As we enter 2024, professional service providers across industries face emerging risks and continued economic uncertainty. Inflation, cyber threats, regulatory changes and insolvencies will shape the year ahead.
For the construction industry, insolvencies continue rising, bringing financial pressure and defects claims under new limitation rules. The Building Safety Act changes have already sparked litigation and lawsuits, and more Building Liability Orders and remediation funding demands are expected. With the political spotlight intensifying ahead of the general election, construction professionals must keep pace with the evolving regulatory landscape.
Law firms also face mounting cybersecurity threats, as confidential client data makes them prime targets. Smaller firms are especially vulnerable and while guidance exists, infrastructure gaps leave firms exposed. Meanwhile, property market shifts and rising interest rates may spur claims against solicitors and surveyors over overlooked break clauses and the like.
The insolvency trend threatens accountants and auditors too, as scrutiny by administrations and regulators grows. Any audit clients entering insolvency may trigger breach of duty claims for perceived reporting failures. The Financial Reporting Council and HMRC also continue targeting questionable tax schemes promoted under the guise of professional indemnity coverage. More promoter exposures are imminent.
Emerging risks around AI, environmental, social and governance (ESG) issues, and “build green” represent newer frontiers. As ESG evaluator oversight increases on the corporate end, gaps or misrepresentations make firms liable. Valuators and surveyors also need greater ESG integration to avoid claims. And while “build green” remains largely conceptual for now, its trajectory will force the construction industry to transform in coming years.
The economic instability means 2024 will likely test professional service providers. But construction cost relief and adaptable risk management provide glimmers of optimism. Firms must watch insolvencies, cyber threats, regulatory shifts, and other key risk areas as the year unfolds.