Cybersecurity has come to the forefront of risk oversight for board members and C-suite executives, according to the third annual global survey of business executives by Protiviti.
Jointly produced by global consulting firm and the enterprise risk management (ERM) Initiative at the North Carolina State University Poole College of Management, ‘Executive Perspectives on Top Risks for 2015’ summarises the concerns of the 277 board members, C-suite and other top-level executives across industries who participated in the survey
Fifty-three per cent of the global survey respondents indicated that insufficient preparation to manage cyber threats is a risk that will “significantly impact” their organisations this year. Following a string of data breaches in the past year, cyber threats jumped to number three this year, up three rank positions in year-over-year (YoY) survey results, reflecting increased concern about operational and reputational damage associated with potential breaches.
“Our survey findings indicate that operational risk issues are keeping many senior executives up at night,” said Mark Beasley, Deloitte professor of ERM and NC State ERM Initiative director. “Given encouraging signs in the economy, we’ve observed an overall shift in focus from macroeconomic risks to operational risks, which had the greatest increase in risk scores from 2014. Notably, however, CEO respondents remained extremely focused on macro trends affecting their business.”
For the third consecutive year, regulatory changes and heightened regulatory scrutiny was the number one risk on the minds of board members and corporate executives; 67% indicated that it will “significantly impact” their organisations.
The top 10 risks identified in the annual risk survey and the percentages of respondents who identified each risk as having a “significant Impact” on their business were as follows.
- Regulatory changes and heightened regulatory scrutiny may affect the manner in which our products or services will be produced or delivered (67%).
- Economic conditions in markets we currently serve may significantly restrict growth opportunities for our organisation (56%).
- Our organisation may not be sufficiently prepared to manage cyber threats that have the potential to significantly disrupt our core operations and/or damage our brand (53%).
- Our organisation’s succession challenges and ability to attract and retain top talent may limit our ability to achieve operational targets (56%).
- Our organisation’s culture may not sufficiently encourage the timely identification and escalation of risk issues that have the potential to significantly affect our core operations and achievement of strategic objectives (51%).
- Resistance to change may restrict our organisation from making necessary adjustments to the business model and core operations (49%).
- Ensuring privacy/identity management and information security/system protection may require significant resources for us (52%).
- Our organisation may not be sufficiently prepared to manage an unexpected crisis significantly impacting our reputation (46%).
- Sustaining customer loyalty and retention may be increasingly difficult due to evolving customer preferences and/or demographic shifts in our existing customer base (48%).
- Our existing operations may not be able to meet performance expectations related to quality, time to market, cost and innovation as well as our competitors (46%)
The survey findings suggest that while the business environment in 2015 will be somewhat less risky than in the previous two years, most of the business leaders surveyed indicated that they are more likely to invest in additional risk management resources in 2015.
The survey also identified differing perceptions between boards of directors and members of the executive team regarding the current risk environment; chief executives (CEOs) and boards of directors reported more optimism about risk issues while chief financial officers (CFOs) and chief audit executives perceived a more risky business environment.
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