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From a global, online survey executed at the end of 2020 with more than 1000 C-level executives and directors across multiple industries, with broad geographic representation, the results showed significant uncertainties and risks were expected over the short term as well over a 10-year horizon.
In the table shown below lists the most rated risks themes in order of priority companies expect to face over the next decade to 2030.
# | Top Risks for 2030 |
1 | Adoption of digital technologies may require new skills that are in short supply |
2 | Impact of regulatory change and scrutiny on operational resilience, products and services |
3 | Rapid speed of disruptive innovation may outpace the ability to compete |
4 | Leadership succession challenges; ability to attract and retain talent |
5 | Privacy, identity management and information security challenges |
6 | Substitute products or services may arise that affect our business model |
7 | Sustaining customer loyalty and retention may be difficult as preferences and demographic shifts evolve |
8 | Ability to compete with “born digital” and other competitors |
9 | Ability to utilize data analytics and “big data” to achieve market intelligence and increase efficiency |
10 | Cyber threats |
Key take-aways we can learn from this list and the outcome of the survey are summarized below.
Facing the next decade with confidence requires positioning the organization for a disruptive future
When business leaders look to 2030, they are mostly concerned about the risks summed above. A trust-based culture, effective utilization of data analytics and the ability to pivot in the face of disruptive change will all prove vital to sustaining the organization’s relevance over the next decade.
Leaders are concerned about the changing nature of work
The current job functions will be displaced by the widespread adoption of e.g. artificial intelligence (AI), automation, virtual reality simulations and digital advances. Can an organization successfully upskill or reskill their employees? New job functions are created, which will likely involve interpreting and acting on customer data to drive improvements in processes, products and services. To adapt, companies have to formulate how and where they need to skill their workers, how they will execute their plans and how to achieve the business outcomes they expect.
Top talents are needed in order to compete in a disruptive environment. But how to source and retain these talents?
Regulatory risk is elevated when viewed over a longer time horizon
The second biggest risks companies expect in the coming 10 years is the regulatory change in how products and services are provided. This risk is expected to come with future environmental legislation as well as laws and regulations that will drive social change, and increase taxes.
The message for the next decade: Fasten your seat belts
A major difference between the expectations for 2021 (short term) and the next decade is the risk associated with the rapid speed of disruptive innovations enabled by new and emerging technologies (e.g., AI, automation, machine learning, hyper-scalable platforms, and increasing bandwidth through 5G data transmission) and/or other market forces outpacing an organization’s ability to compete and/or manage change appropriately without making significant changes to its business model.
That risk was ranked 18 for 2021 but jumped to the third-ranked risk for 2030. Clearly, leaders are expecting disruptive change over the next decade. And why not? Look at the change that’s occurred over the previous decade. It’s been a wild ride!
Conclusion
The board of directors may want to consider the above risks in evaluating the company’s strategic outlook in the context of the risks inherent in its operations. If management has not identified these issues in the formal risk assessment process, directors should consider their relevance to the company’s business and ask why not.
Want to read more? Please read this article on protivity.com: HERE.
