The world has become a riskier place, according to 87% of global business leaders in new data published today by accountancy and business advisory firm, BDO LLP.
The BDO Global Risk Landscape report asked 500 C-suite leaders and board audit committees from all major industries in 44 countries across Europe, the Middle East, Africa, Asia and America on what they thought were the biggest risks facing their businesses now and into the future. Over half (56%) of respondents consider increasing competition as their biggest threat, followed by economic slowdown (43%) and business interruption (42%).
All three regions report increasing competition as the single main threat, with a further 60% believing this risk will continue to impact businesses over the coming ten years. Three quarters (74%) of Europe, Middle East and Africa (EMEA) firms think the ability to harness technological changes and to innovate to meet customer needs would add significant value to their business.
In a more global and interconnected world, large corporates undoubtedly feel the reverberations of commodity price shocks, banking crises, low interest rates, tightening legislation and political instability - whichever market they occur in.
On a regional basis, the risk of economic slowdown is highest in EMEA, with 44% naming this as their biggest risk. Half of EMEA firms go on to identify market changes as a second risk, with the prospect of a British exit from the European Union causing uncertainty for businesses.
Meanwhile for smaller companies, the strong focus on cost reduction remains as they navigate through the slowdown.
Technology and regulation
The Global Risk Landscape also cites technology and regulation as key risk considerations.
Technology is seen as both a risk and an opportunity. The Internet of Things, big data and advance analytics allow companies in many sectors to be created or achieve growth. However, new technology brings with it some of the other biggest risks identified by these firms such as cyber liability, failure to innovate or disruptive innovation.
The report finds that regulation, if applied well, with greater checks and a more robust approach to risk management, helps companies to navigate through this riskier world. However, the regulatory burden can hinder companies’ growth and innovation.
Nigel Burbidge, Partner and Global Chair for Risk & Advisory Services at BDO LLP, says:
“The world is becoming a more dangerous place, heightened by the current levels of economic and political uncertainty. Businesses are facing risks of many different forms: technological, a less certain political landscape, economic and climate to name a few. Each of those risks requires a measured and calculated response, in an appropriate timescale.
“Ratings agencies, listing exchanges and regulators around the world expect management to identify, assess and respond to risks in a prudent fashion. In addition, each of these constituents expects the board of directors to share in management’s responsibility for risk management and assessment.”