Macroeconomic risk tops worry list of senior executives, according to Gartner research. While a similar survey in April saw the risk enter the risk rankings in fifth place, high inflation and prices pushed it into first place.
In addition, executives said they are concerned about the potential for escalating European conflict, state-sponsored cyber attacks and energy price inflation. Key material shortages ranked fifth.
“The top five risks reported by respondents were notable both for their interconnectedness and origination outside of the organisation,” said Chris Matlock, vice president with the Gartner Legal, Risk and Compliance practice. Even though these risks are interconnected, the top threats send conflicting signals on the state of the economy. “That makes the role of emerging risk management leaders especially crucial in filtering the most relevant, organisation-specific information up to the C-Suite and board,” he said.
Risk professionals must balance “top down” risk assessments by senior management with “bottom up” data from business managers, the report said. In fact, businesses must ensure they receive timely data from across the business on emerging risks. But that does not mean executives should simply focus on avoiding risk. They should embrace it as “an opportunity to expand market share and move past competitors,” Matlock said.
The war in Ukraine could drive energy prices higher. But the impact on global businesses could be greater in some geographical reasons, the report said. In particular, extreme weather events in North America could impact supply, as could winter supply shocks in Europe.
Risk professionals must be swift-moving enough to focus on where risks hit hardest. The should also create mitigation plans for key threats. In fact, Matlock advised risk managers to provide qualitative assessments on such threats that are linked to risk appetite.
Economists find it difficult to detect downturns in real time. In fact, many companies say that the worsening economy is biting already. Both Meta and Apple reported weak demand, although not in all areas of their businesses. But some analysts predict most job losses will affect white collar workers. That is because of labour shortages in low-skilled jobs.