The 2009 Ernst & Young Business Risk Report
Ernst & Young, in conjunction with Oxford Analytica, interviewed more than 100 analysts, representing 11 industrial sectors and more than 20 academic disciplines. Respondents were asked to identify and provide commentary and insight on the top 2009 business risks likely to face leading global firms in their sector. Their views on the major long term issues threatening businesses in 2009 have been encapsulated in the attached Report. Risks rated as having the greatest impact across the largest number of sectors were chosen as the top 10 risks for global business in 2009. This year the credit crunch displaced regulation and compliance from last year’s top spot.
There were a number of unexpected outcomes from this year’s study. For instance, ‘business model redundancy’ was ranked as the 9th top business concern. In light of the fact that many sectors are having to make long-established business models obsolete, it was surprising to see that a review of an organisation’s strategy is so far down the rankings. There was also a striking result for ‘radical greening’ which shifted dramatically to fourth place from ninth last year. There was a similar result for ‘managing talent’, which only came in at seventh place particularly in light of new, emerging human capital risks tied in to corporate governance. Following the bailout packages, executive pay and misaligned compensation structures, which have become a topic of political debate, one could have expected it to be higher up the agenda.
Given the level of change that has occurred this year, it is just not acceptable to dust down and roll forward risk and audit plans. The 2009 top 10 risk rankings (2008 rankings shown in parentheses) are:
1. The credit crunch (2)
2. Regulation and compliance (1)
3. Deepening recession (New) (This category includes macroeconomic factors, including difficulties companies have in generating income and reducing expenses)
4. Radical greening (9)
5. Non-traditional entrants (16) (This category includes companies entering a sector from adjacent markets or distant geographies)
6. Cost cutting (7)
7. Managing talent (11)
8. Executing alliances and transactions (7)
9. Business model redundancy (New)
10. Reputation risks (22)
Because of the multi-faceted and deep impact of the current economic climate, companies need to see the related risks not as separate, but as connected. Increasingly, CEOs and CFOs need to challenge how their business identifies and monitors strategic risk. Ultimately, strategic risk management has still not benefited from the investments and developments made in other areas of risk management such as finance and operations. This could leave a business unintentionally exposed to strategic threats and missing opportunities to drive competitive advantage by taking strategic risk-based decisions.
Please visit the E&Y website for downloading this report which is free, its such a excellent document prepared by professionals which makes interesting reading, filled with content, and data.
There were a number of unexpected outcomes from this year’s study. For instance, ‘business model redundancy’ was ranked as the 9th top business concern. In light of the fact that many sectors are having to make long-established business models obsolete, it was surprising to see that a review of an organisation’s strategy is so far down the rankings. There was also a striking result for ‘radical greening’ which shifted dramatically to fourth place from ninth last year. There was a similar result for ‘managing talent’, which only came in at seventh place particularly in light of new, emerging human capital risks tied in to corporate governance. Following the bailout packages, executive pay and misaligned compensation structures, which have become a topic of political debate, one could have expected it to be higher up the agenda.
Given the level of change that has occurred this year, it is just not acceptable to dust down and roll forward risk and audit plans. The 2009 top 10 risk rankings (2008 rankings shown in parentheses) are:
1. The credit crunch (2)
2. Regulation and compliance (1)
3. Deepening recession (New) (This category includes macroeconomic factors, including difficulties companies have in generating income and reducing expenses)
4. Radical greening (9)
5. Non-traditional entrants (16) (This category includes companies entering a sector from adjacent markets or distant geographies)
6. Cost cutting (7)
7. Managing talent (11)
8. Executing alliances and transactions (7)
9. Business model redundancy (New)
10. Reputation risks (22)
Because of the multi-faceted and deep impact of the current economic climate, companies need to see the related risks not as separate, but as connected. Increasingly, CEOs and CFOs need to challenge how their business identifies and monitors strategic risk. Ultimately, strategic risk management has still not benefited from the investments and developments made in other areas of risk management such as finance and operations. This could leave a business unintentionally exposed to strategic threats and missing opportunities to drive competitive advantage by taking strategic risk-based decisions.
Please visit the E&Y website for downloading this report which is free, its such a excellent document prepared by professionals which makes interesting reading, filled with content, and data.
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