BrazilEY: Integrated risk management a key area of focus for governments
Government leaders face a complex web of interconnected threats in 2025, demanding decisive leadership. A report from EY analyses the various risks and how to mitigate them through integrated risk management.
A dangerous combination of risks and disruptions, coupled with public distrust, present significant challenges to governments around the world now more than ever. However, governments can bolster their standing by proactively addressing risks and demonstrating their value.
As government institutions navigate geopolitical complexities, fiscal constraints, digitization, and climate change issues, leaders need to make difficult choices now. Integrated risk management can help governments to anticipate challenges, respond quickly, and adapt. This approach can also improve services and strengthen public trust.
Trouble with public finances
Many governments around the world are grappling with very difficult fiscal situations that threaten to spiral into full-blown crises. For example, a recent International Monetary Fund (IMF) briefing characterized the state of public debt as “worse than it looks.”
Elevated levels of debt and higher interest rates have made it harder for governments to borrow and service debt burdens. Getting public finances on a more sustainable footing in 2025 requires significant fiscal discipline and consolidation. This means governments need to start making difficult decisions.
Another major emerging risk is weak public growth. Global economic growth numbers may not show the full picture for all citizens, as growth increasingly benefits only higher income brackets.
Factors like tariffs, aging populations, and climate change pressures have all contributed to a low growth trajectory. High public debt impedes investment in essential areas like education and health. Governments should promote sustainable growth through green investments and incentives for sustainable consumption.
Labor shortages and work informality
The global workforce is facing labor shortages and informal employment is generally on the rise. Employee expectations and mobility have increased, and over half of the global workforce operates informally. There is also notable discontent: EY’s study shows that 38% of employees want to leave their jobs this year.
These factors threaten growth by shrinking tax bases and disrupting supply chains. Skills shortages and educational disparities hinder workforce development. Governments can address these issues by investing in education, encouraging private sector formalization of work, and regularly evaluating labor market health.
Cybersecurity and supply chains
Public sector organizations must also address cybersecurity concerns. Studies have shown that the Middle East is behind on cybersecurity, with 91% of organizations reportedly experiencing at least one cyber incident in 2023.
Aging technology, siloed systems, and technical debt are all to blame for increased vulnerability to cyber attacks. Part of the solution for governments will be in adopting cloud-based services and building cybersecurity teams to enhance digital resilience. In many cases, skills shortages and data sharing challenges impede the use of digital technologies for public service.
Supply chains are especially vulnerable when it comes to cyber attacks. While onshoring strategies have mitigated some supply chain vulnerabilities, governments lack the necessary visibility and traceability to keep up with the risks. Real-time monitoring is still seriously limited. There is a need to build third-party risk management capabilities and modernize supply chain infrastructure.
“In 2025, the landscape of public sector risks is more interconnected than ever,” reads the EY report. “By investing in integrated risk management, governments will be able to anticipate and mitigate potential threats more effectively. In doing so, they will build public trust and demonstrate the value they bring. Ultimately, by leading with courage and innovation, governments can become more resilient and adaptable.”
