Disruptive market and geopolitical risks are
testing business agility and resilience
MENLO
PARK, Calif., Dec. 7, 2023
/PRNewswire/ -- Economic pressures and persistent inflation have
unseated the war for talent as the top near-term risk facing
business leaders around the world, according to a new survey
from Protiviti and NC State University's ERM Initiative. The survey
measures the most pressing business risks over the next year as
well as the next decade. Beyond the economy and talent market,
business leaders are also increasingly concerned about cyber
threats in both the near and long-term, with this risk ranking as
the top concern of respondents over the next decade.
The 12th annual survey, "Executive Perspectives on
Top Risks for 2024 and a Decade Later," was conducted by global
consulting firm Protiviti and the NC State University Poole College
of Management's Enterprise Risk Management (ERM) Initiative. The
study surveyed more than 1,100 board members and C-suite executives
from organizations worldwide in a variety of industries, asking
them to rate 36 macroeconomic, strategic and operational risks on a
sliding 1-10 scale across one-year (2024) and one-decade (2034)
time horizons.
The Top Risks for 2024
There was significant turnover
in the top risks over the coming year, with six falling out of this
year's top ten list for 2024 versus last year, including the top
near-term risk. Economic conditions and inflationary pressures
emerged as the top near-term risk for 2024. Continuing a trend
highlighted by the last two years' surveys, finding and retaining
talent while managing culture and workplace evolution remained a
major concern. Of the 36 macroeconomic, strategic and operational
risks assessed in the survey, the top five risks identified for
2024 are:
- Economic conditions, including inflationary pressures
- Ability to attract, develop and retain top talent, manage
shifts in labor expectations, and address succession
challenges
- Cyber threats
- Third-party risks
- Heightened regulatory changes and scrutiny
The Top Risks for 2034
Survey respondents also rated
the expected impact of the same 36 risks for a decade out, into
2034, assessing how the risk landscape might shift over the coming
decade. The top five risks identified for 2034 are:
- Cyber threats
- Ability to attract, develop and retain top talent, manage
shifts in labor expectations, and address succession
challenges
- Adoption of digital technologies requiring new skills in short
supply
- Rapid speed of disruptive innovations enabled by new and
emerging technologies and/or other market forces
- Heightened regulatory changes and scrutiny
"The economy, inflation and cybersecurity clearly loom large on
the executive risk agenda, but the best leaders realize that all
these risks are intertwined and need to be addressed as a whole,
not in parts," said Matt Moore,
global leader, Risk and Compliance, at Protiviti. "C-suites and
boards need to be nimble to address concerns on a variety of
strategic and operational fronts and keep pace with the speed of
change. Leaders are expected to manage multiple external risks
effectively without disruptions to operations, productivity or
profitability."
Although not recorded as a top risk, geopolitical events had a
significant ripple effect across the risk landscape. Before the
events that took place in the Middle
East on October 7, 2023, the
survey found that no risk issues were rated at the "Significant
Impact" level for 2024, but in the responses gathered following the
attacks, many risks increased and four risk issues were rated at
the "Significant Impact" level.
"It is still an open question of whether or not recent economic
developments and central bank policies will lead to a soft landing
or a recession that would force organizations to make dramatic
changes," said Carol Beaumier, a
senior managing director in Protiviti's Risk and Compliance
solution and leader of the firm's global thought leadership
program. "Alongside this uncertain economic picture has come
regulatory change in wide-ranging and pervasive areas, meaning that
business leaders need to plan for a range of outcomes as to how
these changes will affect their operations."
Looking out a decade, cybersecurity is the most pressing risk
issue, with the risk rating for cyber threats increasing by more
than 11% over last year's survey - by far the largest risk rating
increase noted in the survey's history. Dr. Mark Beasley, professor of Enterprise Risk
Management, director of NC State's ERM
Initiative and co-author of the report, said, "While the economy is
the top-ranked risk for the coming year, cyber threats jumped to
the top of the list when leaders assessed both near- and long-term
outlooks, after not being a top-five risk at all last year. This
jump reflects the growing recognition of the complex cyber risk
landscape that is impacted by the exponential curve of
technological advances and how seriously leaders are taking these
threats."
"Over the next decade, technologies such as artificial
intelligence, cloud, and the anticipated emergence of quantum
computing will change how organizations secure their data, raising
significant security-related questions," said Sameer Ansari, Protiviti global Security &
Privacy lead. "To adapt quickly to new technologies, many
organizations are increasing reliance on outsourcing and
co-sourcing arrangements to achieve operational and go-to-market
objectives. Additional risks arise as organizations must
ensure their third-party partners, are complying with current laws
and regulations to ensure their data and their customers' data is
secure."
How Companies Can Take Action
No matter the time
horizon, this year's survey results highlight important steps
executives should take to protect their companies against risk and
maximize their chances of future success. The report from Protiviti
and NC State's ERM Initiative outlines
the next steps that executives should take to address key areas of
concern, including:
- Navigating an uncertain economic environment
- The cyber issues executives should be thinking about
- Forging ahead with artificial intelligence capabilities
- Embracing new talent strategies
- Understanding and managing the geopolitical risk landscape
Resources Available
The "Executive Perspectives on Top
Risks for 2024 and a Decade Later" report from Protiviti and NC
State University's ERM Initiative provides detailed results
and analysis broken out by company type, size, industry, geographic
region and respondent role. The report, along with a global webinar
series, an infographic, and a podcast about the survey results, is
available for complimentary download here. Protiviti's global
webinar series kicks off with a one-hour panel discussion hosted by
Protiviti's Matthew Moore and
featuring executives from Protiviti, MacroPolicy Perspectives, and
Prudential Financial to discuss the implications of the survey's
findings on January 11, 2024 at
11pm ET. Attendance is free with
registration here.
About Protiviti
Protiviti (www.protiviti.com) is a global consulting firm that
delivers deep expertise, objective insights, a tailored approach
and unparalleled collaboration to help leaders confidently face the
future. Protiviti and our independent and locally owned Member
Firms provide clients with consulting and managed solutions in
finance, technology, operations, data, analytics, digital, legal,
HR, governance, risk and internal audit through our network of more
than 85 offices in over 25 countries.
Named to the 2023 Fortune 100 Best
Companies to Work For® list, Protiviti has served
more than 80 percent of Fortune 100 and
nearly 80 percent of Fortune 500 companies.
The firm also works with smaller, growing companies, including
those looking to go public, as well as with government agencies.
Protiviti is a wholly owned subsidiary of Robert Half
Inc. (NYSE: RHI). Founded in 1948, Robert Half is a
member of the S&P 500 index.
About North Carolina State
University's Enterprise Risk Management (ERM)
Initiative
The Enterprise Risk Management (ERM) Initiative in the Poole
College of Management at North Carolina State
University provides thought leadership about ERM practices
and their integration with strategy and corporate governance.
Faculty in the ERM Initiative frequently work with boards of
directors and senior management teams helping them link ERM to
strategy and governance, host executive workshops and educational
training sessions, and issue research and thought papers on
practical approaches to implementing more effective risk oversight
techniques (www.erm.ncsu.edu).
Protiviti is not licensed or registered as a public
accounting firm and does not issue opinions on financial statements
or offer attestation services.
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SOURCE Protiviti