Speed of Disruptive Tech Seen as Top Business Risk
December 15, 2017
rapid pace of technological developments and disruptive innovations,
along with organizational resistance to change, are the top concerns for
boards of directors and business leaders around the world heading into
2018, according to the results of the sixth annual Executive
Perspectives on Top Risks Survey conducted by global consulting firm
Protiviti and the Enterprise Risk Management (ERM) Initiative in the
North Carolina State University Poole College of Management.
Released today, the survey report,
"Executive Perspectives on Top Risks for 2018,"
assesses the concerns of 728 board members and executives globally. The
results indicate that growing concerns around disruptive innovation
significantly outpace fears of economic uncertainty and regulatory
scrutiny, which have consistently been the top risk issues of board
members and executives over the past several years. Threats related to
cybersecurity are a top risk area for business leaders as well,
particularly in light of recent cyberattacks such as WannaCry, along
with those affecting major organizations like Equifax. Of particular
note, board members across all industries perceive a much riskier
environment in 2018 relative to 2017.
"Disruption and digital transformation are taking place across all
industries and threatening core business models," said Pat Scott, an
executive vice president with Protiviti. "It's clear from our latest
survey that there has been a major shift in the top concerns for
organizations. Digitalization-related risks have supplanted overall
economic conditions and regulatory scrutiny atop the list of risk issues
for board members and executives who are worried that new technologies
and their impact on established business models could outpace their
organizations' ability to keep up and remain competitive."
"It's no longer a question of if digital will upend your business, but
when," said Jim DeLoach, a Protiviti managing director. "While a number
of organizations already have digital strategies in place, digital
transformation needs to become entrenched as a core part of the
organization to ensure that companies are able to embrace disruptive
change in the current business environment. This risk plus heightened
concerns regarding resistance to change create a formidable challenge to
executives and directors. Leaders know that failure to keep up with the
rapid pace of change can place an organization in the position of
becoming captive to events rather than charting its own course."
The Top 10 Risks for 2018
Following are the top 10 risks identified in the "Executive Perspectives
on Top Risks for 2018" report:
1.Rapid speed of disruptive innovations and/or new technologies may
outpace our organization's ability to compete and/or manage the risk
appropriately, without making significant changes to our business model.
2.Resistance to change may restrict our organization from making
necessary adjustments to the business model and core operations.
3.Our organization may not be sufficiently prepared to manage cyber
4.Regulatory changes and regulatory scrutiny may heighten.
5.Our organization's culture may not sufficiently encourage the timely
identification and escalation of risk issues.
6.Our organization's succession challenges and ability to attract and
retain top talent may limit our ability to achieve operational targets.
7.Ensuring privacy/identity management and information security/system
protection may require significant resources for us.
8.Economic conditions in the markets we currently serve may
significantly restrict growth opportunities.
9.Inability to utilize data analytics and big data to achieve market
intelligence and increase productivity and efficiency may significantly
affect our management of core operations and strategic plans.
10.Our existing operations may not be able to meet performance
expectations related to quality, time to market, cost and innovation, as
well as our competitors, especially new competitors that are "born
digital" and with a low cost base for their operations.
From an industry perspective, the financial services and energy and
utilities industry groups saw the largest decrease in overall risk
concerns compared to 2017. This is likely due to reduced concerns about
macroeconomic risks and regulatory change, as reflected in the survey
findings. The technology, media and communications industry group
expressed the highest concern regarding the magnitude and severity of
light of the shifting risk landscape, it's particularly interesting to
observe an increasing concern among survey respondents that their
organization's culture may not sufficiently encourage the timely
identification and escalation of risk issues to senior management and
the board," said Dr. Mark Beasley, Deloitte Professor of Enterprise Risk
Management and director of NC State's ERM Initiative. "As boards of
directors and senior executives seek to improve their understanding of
emerging risk issues, they may need to re-evaluate how their
organization's culture might be impacting the robustness and
transparency of their risk identification and risk reporting efforts,"
The Executive Perspectives on Top Risks for 2018 survey was conducted in
the fall of 2017, and respondents represent both U.S.-based and non-U.S.-based
organizations across public and private sectors. The survey report also
provides detailed insights broken out by size and type of company,
respondent role and industry.