Top 10 Global Business Risks for 2014

I came across a graph earlier in the month outlining what the Top 10 Global Business Risks are according to the Allianz Risk Barometer Survey.

This serves to confirm a number of issues that have been “top of mind” for a while – and a number of which have been in the news recently, not just globally but also here in South Africa.

Here are my comments on a few of these – full list at the end of the blog.

1. Business Interruption, Supply Chain Risk

  • Without a doubt the nature of supply chains has changed irreversibly over the past few years – we have seen a change in terminology from supply chain, to value chain culminating in the current view which stresses the inter-dependency of all organisations on a number of other – the term used is the extended enterprise.
  • We can no longer just address our own risks (if there ever was such a thing) we now need to understand and act knowing that the risks our supply chain partners face are now our very own risks!
  • A challenge to any part of the supply chain is a challenge for the entire supply chain.

4. Changes in legislation and Regulation

  • South Africa has seen one of the highest rates of new legislation since 2000, with notable recent changes directly affecting the way business is done. The Competition Act, new Companies Act, the Consumer Protection Act and the Protection of Personal Information Act are just a  few examples of the environment transforming legislation which has in many ways “changed the game” for business in South Africa.
  • At the same time business has radically globalised and companies now very often operate in a number of different countries each with their own legislative framework to take into account making the challenge for directors and decision makers more and more challenging.

6. Loss of reputation or brand value

  • One of the most valuable assets in a company is its brand – and the value attached to the brand is not always the easiest thing to quantify or manage.
  • Challenges to the brand or reputation can also come from a number of different directions – so understanding and managing the companies engagement with its entire range of stakeholders is becoming a massive priority.

8. Cybercrime, IT failures, espionage

  • The fact is that IT is no longer just a tool we use in business – it has become an integral part of our business model and something we are totally dependent on.
  • As such IT is perhaps one of the biggest risk areas that companies face today – the management of which needs to be governed at the highest level of the organisation.

A few further comments.

Firstly, this list is interesting because about 6/10 of these are issues within the control of the company, and only 4/10 are totally external.

(My rationale is that Business interruption, supply chain risk, fire, explosion, (6) loss of reputation or brand value, (8) cybercrime, IT failures, espionage, (10) quality defects, serial defects – are within the control of the directors of a company (certainly a measure of control))

Secondly the following governance areas are prioritised

  • Risk Governance
  • Compliance
  • Strategy Governance
  • Stakeholder Engagement
  • IT Governance
  • Quality Governance

Here is the complete list

Top 10 global risks for 2014

I would love your thoughts or comments on this – please use the comments below to let me know how you see this.

Thanks

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