Regulation greatest blindside risk for businesses across geographies and regions - BDO

Regulation is now perceived to be the greatest blindside risk for businesses across geographies and regions, according to the BDO Global Risk Landscape 2018.

A global survey of more than 500 C-suite and senior risk experts, conducted by accountancy and business and advisory firm BDO LLP, has found that regulatory risk represents the biggest concern (62 per cent).

The firm said the rising concern emerges against an increasingly pre-emptive regulatory backdrop, as authorities seek to mitigate instability in an unpredictable world.

Macroeconomic developments came close second (60 per cent) across all respondents. This was up from the third-highest risk concern in 2017, prompted in the UK by the ongoing renegotiation of Britain’s trading arrangements with the European Union.

Supply chain and environmental risks have experienced the most significant increases as areas of concern across the globe within the last year.

The breakdown of free trade agreements as Britain leaves the EU, the renegotiation of the North American Free Trade Agreement, and the imposition of tariffs such as those affecting steel imports into the US have had the biggest impact on supply chain risk.

The other highest climber – environmental risk – owes its increased prominence to a rising tide of global concern about pollution and climate change.

The research also found that 16 per cent of companies have no current strategy in place for futureproofing their business, with almost one in five respondents agreeing that their business operates under an outmoded operational model in need of a technological upgrade.

Greater competition, technological changes, and a failure to innovate stood out as the most pressing concerns for businesses that did not consider themselves futureproofed.

By contrast, high-performing businesses were found to have an overwhelming appetite for agility, placing an importance on customer centricity, competitive relevance and innovation.

Across all industries, the key benefit of agility was perceived to be improved customer satisfaction and retention (68 per cent). The survey further found that 85 per cent of companies, which lack agility, are failing to innovate to meet customer needs.

Claire Robertson, director and head of risk and advisory services for BDO LLP in Scotland, said: “The corporate landscape is being transformed due to trade, technology, political alignments and environmental concerns. Central banks are beginning to unwind a decade of economic experimentation, creating macroeconomic hazards that could blindside businesses that are used to the world of zero interest rates.

“If businesses do not demonstrate an ability to think outside the box - to innovate and to be agile - they will get left on the scrap heap of history; they just won’t exist.”