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Written by staff reporter
An inability to keep up with ‘digital-savvy’ competitors is among the top concerns of business leaders around the world according to a survey of senior executives. The study, ‘Executive Perspectives on Top Risks’, was conducted by consulting firm Protiviti in collaboration with North Carolina State University Poole College of Management ERM Initiative, and found that bosses are concerned about their company’s ability to transform its operations and infrastructure to successfully compete with organisations that are ‘born digital’.
The survey assesses the concerns of 825 board members and executives globally across a variety of industries, with this year’s results showing a significant increase in digital readiness concerns, jumping from the number 10 position in 2018 to number one in 2019. This jump suggests that digital agility and scalability are increasingly seen as a priority for businesses.
The risk of succession challenges and the ability to attract and retain talent moved to number two. Regulatory changes and heightened scrutiny continue to represent a major source of uncertainty, while concerns about economic conditions fell out of the top 10 list of risks for the first time in the seven years in which the research has been conducted.
Jim DeLoach, a Protiviti managing director and member of the research team, added: “Whether covert or overt, resistance to necessary change - spawned by disruptive innovations that alter business fundamentals - can be lethal. Organisations must be willing and able to quickly make necessary adjustments to their business models and core operations. Strategic error in the digital economy can result in the ultimate price, if a company continues to play a losing hand in the marketplace.”
Survey respondents were asked to rate 30 risk issues, with the other risks among the top 10 including: succession challenges and ability to attract and retain top talent; regulatory changes and regulatory scrutiny; cyber threats; resistance to change operations; rapid speed of disruptive innovations and new technologies; privacy/identity management and information security; inability to utilise analytics and big data; a company culture that is unable to quickly identify and escalate risk issues; and sustaining customer loyalty and retention.
Survey respondents indicated that the global business environment is somewhat riskier in 2019 compared to previous years. The survey results also suggest that corporations are likely to increase investment in strengthening risk identification and management efforts over the next twelve months compared with last year.
“The perceived increase in the magnitude and severity of risks in today’s ever-changing landscape should prompt boards and senior executives to closely scrutinise the approaches to proactively address emerging risks,” said Dr. Mark Beasley, professor of Enterprise Risk Management and director of NC State’s ERM Initiative. “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.”