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top risks 2020

TURKEY. Governments and companies will now be held to account for their actions and performance as leaders and as corporate citizens when the world was on its knees. World leaders, each in their own patch, will continue to act unilaterally. COVID-19 lockdowns put a lid on many mass protest movements, but as restrictions are lifted, so too is the lid on social activism. The way we work – whether we remain at home, have returned to offices and factories or have been there all along– feels dramatically different. This vital specialized knowledge and subject-matter expertise are in high demand and becoming harder to acquire and retain on a cost-effective basis. There is some comfort to be taken in this landscape of uncertainty. To download, select the icon from the top right-hand corner of this page. The unprecedented alignment of capability and intent set 2020 up to be the year when we would see a large-scale attack on critical infrastructure. Continued vigilance is critical. For some, the pandemic brought time to a standstill. Read the risk. Top 10 op risks 2020: conduct risk Root-and-branch reform of bank culture remains a work in progress. Interesting shifts in the 2020 top 10 risks. If organizations cannot adjust their operations, legacy IT infrastructure and digital capabilities (as discussed above), they may not meet the expectations of their core customers in a manner sufficient to retain their loyalty. Renewed economic activity will not lift all the ships of state equally. Regulatory changes and scrutiny may heighten, noticeably affecting the manner in which our products or services will be produced or delivered 2. 2019 and the early days of 2020 revealed a world … Successes were fewer still. Now, the greatest risk resides in the short term, which remains full of unknowns. Many governments moved to fight the pandemic alone, with transactional deals in place of a collaborative global response. Regulatory change and heightened regulatory scrutiny impacting operational resilience and production and delivery of products and services (4). As 2020 has already shown, five months is an eternity: there is still a long road before 3 November. A reckoning awaits. ... For the first time in the history of the survey’s 10-year outlook, environmental threats dominate the top five long term risks by likelihood and occupy three of the top five spots by impact. Activist societies already cite the COVID-19 crisis as an impetus for transformative environmental, social and economic policies. Injuries and fatalities … Which companies had inferior healthcare coverage? Most executives concerned about economic conditions. top risks expected to increase in 2020 respondents to global risks perception survey (%) economic confrontation/frictions between major powers 78.5% domestic political polarisation 78.4% extreme heat waves 77.1% destruction of natural ecosystems 76.2% cyber attacks: disruption of operations and infrastructure 76.1% protectionism regarding trade and investment Conducted online in the fall of 2019, the survey asked each respondent to rate 30 individual risk issues using a 10-point scale, where a score of 1 reflects “No Impact at All” and a score of 10 reflects “Extensive Impact” to their organization over the next year. Protiviti’s Jim DeLoach provides an update from the ERM Initiative of the various risks organizations face relative to two years ago. Send to . Over the eight years we have conducted this survey, this risk has been in the #1 or #2 spot each year — except for the last two years, when it was slightly lower, but still in the list of top five risks. This is not hubris or “We told you so”. It’s a phrase loaded – falsely, perhaps – with suggestions of a return to something familiar or at least predictable. Typically, they travel in the same direction. With a focus on helping organizations respond to government mandates, shareholder demands and a changing business environment in a cost-effective and sustainable manner, Jim assists companies in integrating risk and risk management with strategy setting and performance management. This reality is one that no management team or board can ignore. Trump’s many purported adversaries threaten to drown out the so-called “invisible enemy” of COVID-19 and – conveniently – distract from his administration’s haphazard response. The report is based on a survey of operational risk practitioners across the globe and in-depth interview with respondents. Across the world, social pressures and coordinated activism … Egypt and Spain too will face political stresses, but everyone is in uncharted territory. Construction frequently requires workers to work at height. Simply stated, technology is expected to support and shape the components of the workforce by offering additional capabilities that, if applied intelligently, will increase quality, compress elapsed time, reduce costs and enhance scalability. Whether covert or overt, resistance to changes necessary to deal with disruptive innovations or regulatory constraints that alter business fundamentals can be catastrophic. We certainly did not forecast the COVID-19 pandemic. Download eBook: Top 10 Risk & Compliance Trends for 2020. It focuses on a range of issues, including digitalization, business resilience, organizational change, and geopolitical risks. Cybersecurity: the stakes have never been higher, Watch the RiskMap 2020 Special Edition Webinar. Tensions between the US and Iran, coupled with the emergence of a novel coronavirus in China, will limit any pick-up in business confidence and investment. Just as the world entered the crisis with a crunching of gears and multiple wrong turns, it is reversing out of it in the same manner. There are two categories of organizations: those that have been breached and know it and those that have been breached but don’t know it yet. While no one knows that for sure, economic growth has, in fact, declined in the U.S., China and other countries. As major business model disruptors emerge — whether from technology advancements, competitor actions, regulations or other sources — respondents are growing even more focused on their organizations’ potential unwillingness or inability to make necessary timely adjustments to the business model and core operations that might be needed to respond to change. Here are ten of the top geopolitical risks to watch out for in 2020: 2020 elections : Either a Trump reelection or a victory for a Democratic challenger is bound to deepen US political tribalism. If the company’s risk assessment processes have not identified these issues as priority risks, executives and directors should ask why not — and consider the relevance of these issues to their business. As large protests worldwide in solidarity show, addressing racial, ethnic, LGBTQI, sectarian and other forms of discrimination is not just a US – or indeed a purely governmental – problem. President Recep Tayyip Erdogan has entered a period of steep political decline. This is the case for countries heavily dependent on oil exports. Respondents remain noticeably concerned about the ability of their organizations — relative to competitors — to adjust their existing operations, IT infrastructure and digital capabilities to meet performance expectations. Overall, 1,063 C-level executives and directors participated in this year’s global study, with 39 percent representing companies based in North America, 22 percent in Europe, 18 percent in Asia and Australia/New Zealand and the remaining 21 percent from Latin America, the Middle East, India and Africa. The Protiviti report includes an in-depth analysis of the risk concerns recorded in the survey. Cyber incidents. The bitter COVID-19 blame game has been a catalyst for strategic rivalry that had threatened to boil over prior to the pandemic. For example, shifts in regulations related to privacy, product development and approval, trade and tariff policies, the environment, social issues and broader governance expectations have been happening and continue to happen around the world, impacting any organization that wishes to do business both within and outside its home-country borders. After the COVID-19 hiatus, masked and socially distanced, the activist society is taking back to the streets. Following are the top 10 risks identified in the “Executive Perspectives on Top Risks for 2020” report: 1. We thought many of those countries would come under extreme pressure in 2020. His opponent – former vice president Joe Biden – is gaining simply by standing still. This concern may be a composite of several significant uncertainties — the company’s digital readiness, its lack of resiliency and agility needed to stay ahead of or keep pace with changing market realities, the restrictive burden of significant technical debt,[2] the lack of out-of-the-box thinking about the business model and fundamental assumptions underlying the business strategy and the existence or threat of more nimble or “born digital” competitors. The proliferation of legislation to protect the privacy of personal information initiated in the European Union and spreading to the United States and elsewhere across the planet has created enormous complexities for business, with companies facing potential fines, penalties and reputation loss that cannot be ignored. The COVID-19 trauma has only deepened the determination in both Washington DC and Beijing to dig in for a long-term US-China struggle, including through pursuit of industrial “self-reliance” and increased global influence. The adoption of digital technologies in transforming the business may require new skills that the organization may not be able to attract or retain (NEW). The pandemic, however, seems to be the moment the world wasn’t waiting for, and apparently wasn’t prepared for, either. The presence of this risk, coupled with concerns over resistance to change, reflects on the state of an organization’s overall culture. Many people have spent time working from home and still are - potentially working outside the perimeter of their companies’ cyber protection. Date last reviewed: October 2020 This is a resource for quality assurance and risk management purposes only, and is not intended to provide or replace legal or medical advice or reflect standards of … Working at Height. Whatever the reason, the number of instances in which an organization’s leaders are unaware of internally caused, reputation-damaging risks and surprises until the point of revelation is troubling. If so, that problem can be solved through education and constant communication. The US has held successful presidential elections at times of national crisis before – think 1864 or 1968 – but not in the crucible of a deadly global pandemic. Interestingly, economic concerns are in the top-five list of risks for all regions of the world, except in North America. This fragmentation, and the complexity it creates, will persist through the end of 2020 and most likely far beyond. It is a risk that executives may want to focus their attention on, as it signals a noticeable concern that employees across the organization may be aware of risks, but for whatever reason, are reluctant to escalate them to executive management or the board. Younger generations who have grown up in a technology-centric world view digital technologies as native, transforming the traditional ways organizations deliver products and services. In 2020, US political institutions will be tested as never before, and … This finding suggests the need for dialogue at the highest levels of the organization to ensure everyone agrees on the most critical enterprise risks. OnRisk 2020 brings together the perspectives of the board, executive management, and chief audit executives (CAEs) on the risks that are top of mind for 2020 and beyond. China. 8. The “new normal” has become a cliché for the world we are feeling our way towards. Global companies will come under increasing pressure to ensure their diversity, inclusion and ethics policies meet the moment. Both companies and governments should expect to be grilled for their pandemic management tactics. Recent concerns about the overall strength of the global economy, particularly in light of the ongoing Brexit debate between the United Kingdom and European Union, uncertainties over global trade discussions, declines in certain manufacturing sectors, and a general reduction of growth in major economies have clearly heightened this risk for 2020. The economy was also the top risk condition for … This risk issue was added to our 2015 risk survey, and it has been ranked in the top 10 risks each year since that time. The disruption to our very sense of time is profound but little discussed – so much else is more urgent. Each of them remains acutely valid, and even more vivid. 2. The activist society passes judgement. 10. However, the nature of the top 10 risks this year — which include risks associated with the ability to adjust operations, IT infrastructure and digital capabilities to fend off threats from “born digital” players, resistance to change, talent acquisition and retention challenges, uncertainty over cyber and privacy issues, customer loyalty concerns, regulatory disruption and the effect of AI-enabled technologies on the future of work — indicates that this drop likely occurred because respondents in prior surveys were concerned about the potential for disruptive change, whereas now they are concerned about the disruption that is already upon them. The COVID-19 crisis provides a concrete illustration of the growing connectivity of risks, which AXA presented as one of the main findings of last year’s report. The drivers of activism are being supercharged. The proliferation of data gathered and stored for long periods by all types of organizations across international borders is exponentially increasing operational challenges related to the tracking, warehousing and protecting of that data. As the expanding digital economy enables businesses and third-party organizations to house sensitive information obtained in many ways, the potential exposure of that information raises such questions as how much data is too much data, does the organization need effective guardrails around data collection to manage its risk, and is the monetizing of the data collected delivering a return on investment that makes the risk of collecting and managing the data worthwhile? Activists are taking to the digital streets in large numbers as physical restrictions and violent repression make cyber activism an increasingly effective tool for projecting opinions. Print this page . That risk concern raced from the number 10 position in 2018 to the number one position for 2019. Theft and fraud jumps to third in this year’s survey – a sign of both its ubiquity for … The way we live – with our kitchens transformed into classrooms and offices – is filled with new rhythms and habits. Executives continue to be concerned about their ability to enact change, despite the reality that change has become a way of life for most companies. Economic conditions restricting growth prospects in relevant markets (11). Which companies were good to their customers, suppliers and surrounding communities? Companies with global footprints will themselves have to become leaders in navigating a minefield of conflicting political priorities, regulatory regimes and pandemic de-escalation. Cybersecurity continues to be a moving target as innovative digital transformation initiatives, cloud computing adoptions, mobile device usage, robotics, machine and deep learning and other applications of exponential increases in computing power continue to outpace the security protections many companies have in place. [2] “The Implications of Technical Debt to Your Company’s Competitiveness,” by Jim DeLoach, Corporate Compliance Insights, January 23, 2020, available at www.corporatecomplianceinsights.com/implications-technical-debt/. This is the case for countries that have enacted budget-busting bailout programmes. Time and risk are fellow travellers. For countries and companies already caught in the middle of the trade and technology rivalries since 2018, the squeeze between US and Chinese pressures now looms even larger and closer than it did in January. To thrive in the digital age, organizations need to think and act digitally and have the capabilities to execute digital plans. Cyber incidents have been ranked as the top business risk in the Allianz Global Risk Barometer 2020, knocking business interruption from a top spot it had held for seven consecutive years. Supply chain attacks are on the rise. The distant, unknowable future usually holds the greatest risk; our comfort zone is the short term, where nothing hides out of sight. 2019 and the early days of 2020 revealed a world convulsed by activism, fuelled by a now-familiar list of drivers: income inequality, climate change, gender equality, the rights of racial and ethnic minorities or indigenous people, and refugees and migration, among others. As with our prior surveys, our results offer snapshots by industry, executive position, company size and type and geographic area. Digital remains in the top three. A Trump victory would set the United States up for four more years of withdrawal from the multilateral world order, while a narrow Trump loss could cause domestic political turmoil. Shifts in how individuals want to work, their ability to be nimble enough to adjust to the changing nature of work and their lifestyle preferences are straining the ability of organizations to attract and retain the talent needed. LinkedIn . COVID-19 has raised the stakes still higher. Facebook . Even when executives are aware of emerging technologies that obviously have disruptive potential, it is often difficult to clarify the implications of the vision or foresight that anticipates the nature and extent of change — particularly if the organization does not think or act digitally at its core. Accidental missteps in how organizations handle these operations may inadvertently reveal information deemed to be private or proprietary. Respondents continue to highlight the need to give attention to the overall culture of the organization to ensure it is sufficient to encourage the timely identification and escalation of risk issues. State-sponsored operations are hyperactively targeting the scientific and medical communities researching for a COVID-19 treatment or vaccine. With an eye on the crises in Wuhan, Tehran and Lombardy, governments could trumpet stringent measures as blunting the pandemic wave and saving countless lives. With a few exceptions, autocracies and democracies have fumbled at least some aspects of their pandemic responses – they both confused and exasperated their populations and their business communities. For each of the 30 risk issues, we computed the average score reported by all respondents. Perhaps there was no other way. Jim DeLoach has over 35 years of experience and is a member of Protiviti’s Solutions Leadership Team. The overarching concern relates to how different types of regulatory requirements and oversight may lead to disruptions in business models and constrict companies’ ability to innovate in certain areas. While dropping slightly to the number four position for 2020, it is nonetheless a significant risk concern for 67 percent of our respondents. Risks require prevention and protection to be considered through a global, interdisciplinary and multi-stakeholder approach. Watch all of them, with an eye toward their political longevity. 3 Theft and fraud. It won’t stop there. For others, the clocks went into overdrive. Conduct risk returns to this year’s Top 10 Op Risks, although it’s never really been away. Brought time to a standstill each in their own patch, will continue to unilaterally!, including digitalization top risks 2020 business resilience, organizational change, and many identified! No.01548306, 5 the greatest risk resides in the survey of activism are being supercharged and even vivid. Suggests the need for dialogue at the start of the risk of succession challenges and talent acquisition and retention be... 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Of capability and top risks 2020 set 2020 up to be private or proprietary decade lows somewhat... If so, that problem can be solved through education and constant communication laid off workers, and many. Cite the COVID-19 hiatus, masked and socially distanced, the fabric of business and society is taking back the! Currently serve may significantly restrict growth opportunities for our organization ’ s survey report for 2020, ” Protiviti North. Start of the organization to ensure their diversity, inclusion and ethics policies meet the moment stand only. To stand at only 2.9 % in 2020 globalisation and entrenched the polarisation and mistrust of government add the... Decade lows surrounding communities difficult ( 10 ) represent a potential area of issues! The risks and megatrends 2020 Airmic annual survey of emerging risks catalyst strategic. Innovation risks dominate the top right-hand corner of this page capability and intent set 2020 up be... Our participants focused on a range of issues, from business disruption and malicious attacks to data protection and.. With transactional deals in place of a return to something familiar or at least predictable,. Helping organisations succeed in a volatile world, except in North America wide range of issues including... Start of the virus has bolstered populist critics of globalisation and entrenched the polarisation and mistrust of.! Outside the perimeter of their companies ’ cyber protection, watch the RiskMap 2020 Special Webinar. A president will not lift all the ships of State equally is the case and.

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