Our global survey of C-level executives and directors regarding their views on macroeconomic, strategic and operational risks highlights a disruptive risk landscape over the next decade through 2031.
In the following table, we rank the highest-rated risk themes in order of priority to provide a context for understanding the most critical uncertainties companies face looking forward over the next decade to 2031. Key takeaways follow.
Buckle up; a disruptive decade lies ahead.
The rapid speed of disruptive innovation, the threat of substitute products and services, and the ease of entrance of new competitors are all top risks looking out 10 years. Most of these risks were ranked higher over the next decade than for 2022.
Longer-term priorities are shifting.
Looking out over the next 10 years, our survey reported important shifts in the risks companies face across the globe. To illustrate, four risks dropped out of last year’s top 10 list for the 10 years ahead — risks associated with data privacy, sustaining customer loyalty, cybersecurity and competition with “born digital” players have fallen to 11th, 12th, 16th and 18th, respectively.
New to the top 10 risks list for the next decade are concerns over the economy, the ease of entrance of new competitors, resistance to change, and the effect of changes in the overall work environment on sustaining organisational culture and the manner in which operations are conducted. There’s also evidence of shifting priorities within the top 10 risks, the most notable being regulatory concerns, which dropped from the second-rated risk last year to seventh overall in this year’s survey.
People and culture are a long-term priority.
The number two risk overall for the next decade (as well as for 2022) pertains to succession challenges and the ability to attract and retain top talent in a tightening market. Organisational culture is also a long-term concern. There are several important themes related to people and culture for the coming decade:
- The future of work continues to be a defining business challenge for the next 10 years.
- Workplace evolution is creating uncertainty and the need for agility.
- Resistance to change has emerged as a long-term issue.
- Climate change concerns remain primarily isolated to industries heavily reliant on fossil fuels.
Economic uncertainty has emerged as a top long-term concern.
It’s significant that survey respondents are expressing concern about economic headwinds over the long term as well as the near term (concerns over the economy rank fifth overall for both 2031 and 2022). Central bank monetary and interest rate policies, the specter of lasting structural inflation, the duration of time for supply chains to recover, the performance of the Chinese and other large economies, the effects of ballooning government deficits, and growing geopolitical tensions may be interrelated contributing factors to these longer-term concerns.
Reliable market intelligence will separate winners and losers.
The inability to utilise sufficiently advanced data analytics and “big data” to achieve market intelligence that will lead to increased productivity and efficiency and drive focused innovation and digital investments is a top risk. Respondents rated it eighth for 2022 and 10th for the next decade. In rapidly changing markets, effective, ongoing analysis of data wins — particularly with respect to changing customer preferences.
Regulatory scrutiny remains a long-term global concern.
Regulatory scrutiny affecting the way processes are designed and products or services are produced or delivered is more of a long-term risk, as it is rated seventh overall for the next decade. However, interestingly, it’s not a top 10 risk looking out 12 months — that’s the first time this risk has not appeared in the top 10 since we began this annual survey 10 years ago. This may suggest that respondents see gridlock and competing public sector priorities as mitigating factors to regulatory changes affecting their business in the near term. But longer term, they see this as an issue. For example, world leaders recently endorsed an overhaul of international tax rules that would impose a new global minimum tax of 15% on business profits to curb corporations’ efforts to shift profits to overseas tax havens.
A long-term outlook helps companies face the future confidently.
Seven of the top 15 risks over the next decade are not in the top 15 list for 2022. With a disruptive decade ahead, organisations embracing the long view with a trust-based culture, effective utilisation of data analytics and the ability to pivot at the speed of change are more likely to sustain their relevance. A longer-term perspective augments short-term risk awareness by helping leaders “reality test” their assumptions about markets and the business environment so that they’re more prepared for surprises as well as more decisive and agile in making timely adjustments to the strategy and business model.
We encourage interested parties to read the executive summary of our survey results to learn more. Consistent with prior years, there are variations in views among boards and C-suite executives and across geographic regions and multiple industry groups regarding the magnitude and severity of risks for 2031.
For more about the top risks for the next decade, read the article here.
(Board Perspectives — Issue 148)
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