In today’s business environment, conditions remain challenging for many, and risk retains its position high on every organization’s agenda.
Source: Ernst & Young
In today’s post-downturn economy, a variety of business risks have emerged — and some have become more prominent. From the threat of increased regulation to emerging markets to social responsibility and more, our survey of leading industry executives shows which risks you should be prioritizing this year.
Businesses themselves are changing, which brings new risk horizons and, at the same time, they are grappling with the changes brought about by a post-downturn economy. The ability to anticipate threats, respond and continually adapt is as critical a part of the risk management process as it ever has been.
Our Business Risk 2010 report is part of an ongoing conversation about business risk — a conversation that has been taking place for several years, asking the question: How frequently are companies scanning their horizons and with what scope?
The top 10 risks for business(Ranking from 2009 is shown in parentheses):
1. Regulation and compliance (2)
2. Access to credit (1)
3. Slow recovery or double-dip recession (No change)
4. Managing talent (7)
5. Emerging markets (12)
6. Cost cutting (No change)
7. Non-traditional entrants (5)
8. Radical greening (4)
9. Social acceptance risk and corporate social responsibility (New)
10. Executing alliances and transactions (8)
The 10 risks we highlight and those that fall just under the radar were selected based on how frequently our sector groups and analysts identified them.
Regulation and compliance tops the list
Our research suggests that the most important business risks for 2010 are concentrated in the areas of regulation and compliance.
Many of these threats are related to the aftermath of the global financial crisis. Asset management, banking, and to a lesser extent, insurance, are facing a political backlash and regulatory overhaul following the global financial crisis.
Oil and gas, real estate and mining and metals are contending with efforts by cash-strapped governments to gain revenues.
And public sector organizations must cope with knee-jerk decisions made by political leaders under pressure.
We hope the list will trigger a debate, which we would like to explore further.
– Are the risks on the list similar to those you are monitoring?
– Are they your top risks?
– Have our panelists missed anything critical?
Risks on the radar
Our risk radar presents a snapshot of the top 10 business risks across the 14 industry sectors we covered.
The risks at the center of the radar are those that the executives we interviewed thought would pose the greatest challenge to industry-leading global businesses in the years ahead.
– Compliance threats originate in politics, law, regulation or corporate governance.
– Financial threats stem from volatility in markets and the real economy.
– Strategic threats are related to customers, competitors, and investors.
– Operational threats affect the processes, systems, people and overall value chain of a business.