Global Uncertainty and Structural Volatility Threaten Puerto Rico's Recovery
By Jeffrey Quiñones Diaz JD, MS
The global business context is now defined by what the World Economic Forum calls structural volatility: uncertainty that has become "structural rather than episodic." In that environment, the conversation in every sector has shifted from managing temporary disruptions to adapting to a permanently fractured global marketplace.
Uncertainty is the new normal. We can no longer build local, regional or national economic and recovery strategies on the benchmarks and paradigms we are used to. The seminars, webinars and forums we organize cannot keep circling the same topics either.
We need to change the narrative. Public discourse must focus on the disruptions that will persist over the next four to five years, and on how we prepare for them rather than react to them.
The closest threat is a potential financial crisis, and Puerto Rico has to get to work as if Washington is not there to help. Roughly $40 billion in FEMA and CDBG-DR funding remains unspent. Deployed with discipline, that money could jolt an economy that grew an anemic 0.4% in 2025. Puerto Rico's recovery process must adjust so that both obligated and unobligated funds move faster and create the conditions for real growth.
Why the old playbook no longer works
Even the world's most sophisticated risk leaders admit they are not ready. In the WEF's September 2026 survey of its Chief Risk Officers community, 80% said risk management will be somewhat to far more challenging by 2035. Only 10% described their organizations as "very prepared" for risks that cannot be modeled with historical data.
The core problem is interconnection. More than 70% of those CROs ranked the inability to manage interconnected risks and overreliance on historical data among the top three weaknesses of current approaches. As the WEF puts it, a cyberattack can disrupt infrastructure, trigger supply chain bottlenecks, amplify inflation and provoke political responses, all in sequence.
Puerto Rico knows this pattern firsthand. A hurricane is never just a hurricane here: it becomes a grid failure, then a water and telecommunications failure, then a small-business and outmigration crisis. A delay in federal reimbursements becomes a municipal cash-flow problem, then a payroll problem, then a services problem. Managing each risk in its own silo, on an annual cycle, guarantees we will be surprised.
The WEF identifies four shifts that will define the next generation of risk management:
From prediction to preparedness. Resilience depends less on forecasting individual events and more on the governance, capabilities and decision processes needed to respond.
From compliance to strategic enablement. Risk thinking belongs at the start of major decisions, not in a review after the fact.
From periodic reviews to continuous monitoring. Real-time sensing replaces static reporting cycles.
From AI as substitute to AI as complement. Machines handle monitoring and pattern detection; people keep judgment and accountability.
UBS Chief Risk Officer Damian Vogel offers a useful analogy: pilots cannot anticipate every emergency, but they are trained to respond through well-defined procedures and decision protocols. Puerto Rico's governments, municipalities and businesses need the same discipline.
There is also an execution problem. OCEG, the global standard-setter for governance, risk and compliance, puts it bluntly: "A compliance program that exists only on paper protects no one." Most failures happen not in planning but in execution: controls exist but are not followed, and findings are documented year after year without being fixed. For recovery dollars, that gap translates directly into disallowed costs, deobligations and stalled projects.
Six recommendations Puerto Rico can implement now
From my perspective, these measures can be implemented quickly to soften the effects of structural volatility on the island:
Manage remaining recovery funds as a portfolio, not a backlog. Map every obligated and unobligated dollar by agency, municipality and project stage. Identify stalled projects, candidates for reprogramming and investments with the highest economic multiplier, then prioritize accordingly.
Replace annual reviews with continuous monitoring. Track a short set of key risk indicators in real time: reimbursement aging, closeout timelines, procurement exceptions and open audit findings. In the WEF survey, 70% of CROs ranked real-time risk intelligence among the three most critical future capabilities.
Audit assumptions before committing funds. Novartis now practices "assumption auditing," asking not only what the risks are but "what must remain true for this strategy to succeed?" For a recovery project, that means testing assumptions about construction costs, contractor capacity, energy availability, insurance and federal cost-share before shovels move.
Rehearse cascading scenarios, not single events. Run tabletop exercises that combine threats: a hurricane during a federal funding pause, or a cyberattack on municipal systems during an audit cycle. The purpose, in the WEF's words, is rehearsal.
Close the execution gap in compliance. Controls must work in practice, staff must be trained to apply them, and every audit finding needs a root-cause fix, a named owner and a firm deadline. OCEG warns that monitoring activity is not the same as measuring effectiveness: a 95% training completion rate means little if behavior does not change.
Treat stakeholder relations as a resilience asset. Moving federal dollars requires sustained trust among federal agencies, state agencies, mayors, legislators and communities. Coordinated, transparent communication shortens decision cycles and reduces the friction that slows disbursement.
Technology can accelerate all six, but it cannot replace judgment. As SAP's Monica Morata Videira notes, poor processes with poor data "do not become better when automated; they simply operate faster." Fix the process first, then automate it.
Jeffrey is the Senior Public Affairs and Policy Consultant at TCL
References:
World Economic Forum. (2026, September). Risk Management, Reimagined: Outlook to 2035. Chief Risk Officers Dialogue Series white paper. weforum.org
OCEG. (2026). Compliance in Action: Controls, Communication, and Culture. Integrated Compliance & Ethics Professional (ICEP) Series, Part 3. oceg.org
OCEG. (2026). Measure, Monitor, and Improve: The Continuous Compliance Cycle. ICEP Series, Part 4. oceg.org
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