Digital Readiness Dominates Top Risk Concerns for Business in 2019, Protiviti-NC State Survey Finds
MENLO PARK, Calif., Dec. 5, 2018 /PRNewswire/ — Looking to the year ahead, boards and C-suite leaders across the globe are most concerned about their company’s ability to transform its operations and infrastructure to successfully compete with organizations that are “born digital.” This is according to results from the 2019 Executive Perspectives on Top Risks survey conducted by global consulting firm Protiviti in collaboration with North Carolina State University Poole College of Management’s Enterprise Risk Management (ERM) Initiative. Succession challenges, followed by heightened regulatory change and scrutiny, rounded out the top three concerns.
The survey report, titled “Executive Perspectives on Top Risks for 2019,” assesses the concerns of 825 board members and executives globally across a variety of industries. This year’s results show a significant increase in digital readiness concerns, jumping from the number 10 position in 2018 to number one in 2019. This jump provides evidence that digital agility and scalability are top-of-mind for businesses. Traditional companies are struggling to compete with newer digital players that can operate more efficiently, are innovative at their core, digitize and deliver new products and services, enhance the customer experience and operate with agile business models.
The risk of succession challenges and the ability to attract and retain talent moved to number two, triggered by a tightening labor market and an increasing need for specialized digital knowledge and subject-matter expertise. Regulatory changes and heightened scrutiny continue to represent a major source of uncertainty, while concerns about economic conditions fell out of the top 10 list of risks for the first time in the seven years during which the research has been conducted.
“Looking forward, digital disruption is a main driver of risk impacting uncertainty over business model viability, customer preferences, the competitive landscape, workplace dynamics, the war for talent and even regulatory demands,” said Patrick Scott, an executive vice president with Protiviti. “Clearly, organizations must align their culture, people, processes and intelligence gathering to embrace this rapidly changing business environment.”
“Whether covert or overt, resistance to necessary change – spawned by disruptive innovations that alter business fundamentals – can be lethal,” said Jim DeLoach, a Protiviti managing director and member of the research team. “Organizations must be willing and able to quickly make necessary adjustments to their business models and core operations. Strategic error in the digital economy can result in the ultimate price, if a company continues to play a losing hand in the marketplace.”
The Top 10 Risks for 2019
Survey respondents were asked to rate 30 risk issues. Following are the top 10 risks identified in the “Executive Perspectives on Top Risks for 2019” report:
- Existing operations meeting performance expectations, competing against “born digital” firms
- Succession challenges and ability to attract and retain top talent
- Regulatory changes and regulatory scrutiny
- Cyber threats
- Resistance to change operations
- Rapid speed of disruptive innovations and new technologies
- Privacy/identity management and information security
- Inability to utilize analytics and big data
- Organization’s culture may not sufficiently encourage timely identification and escalation of risk issues
- Sustaining customer loyalty and retention
Survey respondents indicated that the global business environment is somewhat riskier in 2019 compared to previous years. The survey results also suggest that corporations are likely to increase investment in strengthening risk identification and management efforts over the next twelve months relative to the prior year.
“The perceived increase in the magnitude and severity of risks in today’s ever-changing landscape should prompt boards and senior executives to closely scrutinize the approaches to proactively address emerging risks,” said Dr. Mark Beasley, professor of Enterprise Risk Management and director of NC State’s ERM Initiative. “Boards of directors and executive management teams cannot afford to manage risks casually on a reactive basis, especially considering the rapid pace of disruptive innovation and technological developments in an ever-advancing digital world.”
The 2019 Executive Perspectives on Top Risks survey was conducted in the fall of 2018, and respondents represent organizations across the globe in the public and private sectors. Sixty percent of respondents’ companies have annual revenues of $1 billion or more. The survey report provides detailed insights broken out by size and type of company, respondent role, industry and geographical region.
Resources Available to Learn More; Webinar on December 12
The “Executive Perspectives on Top Risks for 2019” report from Protiviti and North Carolina State University, along with an infographic, video and podcast highlighting the survey results, are available for complimentary download on the NC State ERM website. A complimentary 60-minute webinar exploring the implications of the survey results will be held on December 12 at 11:00 a.m. PST, featuring NC State’s Dr. Beasley and Protiviti’s Jim DeLoach and Patrick Scott.
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. Through its network of more than 80 offices in over 20 countries, Protiviti and its independently owned Member Firms provide clients with consulting solutions in finance, technology, operations, data, analytics, governance, risk and internal audit.
Protiviti has served more than 60 percent of Fortune 1000® and 35 percent of Fortune Global 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 (NYSE: RHI). Founded in 1948, Robert Half is a member of the S&P 500 index.
About the NC State University Poole College of Management’s 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.
Editor’s note: photos and an infographic of survey highlights available in PDF or JPEG formats available upon request.