Concerns about being able to adequately target and serve millennials and digital-native customers have given way to more pressing and impactful issues like cyber threats, talent acquisition and retention, economic disruption caused by ideological disagreements on trade and religion.
On the technology front, the race to harness artificial intelligence is an ever-present agenda in C-suite discussions.
The report noted that a rapidly changing business environment and the potential for unwelcome surprises vividly illustrate the reality that organizations of all types face risks that can either disrupt their business model over time or damage brand image and reputation overnight.
The report noted that board members and C-suite executives worldwide see 2020 as a less risky business environment compared to 2019. At the time of publishing of the report, regulatory change and scrutiny is the number one risk issue for global business leaders worldwide, with economic conditions taking second spot.
Other operational concerns dominate the top 10 global risk issues, including succession challenges and resistance to change. This suggests on the surface that respondents continue to be focus on operational issues to a greater extent than strategic or macroeconomic risks.
The new entrant into the top ten is the ability to attract, retain and reskill talent needed for organizations to adopt digital technologies (e.g., AI, robotics, natural language processing, among others).
Notably missing in the survey data is the current health crisis that arrived in late December 2019 –the arrival of the coronavirus disease 2019 (COVID-19) and its now expanding footprint worldwide.
In a press statement Adam Johnston, managing director and country market Leader FSI, Protiviti, commented that COVID-19 will have devastating impacts, immediate and long-term, to economic conditions.
“The mapping is crucial, now more than ever, for businesses to design and implement effective risk management capabilities and response mechanisms to maintain agility and resilience. There are two themes reflected in the findings of our survey that indicate concerns from business leaders as they look forward to 2020 – talent and culture as one and technology and innovation as the other. These two interrelated themes are especially relevant in the coming year as organizations globally strive to strengthen their competitive position by advancing their digital maturity and embracing the transformative potential of technology,” he opined.
What concerns Asia
Concerns about economic conditions restricting growth opportunities jumped to the number two spot this year globally and were selected as the biggest risk for Asian Organizations. This was followed by regulatory changes, succession challenges/attracting talent, and privacy/identity management.
This result is not surprising as APAC is still the fastest growing region in the world, contributing two-thirds to global growth, but near term, prospects have deteriorated noticeably over the last year and are trending downward.
The ever-changing risk landscape and overall perceived magnitude and severity of risks should prompt boards and senior executives to closely scrutinize the approach they use to keep an eye on emerging risks.
Those who continue to manage risks the way they have for many years will eventually realize, once it is too late, that the level of investment in risk management and their willingness to engage in robust tools are inadequate.
In this digital age, enterprise risk management has an important role to play in strengthening and nurturing the appropriate risk culture that facilitates the initiative, creativity, innovation and digital thinking so critical to success.
Boards of directors and executive management teams cannot afford to manage risks casually on a reactive basis, especially considering the rapid pace of disruptive innovation and technological developments in an ever-advancing digital world.
|Impact of regulatory change and scrutiny on operational resilience, products and services||6.38||6.24(3)|
|Economic conditions impacting growth||6.34||5.93(11)|
|Succession challenges; ability to attract and retain top talent||6.27||6.34(2)|
|Ability to compete with “born digital” and other competitors||6.23||6.35(1)|
|Resistance to change operations||6.15||6.17(5)|
|Privacy/identity management and information security||6.06||6.13(7)|
|Organization’s culture may not sufficiently encourage timely identification and escalation of risk issues||5.83||5.99(9)|
|Sustaining customer loyalty and retention||5.82||5.95(10)|
|Adoption of digital technologies may require new skills or significant efforts to upskill/reskill existing employees (new in 2020)||5.71||NA (new)|
Source: 2020 Top Global Risk report, Protiviti