More organizations are realizing that additional risk management sophistication is warranted given the fast pace in which complex risks are emerging, according to results of the fourth annual joint survey assessing the current risk environment by global consulting firm Protiviti and the Enterprise Risk Management (ERM) Initiative at the North Carolina State University Poole College of Management.
Executive Perspectives on Top Risks for 2016 (www.protiviti.com/TopRisks) summarizes the concerns of 535 board members, C-suite and other top-level executives around the world and across industries. In the survey, respondents rate the significance of 27 risk issues for the coming year, spanning three risk categories: macroeconomic, strategic and operational.
Regulatory change and heightened regulatory scrutiny is the number one risk cited by survey respondents for the fourth consecutive year, highlighting its dominance on the minds of board members and executives worldwide. The majority (60 percent) of respondents believe this risk will continue to have a significant impact on their organizations, indicating business executives remain highly concerned about the effect of the regulatory landscape on their strategic direction.
Following are the top 10 risks identified in the annual board member and executive risk survey, along with the percentages of respondents who identified each risk as having a “significant impact” on their business:
1. Regulatory changes and regulatory scrutiny may heighten, noticeably affecting the manner in which products or services will be produced or delivered (60 percent)
2. Economic conditions in markets currently served may significantly restrict growth opportunities for the organization (60 percent)
3. The organization may not be sufficiently prepared to manage cyber threats that have the potential to significantly disrupt its core operations and/or damage its brand (57 percent)
4. The organization’s succession challenges and ability to attract and retain top talent may limit its ability to achieve operational targets (52 percent)
5. Ensuring privacy/identity management and information security/system protection may require significant resources for the organization (53 percent)
6. Rapid speed of disruptive innovations and/or new technologies within the industry may outpace the organization’s ability to compete and/or manage the risk appropriately, without making significant changes to its business model (51 percent)
7. Resistance to change may restrict the organization from making necessary adjustments to the business model and core operations (49 percent)
8. Anticipated volatility in global financial markets and currencies may create significantly challenging issues for the organization to address (50 percent)
9. The organization’s culture may not sufficiently encourage the timely identification and escalation of risk issues that have the potential to significantly affect core operations and achievement of strategic objectives (45 percent)
10. Sustaining customer loyalty and retention may be increasingly difficult due to evolving customer preferences and/or demographic shifts in the organization’s existing customer base (46 percent)
“The results of our latest survey show that key stakeholders’ expectations regarding the need for greater transparency about the nature and magnitude of organizations’ risks continue to be high,” said Patrick Scott, Protiviti EVP of Industry Groups.