Business leaders are facing almost permanent disruption.
BDO’s Global Risk Landscape 2024 report found that 84% of executives feel that the global risk landscape is more defined by crisis now than at any time in recent history. In fact, the firm said organisations need to change the way they respond to risks if they want to stay competitive.
“While all organisations need to be alive to the risks they face, they also need to be nimble enough to respond in a way that keeps their business moving forward,” Tim Foster, BDO’s head of Risk Advisory Services, said in a news release.
BDO polled 500 C-suite business leaders from around the world in February 2024.
There is a shift in what risks leaders find most concerning. Regulatory risks are the No. 1 risk that leaders say their organisations are unprepared for, with 37% of respondents citing it as a major concern. That’s up 13 spots from last year.
Supply chain risk was No. 2, most likely a response to economic uncertainty and inflation. Geopolitical tensions rose three places to third. Cyber risk, the second-biggest risk highlighted in 2023, dropped to fifth place in 2024, while environmental risk dropped to ninth.
Bend, don’t break
An antifragile business mindset means seeking opportunity in disruption and turning risk into a competitive advantage, and 49% of business leaders already perceive their organisation as antifragile.
But some of the data doesn’t support that view. Only 7% of leaders said their organisations were “risk welcoming,” and only 19% said they were proactive when dealing with risk — key traits of antifragile businesses.
“Few organisations have the necessary structures to support an antifragile approach to risk,” the report said.
AI optimism is down
The percentage of business leaders who see artificial intelligence as an opportunity for their organisation dropped to 59% from 83% in 2023, possibly because of organisations trying to separate the hype from the reality and what it really means for their business.
“At first, everybody thought there was tonnes of opportunity with AI, but then people started getting into it and realised it’s not as easy to implement because it’s very overwhelming — there’s just so much to do and so much to figure out,” Kirstie Tiernan, data analytics practice leader, said in the report.
Some organisations shelved their immediate AI plans once they began exploring its potential because they discovered they were not capable of using it.
Other findings in the survey:
- 60% of business leaders said risk velocity is increasing.
- 92% of business leaders are already using or considering using AI tools for risk management.
- 65% of business leaders said their company is delaying business decisions until after this year’s elections.
- 46% of business leaders said they would be willing to embrace supply chain risk to drive competitive advantage.
— To comment on this article or to suggest an idea for another article, contact Kevin Brewer at Kevin.Brewer@aicpa-cima.com.
