Entering into a new decade, boards and C-suite leaders around the world are concerned with the escalating competition for specialized talent, their organizations' culture, and the ability to advance their digital maturity and embrace the transformative opportunities of technology.
Business leaders contend that coupled with the ongoing economic uncertainty and unknown future regulatory changes, these risks could impact their ability to effectively compete, grow their business and achieve operational targets in 2020 and beyond.
This is according to findings from the "Executive Perspectives on Top Risks 2020" survey conducted recently by consulting firm Protiviti and North Carolina State University Poole College of Management's Enterprise Risk Management (ERM) Initiative. Now in its eighth year, the latest survey identified top concerns on the minds of over 1,000 board members and C-suite executives from organizations in a variety of industries around the globe. Nearly sixty-eight percent of survey respondents' organizations have annual revenues between $100 million and $10 billion.
Survey respondents were asked to rate 30 macroeconomic, strategic, and operational risks. Of those, the top 10 risks identified are as follows:
"Nearly half of the top risks this year are related to culture and attracting and retaining top talent. This is happening at a time when organizations need to execute increasingly complex strategies to navigate the rapidly changing digitally-based business environment," said Jim DeLoach, a Protiviti managing director and co-author of the report.
"As the future of work evolves, businesses need to upskill and reskill existing employees – particularly as digital innovations, such as artificial intelligence, natural language processing, and robotics become a mainstay in organizations – to ensure they remain competitive with 'born digital' companies and are future-proofed for the next decade," said DeLoach.
While several of the risks remain consistent with findings from previous years, including concerns around regulation, cyber threats, operational resilience, privacy management, and information security, this year's results show an escalation of anxiety related to overall economic issues across domestic and international markets – climbing from number 11 last year to the number two risk concern for 2020.
Dr. Mark Beasley, professor of Enterprise Risk Management and director of NC State's ERM Initiative and co-author of the report said, "As expectations of key stakeholders regarding risk management and oversight remain high, organizations need to offer greater transparency about the nature and magnitude of risks undertaken in executing an organization's corporate strategy."
"Dynamic forces including board pressure, volatile markets, intensifying competition, changing workplace dynamics, and shifting customer preferences are leading to increasing calls for management to design and implement effective risk management capabilities and response mechanisms, to identify, assess, and manage the organization's key risk exposures," said Beasley.
Given the relative riskiness of the business environment, now may be the time for boards and C-suites to closely examine how their organizations approach risk management and oversight in the digital age to pinpoint aspects requiring significant improvement. To that end, the Protiviti-NC State report includes a call to action, offering executives and directors diagnostic questions to consider when evaluating their own risk assessment and risk management processes.
These diagnostic questions address five topical areas:
The report, along with an infographic and a podcast series, are available for complimentary download here.