Business Risks 2013 Global Report: Stay on Top of Uncertain World– Creative Risk-Taking is Essential for Success…

Business risks are the driving-levers of business, and creative risk-taking is essential for success… thoughtless risks are destructive, but perhaps even more wasteful is thoughtless caution which prompts inaction and promotes failure to seize opportunity. ~Gary Ryan Blair

Risks are important part of business and everyday life. Taking wise risks can benefit your business and help you reach and exceed your goals. But, it may be difficult to determine which risks are worth taking, when you’re considering your 2013 projects, investments, plans… For each decision you make, compare the benefits to the potential risk.

Managing risk means thinking through anything that could potentially go wrong in your operation and determining whether or not a control should be used to mitigate that risk. What it all comes down to– is your financial and psychological ability to bear risk.

The rapid increase of complexity is becoming a major concern of 21st-century, i.e., turbulent economy, highly complex processes, organizations difficult to manage… Highly complex business systems are fragile, and can suddenly fail– they are uncontrollable-unpredictable and the enemy of sustainability. Moving from risk management to high complexity management is the new paradigm…

For example, there is– Euro debt crisis, U.S. deficit and debt crisis, slow global growth, unrest in many regions… then add to this the ‘Forum Global Risks 2013’ Report that quite clearly highlights chronic global financial imbalances and possibility of major systemic financial failure– then, these become ‘top 2013 business risks’ facing the global economy. The new reality is a prolonged global economic malaise, particularly in major economies experiencing economic austerity…

International Monetary Fund (IMF) warned that; risks for serious 2013 global slowdown are alarmingly high. It added that this would mean a recession in wealthy nations and serious slowdown in emerging nations. According to Mark Garrett; Europe has entered a 10-year stagnation period, just like Japan did…  Equally, China’s new leadership is clearly worried about the economy. Premier-designate Li Keqiang told China’s National Congress, in November, the period ahead is full of unprecedented risks and challenges.

According to Paul Hodges; as we enter 2013 companies must embark on fundamental change in mind-set and culture. They need to be aware of the risks of major economic disruption and guard against these, as well as they can. But at the same time, they must move beyond short-termist approach of financial markets that created today’s economic uncertainty…

According to Prof Michael Porter; our-field of vision has simply been too narrow and has meant companies have overlooked opportunities to meet fundamental societal needs. Technical and business model innovation is now essential, if companies are to profit from growth markets…

According to Ernst & Young’s 2013 Report; market volatility, pricing pressures, variations in market performance and demanding stakeholders have all contributed to the global economy that encourages competitive drive. And, with drive come opportunity. For that reason, this year’s business risk report looks at both– top business risks and top business opportunities.

As in prior years, we have taken a bottom-up approach, gathering opinions from leading industry-based and academic commentators, across seven global sector groups. In addition, this year, we conducted a second wave of research. This comprised a large-sample survey of companies and governments in 15 countries.

We interviewed a panel of more than 75 sector commentators to identify strategic challenges facing business in seven sectors in 2013. We then surveyed more than 700 leading organizations in 15 countries to discover how companies and governments perceive and are addressing the risks and opportunities that were identified– or in some cases, are struggling to address these challenges:

  • Top Business Risks: Regulation and compliance; Cost cutting; Managing talent; Pricing pressure; Emerging technologies; Market risks; Expanded government role; Slow recovery/double-dip recession; Social acceptance risk/CSR; Access to credit.
  • Top Business Opportunities: Improving execution of strategy across business functions; Investing in process; tools and training to achieve greater productivity; Investing in IT; Innovating in products, services and operations; Emerging market demand growth; Investing in cleantech; Excellence in investor relations; New marketing channels; Mergers and acquisitions; Public-private partnership.

In the article Which Risks Loom Largest for Business in 2013? by ‘The Economist’ writes: Reading reports on risk can have a numbing effect. The more you read the more risks you see; eventually, you succumb to nervous exhaustion. I recently read the publication of two particularly angst-inducing accounts: ‘Global Risks 2013’ by ‘World Economic Forum’  (WEF), and ‘Top Risks 2013’ by ‘Eurasia Group’.

These reports not only provide warnings about dangers that can be avoided through better planning or clearer thinking. They also suggest opportunities-for as they say–it’s a basic law of business that one man’s cliff is another’s ladder. The Eurasia Group’s survey focus exclusively on political risks. Eurasia’s big idea is that the worst risks now come from the emerging world. The rich world has demonstrated that it’s capable of managing risks fairly well– indeed, many rich countries are antifragile (a word that means ‘adept at coping with disruption’ and it’s the title of a book by Nassim Taleb, a scholar of risk).

According to this report; the U.S. could be on the cusp of strong growth, but the emerging world has much less experience of managing volatility or coping with crashes… In our opinion this may be too optimistic about the rich world, e.g., Spain and Italy are hardly antifragile and U.S. is testing the markets’ patience. But it’s true that business folk pay too little attention to political risk in the emerging world (which is likely to account for three-quarters of global economic growth in 2020).

Also, investors often lump very different countries together into a single asset class (e.g., the BRICs). Yet as Eurasia Report makes clear, Russia is much riskier than Brazil: its energy industry is stalling and its middle class is losing patience with kleptocracy. The more the center of economic gravity shifts towards emerging markets, the more business people  must recognize that the emerging world is a horribly complicated place…

According to ‘WEF Global Risks 2013’ Report; global risks are becoming ever more interconnected, and governments must engage the private sector to help them tackle the most serious threats to economies and populations, according to a panel of experts– at the launch of their report on 2013’s biggest global risks. The report survey– 1,234 respondents from business, academia, nongovernmental organizations, international organizations, public sector… and says, that one of the biggest challenges facing companies and countries is the– interconnected nature of risks…

According to Axel P. Lehmann; Risks don’t stop at your factory door… risks don’t stop at national borders; countries must strengthen their risk management approaches… According to John Drzik; governments must invest more in risk management and adopt a multidisciplinary approach to addressing risks…

In the article Five Emerging Risks To Keep An Eye On in 2013 by Andrea Bell writes: Business owners must start thinking about the 2013 risks and be prepared for what the year may have in store. Let’s look at five big emerging risks:

  • Cyber Attacks: Businesses must ensure that they have the most up-to-date security systems, and staff adequately trained in proper data security.
  • Social Media: Social presences can create a number of risks: Misuse can lead to serious reputation damage and data security– accidentally sharing something you shouldn’t, it can be damaging…
  • Climate Change/Extreme Weather: Extreme weather events are more common– business cannot afford to ignore the potential for natural disaster.
  • Economic Stability: U.S. and Europe find themselves in delicate financial positions, at the moment– businesses must consider their financial position and be prepared, if the worst does happen.
  • Something Else: The nature of emerging risks is they come from nowhere. Business must assess and manage risk on an ongoing basis.

In the article IT Risks That Will Crash Your Network in 2013 by Mark Aspillera writes:  A recent study by Gartner predicts that IT spending is going to crest $2 trillion this year. It’s a small increase from 2012′s $1.92 trillion figure, but still a notable one. There are many reasons, but bottom-line is that networks and IT technology are even greater priority for many enterprises going into 2013. IT professionals, in 2013, will have greater power and even more responsibility, especially with economic uncertainty and turbulence, abound, and budgets run lean.

Despite all the ongoing advances in IT tech, however, security and infrastructure dangers are still as much of a problem as they ever were, and look to remain that way for foreseeable future. Here is a handful of prescient threats that IT will be facing in 2013.

  • Bring Your Own Device (BYOD): Key driving factor behind 2013 up-tick in IT spending is the continued proliferation of mobile devices in the enterprise.
  • Social Engineering Slip-Ups: Weakest link in any security plan is the end-user…
  • Bigger, Sneakier Malware: Malware has been around for years, but a particularly nasty strain, the polymorphic malware attack, is set to become more prevalent in 2013.

Economic slow-down still tops the list of the major risks facing business. In light of the current economic global uncertainties, and ongoing Euro and U.S. crisis; there are for the first time several new risks entering the top list, including; business failure to innovate, meeting customer needs, technology-system failure. Moving forward in 2013, businesses must understand their company’s unique range of risks, and it’s essential that they begin to lower their total cost-of-risk…

According to Guy Scott; while it’s difficult to predict which risks will emerge in 2013 and demand attention, we can be certain that successful companies will not be the ones that adopt a ‘wait and see’ approach. Instead they will be the ones that prepare themselves thoroughly to anticipate future needs and undertake the difficult process of finding solutions to address them. They will not just fix what is broken, but view their new circumstances as a portal to the next generation of business opportunity…

According to the ‘Fifth Annual Political Risk Atlas’ by Maplecroft says; situations of societal forced regime change across the Middle East and North Africa, coupled with the prevailing high risk of similar types of regime change in other nations, poses significant risks to business continuity plans. The risk analysis notes– Syria, Libya, Sudan, Yemen, Guinea-Bissau, DR Congo, Zimbabwe, Madagascar, Mali and Bangladesh are potential key flashpoints in the world, and they could impact neighboring countries, as well, spreading risk across the wider regions.

Business risks can emerge in many forms, shapes… suddenly, and companies must be prepared to engage the range of issues that could impact their business…