A new report from consulting firm Protiviti finds corporate c-level executives have shown a sudden spike in their concern over the “digital readiness” of their organizations, particularly as older companies struggle to embrace technology and compete with “born digital” players.
In its 2019 Executive Perspectives on Top Risks survey, published last week, Protiviti surveyed 825 board members across industries and across geographic markets to understand how corporations today are preparing for the year ahead. The report uncovered common themes about the biggest concerns for these professionals, with risks like cyber threats and regulatory changes unsurprisingly landing near the top of the list.
But according to Protiviti, the c-suite corporate leaders are most concerned about the ability of their firms to compete against those born-digital organizations, with this risk rising from number 10 in 2018’s report to number 1 in the 2019 survey. Indeed, concerns over digital disruption and readiness are threaded throughout the top-1o list.
In addition to cyber threats, professionals named the rapid pace of innovation and development of disruptive technologies, privacy and information security, and the inability to deploy big data analytics as major concerns.
On the whole, researchers noted, the c-suite perceives 2019 risks as greater than in years past.
“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 North Carolina State University Enterprise Risk Management (ERM) Initiative Director and ERM Professor Dr. Mark Beasley, quoted in Protiviti’s release. “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.”
A Closer Look At The Risks
Compared to the last two years, Protiviti’s 2019 report found that c-level executives consider 2019 risks to be more intense, with all top-10 risks rated as higher risks than they were last year.
To conduct its research, Protiviti provided c-level executives with a list of 30 risks, including macroeconomic, strategic and operational. Most survey respondents ranked each of the top 10 risks as having a “significant impact,” with eight of the top 10 averaging a 6 on the 10-point scale and, therefore, considered to have a “significant impact.”
But while there are global themes in how corporate executives view many of these risks, researchers noted the geographic differences that emerged from the report, too. Interestingly, c-level executives in North America were significantly less likely to rank their top-five risks as having a “significant impact,” while Latin America and India executives reflected the most severe levels of concern for their top risks. With regard to regulatory risks, European executives showed particularly high levels of concern — unsurprising considering the level of regulatory shifts and the anticipation of Brexit disruption.
In this high-risk climate, executives told Protiviti that they have increased their interest in allocating more resources and efforts to mitigating risk and adopting risk identification and management tools and strategies, as compared to last year’s report. The financial services sector emerged as the industry with the greatest desire for risk mitigation strategy and tools.
Finally, Protiviti highlighted some of the biggest changes between 2018’s and 2019’s risk rankings. In addition to perceived risk overall emerging as more severe this year compared to last, the survey also brings attention to the anxieties that board-level executives feel with regards to how their companies will be able to digitally transform.
“Concerns that existing operations and legacy IT infrastructure may not be able to meet performance expectations as well as competitors that are ‘born digital'” came in tenth place in last year’s survey; this year it is number one, chosen by five out of six industry groups as the biggest concern for 2019.