Risk Management – Embedding the process at the strategic level

Published on 01 April 2026

By David Royston-Jennings | Regional Risk & Resilience Coordinator

In today’s dynamic operating environment, organisations face a variety of risks which can impact their strategic objectives. To navigate these uncertainties effectively, it is essential to embed risk management into the strategic planning process. Risk management should inform strategy development, and also be utilised to ensure strategies are effective, efficient, and achieving their desired outcomes. This integration not only enhances decision-making but also ensures that organisations are better prepared to respond to potential challenges.

The strategic risk landscape is continuously evolving due to various factors, including technological advancements, regulatory changes, geopolitical dynamics, and shifting community and consumer expectations. This ever-changing landscape presents both challenges and opportunities for local government. By proactively identifying and managing these risks, councils can enhance their resilience and increase the likelihood of achieving positive outcomes for community. Embracing a culture of risk awareness and integrating risk management into strategic planning will be essential for navigating the volatile, uncertain, complex and ambiguous world we live in.

Defining strategic risk

Oddly enough, the relevant Standard does not supply a definition for what constitutes a strategic risk. The Local Government legislation in Queensland is no help here either. Therefore, it is up to each council to consider how they will consider what a strategic risk is.

For clarity, I generally recommend that council’s consider the following definition:

Strategic risks are those which may impact upon Council’s ability to deliver and implement the strategic direction of the local government, as outlined in its Corporate Plan, and/or affect the long-term interests of the organisation and community it serves.

The objective of strategic risk management in a Queensland council context is therefore to ensure that council achieves its Corporate Plan for its community.

The importance of strategic risk management

Managing strategic risks is crucial for councils aiming to achieve their long-term objectives and deliver positive outcomes for their community. By understanding the potential risks associated with various strategic options, and maintaining awareness of risks which may impact upon delivery of selected strategies, council can increase its resilience and is more likely to achieve its strategic aims. This level of integration also leads to better alignment between strategic initiatives and council’s risk appetite, ultimately improving the quality of decision-making.

Council’s which proactively manage strategic risks are better equipped to withstand disruptions and adapt to changing circumstances in the external environment. By identifying potential threats and developing contingency plans, councils can respond more effectively to unforeseen events, such as economic downturns, regulatory changes, or technological disruptions. This resilience is vital for long-term sustainability.

Failing to manage strategic risks can have significant and far-reaching consequences for councils. These risks, if left unaddressed, can undermine an organisation’s ability to achieve its objectives and maintain its vision for the future of its community.

Potential consequences of neglecting strategic risk management include:

Financial losses
Reputational damage
Operation disruptions
Regulatory penalties and legal issues
Decreased employee morale and retention
Inability to meet community expectations
Increased vulnerability to crisis
Long-term sustainability threats

Strategic risk trends

The 20th edition of the World Economic Forum’s Global Risks Report outlines the major risk issues and trends we will likely experience in the years ahead. The Global Risks Report is a go-to resource for helping organisations understand and plan for what is ahead internationally, which therefore allows council’s to consider how they may need to respond locally to the issues raised therein.

The World Economic Forum (WEF) assert that four structural forces – technological, geostrategic, climatic and demographic – form the backdrop to the risks which will play out globally over the next decade and beyond. These forces have the potential to materially impact the speed, spread and scope of global risks individually and interconnectedly. This report states that if left unaddressed, these structural forces may ‘steer our world toward an increasingly fractured and unsustainable path’.

Respondents to the Global Risks Perception Survey (GRPS) underpinning the report were asked to rank a variety of risks in terms of severity over the short and long term. The following table provides the results:

The world is in the midst of multiple long-term structural transformations: the rise of AI, increasingly extreme weather events, a shift in the geopolitical distribution of power, and demographic transitions. Although the reach of these risks may be global, local strategies are critical for reducing their impact, as they require little coordination (compared with international agreements) and are concerned mainly with increasing a community’s preparedness to bear their inevitable effects e.g. public awareness and education initiatives can be effective in reducing the impact of AI-enabled misinformation on social media.

To complement the GRPS, the WEF also facilitate an Executive Opinion Survey to identify risks which pose the most severe threat to each country over the next two years (as identified by over 11,000 business leaders in 121 economies). The top five risks identified by Australian respondents to this survey indicate that the top risks most likely to present a material crisis currently in our country are predominantly economical and include:

Economic downturn (e.g. recession, stagnation)
Energy supply shortage
Inflation
Food supply shortage
Labour and/or talent shortage

Concern of economic downturn in the short-term is shared globally, as respondents in 24 additional countries see this as the leading risk to their nation. This includes developed economies such as the United State and United Kingdom, and emerging markets such as Brazil, Kenya and Malaysia.

National perceptions of labour and/or talent shortage as a risk are also widespread throughout the world, with dozens of other countries respondents ranking this highly. The report notes that labour shortages in several sectors are likely to become characteristics of super-ageing societies unless policies shift. The World Economic Forums Future of Jobs Report 2025 elaborates on this point and notes that findings from the Future of Jobs Survey indicate that for 40% of employers worldwide, aging and declining working-age populations are driving transformation, while 25% are being transformed by growing working-age populations. Many high-income economies are experiencing the combined effects of both trends and certain countries, including Australia, are impacted more from declining working-age populations.

Whilst the national risk perception of significant global risks such as armed conflict, and misinformation and disinformation, ranked higher in other nations compared with Australia’s attitude towards these issues, the national perception in Australia of pollution (air, water and soil) as a risk was relatively high. Pollution is linked with other environmental and societal risks, including extreme weather events, natural resources shortages, infectious diseases and a decline in health and well-being. These issues have the potential to impact all local government areas in Queensland in some form and as such should be taken seriously.

Various other risk reports share similar sentiments to those included in the World Economic Forum’s Global Risk Report 2025 about the current and future risk landscape, with some painting a more despondent picture of the global risk outlook over the short and long term.

In January 2025, the Bulletin of the Atomic Scientists (BAS) set the Doomsday Clock - which symbolises how near humanity is to destruction - to just 89 seconds to midnight. This is the closest it has ever been. The BAS explained that nuclear threats, potential misuses of advances in biology and artificial intelligence, as well as climate change, were the key factors in reaching this conclusion.

In a statement announcing this change, the BAS elaborated that ‘emerging and re-emerging diseases continue to threaten the economy, society and security of the world’. The panel of scientists warned that ‘an array of other disruptive technologies advanced last year in ways that make the world more dangerous’ and added that ‘the long-term prognosis for the world’s attempts to deal with climate change remains poor, as most governments fail to enact the financing and policy initiatives necessary…’.

The latest AXA Future Risks report builds on this forecast and adds that the impacts of a global polycrisis are becoming more visible in everyday life, with 87% of those surveyed believing that the world is more vulnerable to risks than it was five years ago, and 92% asserting that there has been an increasing number of crises in recent years. The Eurasia Group’s 2025 Risk Report shares a similar view, revealing that their top risk this year ‘is not a single event. It’s the cumulative impact of the G-Zero leadership deficit on the breakdown of the global order’. They add that, ‘we’re entering a uniquely dangerous period of world history on par with the 1930s and the early Cold War. This geopolitical reality is the force behind all the Top Risks in this year’s report. And the tail risk of something truly catastrophic is getting fatter every day’.

The Allianz Risk Barometer, which annually identifies the major risks to the private sector, once again includes a list of exposures almost identical to those experienced by local government. The top three risks identified by Allianz Australian corporate clients surveyed were cyber security, changes in legislation, and natural catastrophes – all of which also impact Queensland Councils i.e. these risks are not exclusive to local government and require a collaborative approach to manage.

AXA’s Future Risks report specifically states that collaboration is required with regards to the risk of misinformation and disinformation in particular, noting that many people are overconfident in their ability to spot misinformation. This risk is explored further within the 2025 Accenture Life Trends report, which suggests that ‘the innate trustworthiness of digital technology is under threat, and its additive value for people’s daily lives has become diluted by authenticity and trust issues’.

As it is harder for people to tell what is real, hesitation is seeded into our digital interactions. This has infiltrated various aspects of our lives, including how we parent (how do we help the next generation shape a safe, healthy relationship with digital technology as it evolves?) and how we work (as new technologies arrive in the workplace, will people hesitate or trust and embrace them?).

The 2025 Accenture Life Trends report also contends that we now live in an impatience economy, where consumers are going their own way and finding quick solutions via relatable online content, as opposed to seeking information and advice from traditional sources. Councils should therefore continuously endeavour to engage with residents across multiple on and offline platforms, to build and maintain trust with its community and retain its position as a source of truth.

As the level of government closest to those it represents, local government is largely insulated from trust issues experienced by State and Federal governments around the globe. However, it is worth noting that the 2025 Edelman Trust Barometer indicates that government is generally seen as far less competent and ethical than the private sector and is distrusted in most countries surveyed. It is also worth noting that survey respondents internationally indicated that the fear of government leaders lying to the public is at an all-time high, and 4 in 10 people see hostile activism as a viable means to drive change. The report suggests that grievances towards institutions including government, business and the media are growing globally. With only 17% of Australian respondents agreeing that the next generation will be better off compared to today, there is a general lack of trust in government to resolve the major issues impacting us right now.

When asked to characterise their global outlook over the short term, 88% of respondents to the World Economic Forum’s GRPS indicated that they anticipate the next two years to be stormy, turbulent and unsettled. Over a ten-year period, this perception increases to 92%, with almost one-fifth of respondents ominously expecting globally catastrophic risks to loom. These increasingly pessimistic predictions highlight the necessity for Council to continuously monitor and bolster its resilience. In a volatile, uncertain, complex and ambiguous world, it is not a matter of if these risks will impact Council, but when, and is Council prepared?

Integrating risk management into strategic planning

Integrating risk management into strategic planning should be achieved through two phases.

The initial phase is during strategy development, when council should assess the risk landscape it operates within, as this will inform what strategies it wishes to pursue. This will typically involve stakeholder engagement to ascertain the issues and opportunities community is mindful of, as well as reviewing resources such as the risk reports referred to earlier in this article. The broader council’s understanding and awareness is of contemporary and predicted future issues, the more likely it is to adopt appropriate strategies with a realistic positive outcome which will benefit its community.

The second phase is utilising risk management during the implementation of council’s strategy, so that council is continuously monitoring potential areas of exposure which may negatively impact upon the achievement of its desired outcomes. This can be achieved through the development and regular monitoring of a risk register, which includes all identified and assessed strategic risks to council. To completely align the strategic planning and risk management processes, council may consider including any risk treatment plans for strategic risks as actions within its Operational Plan.

For clarity and consistency, this process should be documented in council’s Risk Management Framework. The RMF should at a minimum outline what strategic risks are, how they will be identified and assessed, and how they will be monitored and reported upon.

Embedding risk management into your councils strategic planning processes is essential for navigating the complexities of today’s operating environment. By establishing a robust risk management framework, integrating risk assessments into strategic planning, and fostering a risk-aware culture, Councils can enhance their decision-making capabilities and improve their resilience to potential challenges. As organisations and the environment they operate within continues to evolve rapidly and unpredictably, the integration of risk management will be a critical factor in achieving long-term success and sustainability.