Business environment seen as riskier in 2019

The consulting firm Protiviti has released its annual report on the top risks facing organizations in 2019, with survey respondents indicating they see the global business environment as riskier next year, compared to this year and last year.

“We’re seeing an uptick in risk from 2018 to 2019,” said Jim DeLoach, a managing director at Protiviti, during a panel discussion last week in New York. “It’s not a big jump, but it’s a little bit higher for 2019 relative to 2018.” He noted that executives in North America see less of a risk than those in Latin America.

Among the macroeconomic issues anticipated are volatility in global financial markets and currency exchange rates and uncertainty surrounding the influence and continued tenure of key global leaders, along with evolving changes in global trade policies. The ability to access capital and liquidity is also weighing on the executives polled. For the survey, Protiviti partnered with North Carolina State University’s Enterprise Risk Management Initiative in polling 825 board members and executives around the world.

The survey found the respondents indicated they are more likely to devote more time and resources to risk identification and management over the next 12 months compared to their plans in the prior year. Other concerns include regulation. “Regulatory policies have been in the top five rive risks every year,” said Mark Beasley, a professor at NC State’s Poole College of Management. He pointed to the General Data Protection Regulations, or GDPR, in Europe, which is affecting many U.S.-based companies.

While the survey didn’t specifically ask about climate risk, DeLoach acknowledged, “Climate is on everybody’s mind.” However, it is more of a long-term concern than an immediate one for next year, he noted.

Technology also presents risks, with the rapid speed of disruptive innovations enabled by new and emerging technologies and market forces outpacing an organization’s ability to compete. Protiviti managing director Gordon Tucker pointed to traditional retailers such as Sears and Toys ‘R’ Us falling victim to competitors like Amazon. “With real-time product delivery, there’s a dynamic of brick and mortar vs. digital,” he noted. Digital readiness for competing topped the list of risk concerns on this year's survey.

Social media, mobile applications and other internet-based applications can have a significant impact on a company’s brand. Other risks include managing cyber threats, which is one of the top five risks for each of the four size categories of organizations.

The risk of succession challenges and the ability to attract and retain talent moved into the top five list of risks for 2019. “Baby boomers are retiring and there are succession planning challenges in the C suite,” said Protiviti managing director Shaheen Dil.

(left to right) Protiviti managing director Shaheen Dil, North Carolina State University professor Mark Beasley, Protiviti managing directors Jim DeLoach and Gordon Tucker

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