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Understanding Global Business Risks: Economy, Cyber Threats, and Talent Concerns

In a dynamic business environment, leaders are increasingly anxious about risks that could impact their organizations' stability and growth. A recent survey conducted by Protiviti in conjunction with North Carolina State University's ERM Initiative sheds light on the pressing issues that challenge executives today. According to the survey, the economy stands out as the top concern among global business leaders, reminding them that the financial landscape remains unpredictable.

Research findings indicate that economic uncertainty, marked by inflation pressures and geopolitical instability, pervade the current climate. Such factors rank highest among concerns for board members and C-suite executives, provoking strategic discussions on how to approach these challenges effectively.

The survey revealed that a staggering 1,215 board members and executives provided insights on over 32 macroeconomic and operational risks facing their companies over both the immediate term (the next 2-3 years) and the long term (ten years later). The consensus is that despite experiencing complex uncertainties, business leaders feel more prepared to navigate these unpredictable waters. This resilience is depicted in their responses, where they consistently express confidence in their organizations' capacity to remain agile in the face of transformation.

Top Short-Term Risks (Next 2-3 Years)

Here are the top ten identified risks affecting business leaders:
1. Economic conditions, especially inflationary pressures
2. Cyber threats and vulnerabilities
3. Attracting, developing, and retaining top talent, and managing shifts in labor expectations
4. Talent availability and rising labor costs
5. Increasing regulatory uncertainty and scrutiny
6. Third-party risks emerging from partnerships and supply chains
7. The accelerated pace of disruptive technological innovations
8. Adapting to artificial intelligence (AI) and emerging technologies that expose skill shortages
9. New risks becoming apparent due to AI implementation

Significantly, talent-related concerns are prominent on this list, signaling ongoing challenges in acquiring and managing skilled labor. Almost half of the issues tied to workforce dynamics point to the necessity of acquiring new skills and addressing anticipated changes brought forth by AI advancements.

Cybersecurity: The Unseen Threat

Ranked just below economic concerns, cyber threats are a focal point for many businesses today. Executives recognize that cyber-attacks can have far-reaching impacts, disrupting operations, damaging reputations, and incurring financial costs. As states and cyber criminals develop more sophisticated means of attack, the readiness of companies to fend off these threats is paramount. It is evident from the findings that proactive discussions on cyber risk management between Chief Information Security Officers, senior leadership, and board members are crucial as they prepare to combat these evolving challenges.

Andy Retrum, a leader in Technology Risk Resilience at Protiviti, emphasizes the importance of transparent dialogues regarding an organization’s cyber risk profile. By deeply understanding these potential vulnerabilities, companies can make informed decisions to address third-party risks and prevent nation-state-sponsored attacks.

Long-Term Prognosis: Insights for 2035

The survey also asked executives to ponder risks they foresee a decade from now. Interestingly, many of the immediate-term risks are expected to persist into the longer term, particularly regarding economic pressures, talent availability, and cyber threats. According to respondents:

• - Economic conditions will likely remain a critical issue.
• - Talent management will continue to dominate the personnel agenda.
• - Regulatory scrutiny will intensify, requiring organizations to be prepared for heightened levels of compliance.
• - The disruptive nature of technological advancements will necessitate ongoing adaptation and readiness to innovate.

Additionally, geopolitical shifts and evolving customer loyalty dynamics will become focal points of concern, as more organizations recognize the interconnectedness of risks.

Conclusion

As organizations navigate through the complexities of a volatile economic landscape, they must remain adaptable to the changing conditions. The results of Protiviti and NC State’s survey highlight not just the active risks of today but also the anticipated challenges of tomorrow. Dr. Mark Beasley emphasizes the need for collaboration within organizations to address risks effectively. By breaking down the silos that often restrict an integrated understanding of risks, companies can build a resilient foundation for the future.

Protiviti continues to serve as a partner to many Fortune 100 and 500 companies, offering tailored consulting services aimed at strengthening operational resilience. With the insights gained from this survey, businesses are urged to remain proactive in their strategies to ensure long-term sustainability and success amidst the uncertainties of global markets.