Most executives rated the business environment as risky, although improving relative to 2013. The 2014 scores for a majority of risks assessed in the study are lower than their respective scores in the prior year, suggesting a slight improvement in the risk environment. Interestingly, board members appear to view the business environment as more risky than does management. By contrast, CEOs seem to have the most optimistic views about the risk environment.
"One possible reason for directors perceiving the business environment as riskier than management does is that the risks with the highest ratings were primarily strategic in nature and many directors tend to focus more on strategic rather than operational issues," said Jim DeLoach, a managing director with Protiviti. "With respect to CEOs, they tend to focus heavily on the strength of markets. The global economy was showing signs of improvement during the survey period, which could have had a positive influence on the participating CEOs, resulting in a lower assessment of macroeconomic and strategic risks."
The Top Ten Risks
According to the 374 survey respondents, who included board directors, C-suite executives and other top management from companies across a range of industries, the top 10 risks that present the greatest concerns this year are:
- Regulatory changes and heightened regulatory scrutiny
- Economic conditions restricting growth
- Uncertainty surrounding political leadership affecting U.S. and international markets
- Challenges related to succession-planning and talent acquisition/retention
- The ability to grow organically through customer acquisition
- Cyber threats that have the potential to disrupt core operations significantly
- Resistance to change restricting necessary adjustments to the business model and core operations
- Privacy/identity management and information security/system protection
- Anticipated volatility in global financial markets and currencies
- Uncertainty surrounding costs of complying with healthcare reform legislation