Business leaders believe the global business environment is becoming ‘riskier’, according to a new report from consultant Protiviti. The Executive Perspectives on Top Risks 2019 report, published in conjunction with North Carolina’s State University’s Enterprise Risk Management initiative, focuses on the ‘key issues being discussed in the boardroom and C-suite’.
Its findings are based on data from a survey of 825 board members and executives from businesses across the world. In the survey, each respondent identified the top risks to their businesses in 2019.
They were also asked to rate the potential impact of 30 specific risks using a 10-point scale. A score of one signified ‘no impact at all’ while 10 indicated ‘extensive’ impact. Risks with average scores of six or more were classed as having ‘significant impact’.
The risks spanned three areas:
Macroeconomic risks– which could potentially affect organisations’ growth, such as volatility in global financial markets and the impact of world leaders on international markets.
Strategic risks– which might affect the validity of growth opportunity strategies. For example, will the growth of new technology outpace businesses’ ability to react to changes it brings? Will organisations be able to adapt to social media innovations and trends affecting their customers’ purchasing habits?
Operational risks– which might affect key operations in businesses’ execution of their strategies, such as management teams’ alignment with shareholders’ needs or the long-term viability of key suppliers.
Overall, economic risks did not make the survey’s top 10 even though businesses from a number of geographic regions, including Europe, placed it in their top five.
The results of the Protiviti report make for an interesting read for risk managers, and it appears more time and resources are being invested in risk identification and management as businesses become more concerned about how their businesses will thrive in 2019.
There are many drivers behind the increased number of boardroom conversations about risk and how to mitigate it. In Europe, Brexit clearly continues to have an impact while new technologies, shifting customer preferences and demographics, cyber threats, unemployment levels and the strong US dollar are all contributing to the renewed focus on risk management.
These factors are leading to more demands at board level for effective risk management programmes and capabilities to be in place.
As the report concludes, boards and C-suites should now be closely examining how their organisation approaches risk. It would be prudent for risk managers to revaluate and ensure their organisations and clients have the tools and techniques in place to minimise risk and to ensure the main concerns highlighted in the report are part of current risk management plans.