Global survey report identifies legacy infrastructure, succession challenges and regulatory change as the top risks for businesses in the digital age.
Looking to the year ahead, boards and C-suite leaders across the globe are most concerned about their company's ability to transform its operations and infrastructure to successfully compete with organizations that are ‘born digital’. This is according to results from the Executive Perspectives on Top Risks 2019 survey conducted by global consulting firm Protiviti in collaboration with North Carolina State University Poole College of Management's Enterprise Risk Management (ERM) Initiative. Succession challenges, followed by heightened regulatory change and scrutiny, rounded out the top three concerns.
The survey report reviews the concerns of 825 board members and executives globally across a variety of industries. This year's results show a significant increase in digital readiness concerns, jumping from the number 10 position in 2018 to number one in 2019. This jump provides evidence that digital agility and scalability are top-of-mind for businesses. Traditional companies are struggling to compete with newer digital players that can operate more efficiently, are innovative at their core, digitize and deliver new products and services, enhance the customer experience and operate with agile business models.
The risk of succession challenges and the ability to attract and retain talent moved to number two, triggered by a tightening labor / labour market and an increasing need for specialized digital knowledge and subject-matter expertise. 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 during which the research has been conducted.
The top ten risks for 2019
Survey respondents were asked to rate 30 risk issues. The following are the top ten risks identified in the Executive Perspectives on Top Risks for 2019 report:
- Existing operations meeting performance expectations, competing against ‘born digital’ firms;
- 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 utilize analytics and big data;
- Organization's culture may not sufficiently encourage timely identification and escalation of risk issues;
- 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 relative to the prior year.
The 2019 Executive Perspectives on Top Risks survey was conducted in the fall of 2018, and respondents represent organizations across the globe in the public and private sectors. Sixty percent of respondents' companies have annual revenues of $1 billion or more. The survey report provides detailed insights broken out by size and type of company, respondent role, industry and geographical region.