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A systematic literature review on emerging technology risks in Industry 4.0/5.0: identification, clustering and developing mitigation strategies

Published online by Cambridge University Press:  27 August 2025

Dominik Fuchs ,
Blair Kuys ,
Boris Eisenbart  and
Kilian Gericke
Dominik Fuchs*
Affiliation:
Swinburne University of Technology, Australia
Blair Kuys
Affiliation:
Swinburne University of Technology, Australia
Boris Eisenbart
Affiliation:
Swinburne University of Technology, Australia
Kilian Gericke
Affiliation:
University of Rostock, Germany
*
dfuchs@swin.edu.au

Abstract:

This systematic literature review comprehensively assesses the risks associated with implementing Industry 4.0/5.0 technologies. It clusters these risks into six groups (strategic, financial, operational, technological, environmental, and sociocultural). Using a PRISMA-guided approach, the analysis of 83 peer-reviewed papers identified 36 unique risks out of a total of 811. The findings reveal critical challenges, including in cybersecurity threats, financial burdens, technological obsolescence, and workforce adaptation. These results provide a structured risk categorization that can assist enterprises, in effectively mitigating risks and aligning their strategies with Industry 4.0/5.0 transitions. This framework closes knowledge gaps and offers actionable insights for a robust and sustainable implementation.

Keywords

risk managementdecision makingentrepreneurshipstrategc risk cluster and mitigationresilience strategies

Information

Type
Article
Information
Proceedings of the Design Society , Volume 5: ICED25 , August 2025 , pp. 299 - 308
Creative Commons
Creative Common License - CCCreative Common License - BYCreative Common License - NCCreative Common License - ND
This is an Open Access article, distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives licence (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is unaltered and is properly cited. The written permission of Cambridge University Press must be obtained for commercial re-use or in order to create a derivative work.
Copyright
© The Author(s) 2025

1. Introduction

The COVID-19 pandemic has put the global economy under significant stress, imposing a renewed need for an increase in enterprises’ agility and developing resilient strategies to manage global crises (Camarinha-Matos et al., Reference Camarinha-Matos, Rocha and Graça2022; Dwyer Bricklin, Reference Bricklin2021; Miahkykh et al., Reference Miahkykh, Horiashchenko, Okhrimenko, Petecki, Lytvynenko and Ilchenko2024). Industry 4.0 and 5.0 technologies present both opportunities and challenges in this transformation. While innovation is crucial for maintaining competitiveness, effective risk management is equally important to ensure organizations can navigate uncertainties, optimize resource allocation, and enhance resilience (Reference Miahkykh, Horiashchenko, Okhrimenko, Petecki, Lytvynenko and IlchenkoMiahkykh et al., 2024). 80 percent of experts interviewed in a recent study emphasized the growing importance of innovation as a key factor in competitiveness, which underlines the need for effective risk management, especially within the transformation towards Industry 4.0/5.0 technologies (Reference Miahkykh, Horiashchenko, Okhrimenko, Petecki, Lytvynenko and IlchenkoMiahkykh et al., 2024). Despite the growing importance of these technologies, existing literature lacks a structured risk assessment framework for Industry 4.0/5.0 technologies adoptions. Studies emphasises the importance of change management in technological transitions (Reference ByBy, 2005; Reference Sonar, Khanzode and AkarteSonar et al., 2021), yet the interconnection between risk management, change management and business resilience remains underexplored. Additionally, the application of VUCA (Volatility, Uncertainty, Complexity, Ambiguity) and BANI (Brittle, Anxious, Nonlinear, Incomprehensible) frameworks provides valuable insights into the dynamic nature of transformation, highlighting the need for comprehensive risk mitigation strategies. Especially in context of transforming processes, studies revealed that an inadequate attention to adequate implementation of risk management strategies will likely lead to projects failure (Araújo et al., Reference Araújo, Pacheco and Costa2021; Götze et al., Reference Götze, Northcott and Schuster2015; Humphries et al., Reference Humphries, Ryan and Van de Ven2024).

As organisations struggle to align their processes with Industry 4.0/5.0 standards (Reference Karevska, Steinberg, Müller, Wienken, Kilger and KraussKarevska et al., 2019), this paper aims to answer: What are the key risks associated with implementing Industry 4.0/5.0 technologies and how can they be systematically categorized to support risk mitigation? Industry 4.0 technologies can be summarized into ten main interconnecting pillars: (1) Big Data Analytics; (2) Internet of Things (IoT); (3) Autonomous robots (4) Simulation; (5) Augmented reality; (6) Additive manufacturing; (7) Cloud computing; (8) Cyber security; (9) Horizontal & vertical integration; (10) other enabling technologies (Reference ButtButt, 2020). Although digitalization, automation and connectivity are core principles of industry 4.0 (Reference Despeisse, Baumers, Brown, Charnley, Ford, Garmulewicz, Knowles, Minshall, Mortara, Reed-Tsochas and RowleyDespeisse et al., 2017), Industry 5.0 builds upon these principles, incorporating sustainability, human-centric approaches and resilience (Reference Breque, De Nul and PetridisInnovation et al., 2021), including the introduction of a broader field of digital features (for example predictive maintenance, hyper-customization, cyber-physical cognitive systems, collaborative robots and smart additive manufacturing) (Reference Khan, Haleem and JavaidKhan et al., 2023). Adopting Industry 4.0/5.0 require strategic change management to ensure that organizations can align their workforce, operational processes and business models with the evolving technological landscape (Reference Errida and LotfiErrida & Lotfi, 2021). Common models such as “Kotter’s 8-steps”, “Mento et al.’s 12-steps”; “Cummings and Worley 5-steps”; “Lücke’s 7-steps”; “Kanter et al.’s 10-steps”; “McKinsey’s 7-s”; and other processual and descriptive models (By, Reference By2005; Errida & Lotfi, Reference Errida and Lotfi2021; Miller, Reference Miller2020) provide comprehensive insights into managing technological transitions, yet they often lack a risk-focused approach specific to Industry 4.0/5.0 adoption. Furthermore, a two-year case study conducted in the construction sector (Reference Errida and LotfiErrida & Lotfi, 2021) highlights the practical challenges of integrating digital tools such as ERP and BIM software, emphasizing critical factors such as leadership, resilience management and continuous monitoring. While BIM (Building Information Modelling) enhances collaborative workflows, real-time assessment and predictive analytics, its implementation presents unique challenges such as interoperability issues, data security concerns and resistance from traditional construction stakeholders. These risks underline the necessity of structured digital adoption frameworks that account for both technological and sociocultural factors. While existing literature provides insights into change management strategies, it lacks a comprehensive focus on the interconnected technological, operational and strategic risks occurred by Industry 4.0/5.0 adoption.

2. Literature review scope and methodology

The literature review presented here was conducted following the Cochrane framework, which is a structured methodology designed to create high quality and evidence-based research by emphasizing a transparent and replicable process for assessing studies (Reference Higgins, Thomas, Chandler, Cumpston, Li, Page and WelchHiggins et al., 2019). The guidelines for “preferred reporting items for systematic reviews and meta-analyses” (short PRISMA) are used to describe the selection process (Reference Page, McKenzie, Bossuyt, Boutron, Hoffmann, Mulrow, Shamseer, Tetzlaff, Akl, Brennan, Chou, Glanville, Grimshaw, Hróbjartsson, Lalu, Li, Loder, Mayo-Wilson, McDonald and MoherPage et al., 2021).

The purpose of this systematic literature is to strengthen implementation projects robustness and supporting especially small and medium sized enterprises in adopting emerging technologies in the context of Industry 4.0/5.0. Furthermore, this review identifies a knowledge gap between current practice and literature regarding risk assessment in implementing Industry 4.0/5.0 technologies. Therefore, the central research question (RQ) to be answered is: “What risks arises when implementing new Industry 4.0/5.0 technologies and how can such risks be categorised?”

The used databases are SCOPUS and Web of Science, employing the following search strings:

  • SCOPUS: ( “Industry 4.0” OR “Industry 5.0” ) AND ( “risks” OR “risk assessment” OR “risk management” OR “enterprise risk management” OR “Implementation risks” OR “technology adoption risks” OR “risk clustering” ) AND PUBYEAR > 2009 AND PUBYEAR < 2026 AND ( LIMIT-TO ( DOCTYPE , “ar” ) OR LIMIT-TO ( DOCTYPE , “cp” ) OR LIMIT-TO ( DOCTYPE , “re” ) ) AND ( LIMIT-TO ( LANGUAGE , “English” ) OR LIMIT-TO ( LANGUAGE , “German” ) ).

  • WEB of Science: TS=(“Industry 4.0” OR “Industry 5.0”) AND TS=(“risks” OR “risk assessment” OR “risk management” OR “enterprise risk management” OR “Implementation risks” OR “technology adoption risks” OR “risk clustering”) AND PY=(2010-2025) AND (DT=(“ARTICLE”) OR DT=(“CONFERENCE PAPER”) OR DT=(“REVIEW”)) AND (LA=(“English”) OR LA=(“German”)).

Included literature are studies published after 2010 to ensure relevance. Moreover, selected articles are published in the top quartiles (Q1) of peer-reviewed journals and contain primary empirical data on Industry 4.0/5.0 implementation risks to ensure the highest possible quality. Another eligibility criteria was that only studies in English or German are included to permit the research team a first-hand analysis, with no restrictions based on region or organisation type to ensure a global perspective. The search strategy focuses on search terms that include “Industry 4.0 OR Industry 5.0 AND risks” and other risk-related keywords, while specific technology terms (e.g. IoT, AI) are excluded, as they are considered part of Industry 4.0/5.0. The applied filters are publication dates from 2010 onward, document types including articles, conference papers, and reviews. Unreported information from studies (e.g. industry sector, geographical region, organisation size, etc.) are extrapolated where possible and handled with risk bias assessment according to Cochrane RoB 2 tool. The screening process revealed an initial pool of 38,244 papers which could be reduced furthermore as duplicates and those without DOI numbers are removed to ensure the repeatability of the literature review and the retrievability of the included papers. After refining the search scope (such as title, abstract, keyword) and focusing on papers with higher citation records (above 3 between years 2010–2021), and higher impact level for articles (only Q1; identified with SCIMAGO), the selection narrowed to 1,296. Final exclusion criteria applied for redundancy and narrow focus, such as topics outside Industry 4.0/5.0 implementation, revealed a final selection of 83 included papers (47 articles, 18 conference papers and 18 reviews). Despite the possibility of missing relevant publications due to the highly selective process, the confidence in the findings remains high.

3. Risks associated with implementation of emerging technologies

The systematic literature review of the 83 papers revealed a total of 811 risks. In order to make the analysis effective, these risks were consolidated into 36 individual risks through a thematic clustering approach. This process involved: (1) Identifying duplicate or overlapping risks across multiple sources (2) Group similar risks under broader categories (e.g. different cybersecurity risks under technological risks) and (3) validating cluster consistency with existing frameworks (such as (Reference Gabriel, Grauthoff, Joppen, Kühn and DumitrescuGabriel et al., 2021; Reference Herceg, Kuč, Mijušković and HercegHerceg et al., 2020))

3.1. Risk categories

These risks can be clustered into 6 main groups based on an intersection of frequently named groups (such as by (Gabriel et al., Reference Gabriel, Grauthoff, Joppen, Kühn and Dumitrescu2021; Herceg et al., Reference Herceg, Kuč, Mijušković and Herceg2020; Miahkykh et al., Reference Miahkykh, Horiashchenko, Okhrimenko, Petecki, Lytvynenko and Ilchenko2024)):

  1. 1) Strategic risks involve the broader/long-term challenges that organisations face when attempting to align their strategic vision/roadmap with the fast-pacing development of industry 4.0/5.0 technologies and uncertainties of external market forces (e.g. risks related to decision making processes and market positioning).

  2. 2) Financial risks in the context of Industry 4.0/5.0 technology implementation encompasses financial uncertainties and potential losses such as high capital investments and challenges of securing adequate funding. These risks arise from external economic factors (e.g. currency fluctuations, or market) as well internal inefficiencies (e.g. integration failures, or financial burdens of mitigating).

  3. 3) Operational risks encompass disruptions and inefficiencies arising from technological obsolescence, inadequate integration of digital systems, and data security vulnerabilities. These risks are merged by scalability challenges, workforce skill gaps, and the complexities of automated decision-making processes, all of which can hinder operational performance and productivity.

  4. 4) Technological risks pertain to the integration, performance and security of (advanced) Industry 4.0/5.0 technologies that create potential challenges and vulnerabilities (such as cybersecurity threats where the risk of data breaches and unauthorized access occur).

  5. 5) Environmental risks focus on ecological impacts due to increased resource consumption, energy requirements or waste generation associated with Industry 4.0/5.0 technologies. The pressure to adapt to evolving environmental regulations and societal expectations of sustainability can require operational adjustments and investments that assume environmental risks.

  6. 6) Sociocultural risks encompass cultural, ethical and social impacts are encompassed by sociocultural risks. These risks include resistance to organizational change, increased employee stress, and concerns about ethical issues such as transparency and fairness. All of these can negatively impact the successful adoption and integration of new technologies.

Unlike traditional risk frameworks these categories reflect Industry 4.0/5.0 specific challenges from a global perspective. For example, technological risks in Industry 4.0/5.0 are not just about systems failures but also include AI biases, cyber-physical system vulnerabilities and interoperability concerns. Similarly, sociocultural risks have gained importance due to Industry 5.0’s emphasis on human-centredness, workforce adaption and ethical AI development. Figure 1 shows the distribution of identified risks grouped into the six main groups. The left spider web diagram shows the distribution of the total number of identified risks (811) of each paper, while the right shows the consolidated individual identified risks. For instance, 160 strategic risks have been identified in the 83 papers (Figure 1, left diagram). After grouping duplicates together, eight individual strategic risks are mentioned throughout the 83 papers (Figure 1, right diagram). Consequently, overall (Figure 1, left diagram) strategic, financial, operational, and technological risks have been frequently mentioned in this literature review, while sociocultural and environmental risks remain less prominent. This demonstrates the extent to which the review addresses each risk group and, therefore, sets its importance. Figure 1 (right diagram) instead illustrates the number of individual risks associated with each group that the review uncovered. The 160 strategic risks identified a total of eight unique risks, whereas the less discussed sociocultural risks (111 risks) revealed only three unique risks. Overlapping this information illustrates the frequency with which risk groups have been mentioned in the literature review, enabling the identification of areas where enterprises should prioritize their efforts. This is also evident in the dimensions of the 36 unique risks depicted in Figure 2, specifically the outer wheel.

Figure 1.

Identified risk distribution (l: absolute total; r: adjusted/unique total)

Figure 2.

Implementation risks of Industry 4.0/5.0 technologies

3.2. Definition of implementation risks of Industry 4.0/5.0 technologies

Figure 2 shows the 36 identified unique risks based on the distribution of the risk groups [inner wheel: strategic- (20 % | 160 risks), financial- (19 % | 156 risks), operational- (21 % | 169 risks), technical risks (19 % | 153 risks), environmental- (8 % | 62 risks), sociocultural risks (14 % | 111 risks)]. As Figure 2 (r.) and the outer wheel shows the number of unique risks of each group, strategic- (8 risks), financial- (7 risks), operational- (7 risks), technical risks (6 risks), environmental- (5 risks), sociocultural risks (3 risks). Table 1 describes each of the risks in detail.

Table 1.

Description of implementation risks for Industry 4.0/5.0 technologies

In a nutshell, this table shows critical risks associated with implementing Industry 4.0/5.0 technologies. Beside the six main risk groups, the table shows and explains the 36 unique risks. Strategic risks emphasize challenges such as framework deficiencies, cybersecurity adaptation, or immature technology adaptation, which can undermine organizational resilience and competitive position. Financial risks highlight the burden of high (upfront) costs, cost efficiency, and uncertainties in the return/ mitigation costs. Operational risks focus on scalability, workforce reskilling, and digital transformation disruption, while technological risks focus on integration failures, cyber resilience gaps, and the increased dependency of information and communication systems. Environmental risks emphasize sustainability challenges and compliance demands. Sociocultural risks highlight the human and ethical complexities of adopting disruptive technologies. These findings provide a foundation for understanding and clustering risks, which becomes essential for developing a comprehensive risk assessment and developing targeted mitigation strategies.

4. Discussion and practical implications

Previous research has acknowledged the challenges of technological adoption within Industry 4.0 framework, but this literature review systematically clusters them into six main groups and 36 unique risks based on a holistic approach, demonstrating their interconnectivity and universal adaptable to Industry 4.0/5.0 technologies.

One key finding is the necessity of an integrated approach to risk management, ensuring that enterprises are prepared for both risks and opportunities. While risks such as cybersecurity threats and financial instability, raise challenges, Industry 4.0/5.0 also offers significant benefits, including enhanced operational efficiency, predictive maintenance and sustainability driven innovations. Organizations must balance risk mitigation with leveraging opportunities.

5. Risk mitigation strategies

To make the findings actionable, the provided risk list based on the 83 papers included in the literature review can be summarized and evolved into mitigation strategies as follows:

  1. 1) Strategic risks: Emphasize alignment between technological adoption and business strategy by incorporating scenario analysis and stress-testing into strategic planning. This alignment helps mitigate risks related to market positioning, regulatory uncertainties, and strategic misalignment. Establishing cross-functional risk committees can further strengthen risk identification and strategic decision making.

  2. 2) Financial risks: Companies, particularly SMEs, should explore flexible and alternative financing models such as leasing technology, forming strategic partnerships, or using government grants to reduce high upfront costs. Additionally, implementing dynamic financial forecasting models can help enterprises manage cash flow and buffer for unforeseen expenses and financial shocks from technological investments.

  3. 3) Operational risks: A key mitigation strategy involves structured workforce reskilling programs to bridge skill gaps and ensure seamless integration of Industry 4.0/5.0 technologies. Enterprises should adopt modular and scalable technology systems that allow gradual implementation, reducing operational disruptions. Additionally, firms must establish risk aware supply chain management practices to enhance resilience.

  4. 4) Technological risks: Organization should invest in advanced cybersecurity infrastructure including continuous monitoring tools, encryption protocol and blockchain technology to safeguard digital assets. Partnering with cybersecurity firms and conducting regular stress testing will help address vulnerabilities. Developing fail-safe redundancy systems ensures continuity in case of complex cyber threats or systems failure.

  5. 5) Environmental risks: Companies should integrate circular economy principles by prioritising resource optimisation, waste reduction and ecofriendly manufacturing techniques (such as LCA based on ISO1440/14067). Proactive compliance monitoring and automated environmental impact assessments will help businesses stay ahead of regulatory changes and meet sustainability targets.

  6. 6) Sociocultural risks: To mitigate resistance to change, enterprises must foster a culture of transparency and inclusivity by involving employees in the transformation process. Regular communication, leadership engagement and participatory decision-making can enhance workforce adaptability. Ethical concerns, such as AI-driven decision-making biases, should be addressed through a clear ethical guidelines and AI governance frameworks.

By implementing these structured mitigation strategies, enterprises can not only reduce potential risks but also maximize the opportunities presented by Industry 4.0/5.0 technologies.

6. Conclusion and future research

As this paper systematically identifies and categorizes six key risk groups associated with Industry 4.0/5.0 adoption, this study fills a critical gap in risk assessment literature. Unlike prior research, which focuses on isolated and technology specific risks, this study integrates risk categories to provide a structured and actional framework. Future research should examine: (1) sector specific risks in Industry 4.0/5.0 transformation, (2) regional variations by analysing how different regulatory and economic aspects form risk profiles – especially for global operating SMEs and (3) conduct empirical studies to evaluate how organization’s risk profiles develop over time as Industry 4.0/5.0 technology matures. Furthermore, it is necessary to demonstrate the impact of a comprehensive risk management framework on the outcomes of change initiatives to support organisational innovation.

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Figure 0

Figure 1. Identified risk distribution (l: absolute total; r: adjusted/unique total)

Figure 1

Figure 2. Implementation risks of Industry 4.0/5.0 technologies

Figure 2

Table 1. Description of implementation risks for Industry 4.0/5.0 technologies