PreView - Protiviti's View on Emerging Risks

Preview - September 2018
PreView - Protiviti's View on Emerging Risks

September 2018 Edition

As organizations continue to evolve their risk governance practices and pursue new market opportunities, focused and relevant information about emerging risks is at a premium. The objective of Protiviti’s PreView newsletter is to provide input for these efforts as companies focus on risks that are developing in the market. We discuss emergent issues and look back at topics we’ve covered to help organizations understand how these risks are evolving and anticipate their potential ramifications.

As you review the topics in this issue, we encourage you to think about your organization and ask probing questions: How will these risks affect us? What should we do now to prepare? Is there an opportunity we should pursue?

Our framework for evaluation of risks is rooted in the global risk categories designed by the World Economic Forum. Throughout this series, we use these categories to classify macro-level topics and the challenges they present.

Inside this issue:


Automation and Its Impact on the Labor Market

Emerging Risk Categories: Technological, Societal, Economic 

Key Industries Impacted: Technology, Manufacturing, Government, Financial Services, Consumer Products and Services, Healthcare

In the August 2017 edition of PreView, we looked at the ways changes to the labor force are contributing to income inequality. A new era of automation, often referred to as “Industry 4.0,” shorthand for “the Fourth Industrial Revolution,” is expected to have a unique and major impact on the workforce that differs from past technological advancements and challenges. These changes will have broad and sweeping effects on the labor economy, with wage inequality being one of its aspects.

Automation affects both low-skilled and high-skilled labor, and can increase productivity in multiple industries. At its maximum potential, it brings together computing power and automation to reshape the way things are made. According to Forbes, “Industry 4.0 introduces what has been called the ‘smart factory,’ in which cyber-physical systems monitor the physical processes of the factory and make decentralized decisions. The physical systems become the Internet of Things, communicating and cooperating both with each other and with humans in real time via the wireless web.”

This level of automation poses a risk to the labor market because of its strong potential to increase the amount of structural unemployment. Unlike unemployment primarily caused by simple supply and demand shifts, structural unemployment is caused by changes in technology or other fundamental shifts. This type of unemployment has long-lasting impacts, which lead to further challenges in the economy and present risks to both employees and employers. For example, labor markets across developed economies have been shifting away from manufacturing employment. In the United States, the number of manufacturing jobs has fallen from nearly 20 million in 1979 to 12 million in 2018. While some of this decline is due to offshoring, automation is increasingly playing a role. The number of industrial robots has risen from 1.5 million in 2014 to an estimated 1.9 million in 2017. Automation has already significantly impacted the levels of employment in manufacturing, and other industries may see similar employment trends as the use of automation expands across the workplace in myriad ways.

“Technology will greatly influence the design of labor models over the near and long term, offering opportunities to increase quality, compress elapsed time, reduce costs and enhance scalability. As the future world of work evolves, organizations must optimize their mix of internal, interim and outsourced human talent as well as ‘electronic workers’ made possible through robotic process automation, machine learning, natural language processing, advanced analytics and other elements of artificial intelligence.”

Jim DeLoach , Managing Director, Protiviti

Key Implications and Considerations

Impacts on Unionization

Though there are variations across industries, overall, union membership rates have fallen in recent decades. The 2017 labor unionization rate in the U.S. was 11 percent — a large decrease from 35 percent in the 1950s. Union membership rates are significantly lower for private-sector workers, at 6.5 percent, than for public-sector workers (34.4 percent).

The recent developments in technology put the question of unionization at a crossroads — will the rates continue to drop, or are workers going to have a reason to unionize now more than ever? Technology creates a potent market force that cannot be ignored by companies intending to survive and thrive in the digital economy. The mandate of unions to protect jobs and preclude the use of technology to automate labor-intensive aspects of the business pale against the stark business realities of competitors and “born digital” entrants researching and developing technologies to reduce costs, compress elapsed time and offer an improved customer experience. It’s the proverbial elephant in the room sitting at the bargaining table.

Below, we discuss two potential scenarios for unions.

Potential Increase in Unionization Rates

While unionization rates have been decreasing for decades, the recent changes in technology may reverse this trend. Unions have historically protected workers through economic challenges. It is only logical to predict that employees will increase their participation in unions to form a collective voice in the era of digital automation. However, since automation of this scale is a relatively new challenge, unions must be creative in their approach to help the workers they represent.

One strategy that unions may implement is to advocate for ways in which employees can work together with automation and focus their advocacy on retraining, reskilling and reassigning workers to fill new occupations as their old jobs are partially or fully automated. To illustrate, an Italian union for metalworkers has begun supporting professional training for its members to help prevent job replacement before automation largely takes over the industry. Similarly, the Culinary Workers Union Local 226, which represents 50,000 employees in Las Vegas, Nevada, has taken a stance against automation replacing cooks, servers and housekeepers throughout the tourist destination by pushing for hotel-sponsored training programs that will help employees increase their skills and efficiency to compete with automation. As unions recognize that automation is inevitable, some may mobilize against it, as union rail workers in the UK have done, while others (i.e., manufacturing unions in Germany) will likely continue to support “upskilling” initiatives that will enable employees to work with technology, instead of being replaced by it.

A rise of unionization will bring an increased cost to employers, since unionized employees typically demand more benefits and higher wages. Businesses may offset these additional costs through increased product prices or reduced headcount. Higher labor costs could also further motivate businesses to more aggressively pursue automation.


Potential Decrease in Unionization Rates

Another possibility is that automation will render labor unions in many industries ineffective. With more and more jobs being taken over by robots, there may simply not be enough workers to support unions. For businesses, further decreases in unionization rates could be a significant benefit: business owners could avoid the costs of “union” wages and the threat of strikes. Additionally, as competition between human workers and machines increases, businesses may completely avoid the costs of unionization by opting to hire non-union employees first, as there will be more workers from whom to choose. In the past, unions have fought against wage inequality and job cuts, but with the shift in labor composition to include “digital workers,” it is unclear how successful they will be in achieving their objectives.
A decrease in unionization may especially impact wage inequality. A National Bureau of Economic Research study found that unions tend to reduce wage inequality and that de-unionization explains a substantial part of the growth in male wage inequality. Thus, the largest impact of automation, and the resulting decrease in unionization, could be on workers' income. This pressure on income may further drive existing income inequality trends and have a downstream effect on government policies, services, tax revenues and consumer purchasing power. The unknown in this scenario is the residual effect of automation in creating new types of jobs.


Given current trends, it seems likely that unionization rates may initially increase as employees fight for their jobs and for training and policies that will allow them to work alongside automation, but will likely decline later as sophisticated automation becomes a more viable labor resource for employers than human labor. The bottom line is that workers who embrace automation, whether unionized or not, will likely outperform those who don’t, while workers who resist it will most likely be overlooked in the new labor market.

White-Collar Workers Not Immune to Automation

The technological changes of Industry 4.0 leave many people wondering how their careers may be affected. A 2013 report from the University of Oxford suggests that within two decades, as many as 47 percent of Americans will have jobs at risk of being replaced by machines. A more recent report from the think tank Future Advocacy estimates this number between 20 and 40 percent for UK workers. On a larger scale, the World Bank predicts that two-thirds of jobs in developing countries are at risk of being automated. Finally, research by McKinsey and Company states that 45 percent of work activities can be automated using currently available technologies but argues, optimistically, that machines will complement tasks performed by workers currently and have minimal impact on employment rates. These forecasts vary across different industries and types of occupations. Between these opinions, the question of whether Industry 4.0 will match or exceed the labor shocks of prior technological revolutions remains open.

During the Industrial Revolution, jobs traditionally performed by humans, such as those in the textile industry, were easily replaced by machines. However, throughout that period, skilled workers were not as negatively affected by technological advances. What makes Industry 4.0 different is that it initiates an era of automation that has the potential to affect a wider swath of the workforce beyond the manual or low-skilled jobs. Technologies such as artificial intelligence (see the Spotlight on page 6) can both take over white-collar jobs, such as office or medical assistants, and raise the standard for required job skills. This will affect not just the labor market, but the educational system as well, since skills beyond the ubiquitous bachelor’s degree may be viewed as a new requirement, and even the relevance of certain degrees could be called into question.

Impacts Differ Across Nations and Income Levels

A 2018 study by the OECD shows that the disruption in the labor market caused by automation will affect countries differently. The industry distribution within each country is a key factor in this determination. For example, countries with less developed economies tend to have more workers engaged in manufacturing and performing routine tasks easily replaceable by machines. Those employed in food preparation, construction and cleaning industries are most at risk of being replaced by automation, according to an article discussing the study results. The risk of job replacement due to automation also varies across income brackets — furthering the potential for increased wage inequality. The table below depicts the risk of job automation within different income percentiles and shows that across all countries, individuals in the lower income percentiles face a significantly higher risk of job automation.

Share of People With High Automatibility by Income and OECD Countries

Source: OECD; Authors’ calculation based on the Survey of Adult Skills (PIAAC) (2012).
The Human Advantage

Although the image of robots taking human jobs on a massive scale appears alarming, it is important to also consider what machines cannot replace. Human interaction is an important part of many careers and is not easily replicable by technology. The social skills used in numerous jobs to negotiate, sell products, service customers and manage teams give humans an important advantage. While machines are often more productive at performing menial tasks, humans can implement creative skills and innovative techniques to add value to the work machines do. These predictions, however, take current computing and automation capabilities into account; quantum computing could change the rules completely.

Spotlight: Quantum Computing — a Game Changer for Automation

A new type of computing, called quantum computing, has the potential to take problem-solving and automation to an entirely new level. Unlike traditional computing based on a binary system of ones and zeros, quantum computing operates using qubits, which are unique in their ability to take on the value of one, zero, or both. This unique property allows for an exponentially larger amount of information to be processed at speeds current computers cannot begin to approach.

One key area where quantum computing can solve currently unsolvable problems is optimization, and its many applications across multiple fields. Optimization problems involve identifying the best solution for a problem with many possible solutions. While current computers may take days to solve a complex problem, a quantum computer can compress this time frame down to seconds. This will eventually enable advanced, or “quantum,” machine learning and artificial intelligence, allowing for the creation of machines that rival or exceed the human capacity for data analysis, pattern recognition, learning and decision-making.

Industries will be significantly impacted once quantum computing becomes mainstream. The medical and security industries are likely to be some of the first adopters. Within the cybersecurity industry, quantum entanglement creates the potential for increased cybersecurity protocols (it also creates the power to breach security features on classical computers). Other fields expected to seize on the power of quantum computing include aerospace and defense.

The market for quantum computing is expected to grow to $10 billion by 2023, and it is being labeled the “next tech megatrend.” As scientists continue to push the boundaries of quantum computing, the intelligent machines powered by this technology will cause even the highest-level jobs performed by humans to be put at risk.


Over time, the paradigm-changing effects of automation could fuel policy debates around guaranteed basic income if displaced workers can’t find new jobs. Countries will need to consider how they train their populations for the digital age, with implications for education, vocational training and private sector investment in programs for displaced workers. Other potential issues include sustainability of the middle class and the effect of widening income inequality on democratic institutions. Fundamental assumptions underlying our global society will be stressed by automation and it is unclear how the private and public sectors will collaborate to prepare the workforce for these new realities.

World Economy Impact From Sustained Cryptocurrency

Emerging Risk Categories: Economic, Technological, Geopolitical, Societal

Key Industries Impacted: Financial Services, Technology, Government, Consumer Products and Services

The astronomical rise of cryptocurrencies and the blockchain technology that powers many of them have been the talk of nearly everyone from homegrown investors to banking regulators. Much of the initial global conversation has centered around the sustainability and longevity of cryptocurrencies as prices continue to fluctuate amidst changing government policies, mainstream business adoption and cybersecurity concerns. Yet despite the doubts expressed by some, the potential impacts of cryptocurrency on the real-world economy remain theoretically extraordinary. Among the possible impacts of durable cryptocurrencies are increasingly decentralized global currencies and the associated ability to trade quickly across borders, wealth creation and taxation through investment opportunities via coin offerings, and diminished effectiveness of traditional monetary policies. While it is difficult to predict if and when cryptocurrencies may go completely mainstream, this emerging payments mechanism bears continuous watching and assessing.

Key Implications and Considerations

Global Trade

One of the larger impacts of scaled and sustained cryptocurrencies on the global economy is their ability to lower barriers on trade. Currently, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) is the middleman that facilitates the flow of money across international borders. Although SWIFT provides a network for financial institutions across the globe to transmit information in a safe and secure network, transaction fees increase the cost of trade, and transactions can take days to be processed. With the rise of cryptocurrencies and blockchain technology, however, the role that SWIFT plays in cross-border transactions may be usurped.The security of the blockchain network also does away with the need for a third party to authorize and authenticate transactions, as blockchain technology has inherent authentication capabilities. This ultimately could lower transaction fees, with the added bonus of nearly instantaneous transactions. Even the Bank for International Settlements, which issued a scathing review of cryptocurrencies, declaring them “not ready for prime time,” nevertheless acknowledged that the distributed ledger technology of blockchain makes cross-border payments more efficient and stated that trade finance was “ripe for the improvements offered by blockchain-related programs.”

Along with the benefits of improved efficiency and potentially increased international demand, cryptocurrencies bring new risks even as some countries are attempting to use them to their advantage. Earlier this year, in an attempt to stabilize the country’s economy, Venezuela introduced the world’s first fiat (government-backed) cryptocurrency, the Petro, in which one coin represents a barrel of crude oil from the country’s oil belt. While innovative in thought, the Petro remains a speculative currency with critical information lacking regarding its mechanics and supposed oil backing. This has made creditors hesitant to invest in this new cryptocurrency crafted by a regime in crisis. Venezuela has seen its economic output fall dramatically since 2013, and the Petro move is viewed by some outsiders as a desperate response to evade sanctions and respond to financial calamity and quadruple-digit inflation. In addition, other governments’ responses, such as the U.S. Treasury warning investors that Petros bought with U.S. dollars may violate sanctions, make it clear that the new technology does not absolve businesses from trading risks associated with these cryptocurrencies.

Russia is also in the process of developing its own state-owned cryptocurrency, dubbed CryptoRuble, partially with the idea in mind that the country could then trade with no regard for sanctions. This is because cryptocurrencies can be converted into regular currencies anonymously, and users can hide their identities during business transactions.

In addition, several other countries, including more economically stable nations such as Sweden and Switzerland, have embraced, or are at least exploring, the notion of a government-backed cryptocurrency. These developments could present businesses with the potential rewards of cheaper and faster trade as discussed above, but also with the technological, market and regulatory risks associated with unseasoned cryptocurrencies.

A Growing Cryptocurrency Market: 2017-2018

Source: Coinspeaker
Wealth Creation and Taxation

Cryptocurrencies offer the opportunity for wealth creation both on an individual and national level, as the decentralized network allows anyone to participate in the global economy. Broad financial inclusion is considered a key factor in reducing poverty, as impoverished people often lack access to services such as traditional banking. Since two billion adults worldwide are considered unbanked, cryptocurrencies present a perfect opportunity to provide expanded financial services to this population. The infrastructure required for cryptocurrencies (mainly internet services) is much less burdensome than establishing a physical bank dealing with physical currency. Because this “light” infrastructure makes money transactions more affordable, fast and transparent, a larger percentage of the world population could have access to capital, including new entrepreneurs.

Some companies are using initial coin offerings (ICOs) to help them raise capital, an approach that enables the execution of ideas that may not receive investor capital otherwise. Additionally, companies that invest in cryptocurrencies and blockchain technology have recently been rewarded with higher stock prices and have attracted the interest of Wall Street (see the Spotlight:, First Major Retailer to Embrace Cryptocurrency).

As wealth from cryptocurrencies is created, states must determine how to tax these gains. The extent to which they are successful would enable nations to capitalize on the cryptocurrency boom as well. Russia is planning to tax profits on CryptoRubles at 13 percent (similar to the current capital gain/ loss tax treatment of cryptocurrencies in the U.S.), and do the same for any unexplained holdings of the cryptocurrency, in an attempt to cut down on tax evasion. This approach, however, unlike the approach in the U.S., necessitates the regulation and centralization of the currency, which is the opposite of what has made cryptocurrencies attractive to market participants. Venezuela offers another example of how a state might benefit from cryptocurrencies through investment opportunities. President Nicolas Maduro has recently approved the use of 909,000 Petros to partially fund construction of new housing projects for the homeless.


Regulation over these assets is still in various stages across the world as countries are developing cryptocurrencies and determining how to use them. In late July 2018, the G20 finance ministers met and discussed cryptocurrency. They determined that the financial system can benefit significantly from the related technological advancements, but that countries must remain vigilant about the potential of cryptocurrencies to introduce financial stability risk. The group asked the Financial Action Task Force (FATF), an intergovernmental organization that develops policies to counter money laundering and terrorist financing, to “clarify in October 2018 how its standards apply to crypto-assets.” Until then, there isn’t a global consensus or standard on how regulation will proceed.

Interest Rates and Inflation

The question of how cryptocurrencies will interact with more traditional or fiat currencies and affect global interest rates is on the minds of many people. One established thought is that due to their global, decentralized nature (Russia's attempt to centralize its cryptocurrency notwith-standing), cryptocurrencies can circumvent traditional monetary channels and jurisdictions. As a result, national monetary policy may be undermined or rendered less effective if cryptocurrencies begin to be used more frequently as payment and their prevalence in the real economy forces the values of the cryptocurrencies to receive backing by government agencies. This could potentially necessitate greater global cooperation to obtain the same level of effectiveness as current/traditional monetary policy.

Additionally, demand for the U.S. dollar as the globalized central currency could be dampened in a world with a greater appetite for cryptocurrencies, which could have the effect of making U.S. products cheaper while also potentially increasing borrowing rates in the future. Conversely, as in the case of Venezuela, there are some that hope cryptocurrencies can be the cure to financials ills, as opposed to their cause, and be used in attempts to curtail the devastating impacts of hyperinflation.

Though much yet remains to be seen on how, and to what degree, cryptocurrencies will impact the real economy, the potential for large-scale disruption is significant. Governments have been forced to respond in a variety of manners to the growing interest surrounding cryptocurrencies and, with the recent implementation of state-backed cryptocurrencies, the conversation will likely grow louder. Currently, the Bank of Japan and the European Central Bank are joining forces to research potential market impacts of central bank-backed digital currencies, with leading U.S. banks conducting similar studies. With impacts on the real economy beginning to be felt across the globe, these studies could very well turn into recommendations and policy implementations in due time.

Spotlight:, First Major Retailer to Embrace Cryptocurrency is widely known to consumers in the U.S. as a furniture retailer. However, in 2014 the company made a focused transition into the world of cryptocurrency, becoming the first major retailer to accept Bitcoin. As of June 2018, the company is generating $68,000 to $120,000 in cryptocurrency revenues weekly. While currently this is not a large revenue stream (roughly 0.2 percent of total revenue), it certainly has the potential to grow over time. In 2014, Overstock also created a subsidiary to manage and oversee its investments in blockchain-related firms, and the company invested in tZero, a financial technology company that trades crypto securities. As a prime example in wealth creation, tZero recently offered a security token offering, which resulted in a Hong Kong venture capital firm agreeing to purchase $160 million worth of the security tokens in late June 2018. The OSTK stock was up 12.5 percent after the news about tZero token purchases.


The Growing Risk of Technical Debt in a Fast-Paced World

Emerging Risk Categories: Technological, Economic

Key Industries Impacted: Technology, Financial Services, All Industries

The term "technical debt" describes a universal technology phenomenon affecting most businesses today. It refers to the design or implementation constructs that are expedient in the short term but result in the need for rework or refactoring in the future. For every technical decision a company makes, the business forgoes other options. These are the opportunity costs of current enterprise technology architectures. The concept not only involves the purchase or implementation of new systems but represents the accumulation of debt over time due to tradeoff decisions and a patchwork of legacy systems.

This is not a new phenomenon. For years — even decades — businesses have overlooked technical debt as they prioritize new client-facing solutions over architectural and foundational investment. So why face it now? As digitalization of services and products expands, it marks the difference between survival and demise in an ultra-competitive, digitally enabled marketplace. Ignoring technical debt can prove perilous, especially for those operating on older legacy platforms.

According to the IDC FutureScape: Worldwide Digital Transformation 2018 Predictions report, digital transformation spending is expected to reach $1.7 trillion worldwide by the end of 2019. However, 59 percent of companies remain at an early stage of digital transformation maturity as many corporations spend a significant portion of their IT budgets on maintaining older systems. For these corporations, technical debt is a competitive liability, resulting in the inability to quickly respond to born-digital players with more nimble technology. Consequently, the gap between leaders and laggards in the growing digital economy has widened. Closing it requires a sufficient IT budget and scope and the organizational discipline to invest in a long-term strategic approach that incorporates all technology platforms, processes and people.

Key Implications and Considerations

No Industry Is Immune

The impact of technical debt is acute in industries like financial services; however, it is relevant to all industries. Companies with significant outsourcing of application design and maintenance to various vendors or where design is conducted in silos are particularly susceptible to increased technical debt. This is also true for companies that rely on archaic systems or have a patchwork of back-end systems propped up beyond their useful life.

Code Integration Matters

Accumulation of technical debt is not always a conscious decision. Solutions that are not designed to evolve or are difficult to integrate with more modern or emerging technologies may result in the accrual of technical debt. Often, the decision-makers in technological systems are focused on the immediate business need and lack sufficient technical knowledge about the intricacies of how systems or tools interact. This can result in unintended additions of technical debt and potential hurdles for future advancements.

Technical Debt Can Be Acquired

Significant technical debt can accumulate as a result of merger and acquisition activities if infrastructure is not rationalized as part of the integration process. As such, it is a component that should be considered during the deal’s due diligence process. While not a specific line item that is easily found or quantified on another company’s balance sheet, acquisition of a company with significant technical debt can result in increased spend to integrate systems and potential issues with system compatibility that could affect the bottom line of the deal’s value.

Spotlight: The COBOL Dilemma

A key component driving up technical debt for many firms is the quality of legacy system development and implementation. According to a 2017 Report by CAST, COBOL (Common Business-Oriented Language) is the second most used programming language globally, and it underlies the technology commonly used within the financial services and insurance industries. Since its creation over 60 years ago, COBOL has been replaced with newer languages such as Java, C and Python; however, many technology systems in the aforementioned industries continue to run on COBOL.

COBOL has modules approximately 10 times larger than those used in the more modern languages. Due to its complexity and the fundamental importance of the systems that run on it, changing or adding to these systems becomes difficult and results in a further increase in the amount of technical debt. Cast Software Research Labs estimates that an average-sized application with 300,000 lines of code (LOC) carries $1,083,000 in technical debt, representing an average debt of $3.61 per LOC. With 15 percent of applications exceeding one million lines of code, a significant portion of applications may exceed $3 million in technical debt.

Not to be ignored is the growing difficulty in effectively maintaining these COBOL-based systems due to a shrinking pool of coders. The prevalent age range for COBOL programmers is 45-55, and training on the more archaic coding languages is limited. According to Computerworld, there are only 75 schools, mostly community colleges and technical schools, that still teach COBOL.


“Technical debt isn’t a new phenomenon. It’s existed since the dawn of technology and is a natural result of tradeoff decisions that occur over time. However, it can be an insidious problem and a growing risk, manifesting itself in stability issues, security gaps, increased maintenance costs and, most importantly, difficulty in responding to business opportunities. Like an old anchor, it can weigh down a business and make it less agile, less responsive to change, and more difficult and expensive to operate.Taking steps to resolve technical debt is becoming increasingly important in today’s fast-paced, digitally enabled environment.”

Ed Page, Managing Director, Protiviti

Managing Technical Debt

In order to remain competitive, companies need to acknowledge their technical debt and create plans to manage it in relation to their short-term and long-term digital strategies. The following are considerations to help manage technical debt:

On the Radar

Millennials and the Housing Market

According to a report published by the Urban Institute in July 2018, millennials entering the real estate market in the U.S. hoping to become homeowners are faced with a variety of unique obstacles compared to previous generations. The report indicates that the millennial homeownership rate is 8 percent lower than that of baby boomers or the Gen X generation, totaling 3.4 million fewer homeowners. This drop in homeownership results from several obstacles specific to millennials, including significant amounts of student debt, tightened credit standards and the increasingly limited availability of affordable housing in desirable cities with strong labor markets. Additionally, there has been a shift in attitude toward homeownership among millennials due to changing priorities, including the increased likelihood of delaying marriage and having children.

In cases where individuals in this demographic do elect to pursue homeownership, obtaining the necessary financing and down payment funds for the purchase has become increasingly difficult. According to CNBC, one in three millennial homeowners in the U.S. withdrew money from or took loans against their retirement accounts to finance the down payment on a home. Further, slightly more than 40 percent of millennial homeowners said they had regrets after they purchased a home because they felt stretched financially.

As millennials in the U.S. and other markets, such as the UK, continue to enter first-time homeownership under these strained circumstances, the shift may have downstream impacts on countries’ broader economies, including increased risk of mortgage and non-mortgage default, rising rent prices, and shifts in the purchase real estate market. If a decline in demand results in fewer housing starts, that can mean a reduction in construction jobs and lower demand for essential housewares and appliances, creating a ripple effect through the economy. Thus, this trend could affect construction, manufacturing, transportation and other industries directly or indirectly impacted by the housing market.

Continuing the Conversation

The risk areas summarized in this issue will continue to evolve, and there is no question that new risks will emerge and affect organizations globally. We are continuing the discussion we’ve started in this newsletter on our blog, The Protiviti View ( Our blog features commentary, insights and points of view from Protiviti leaders and subject-matter experts on key challenges and risks companies are facing today, along with new and emerging developments in the market. We invite you to subscribe and participate in our dialogue on today’s emerging risks. You can also find additional information on our microsite,

About Our Risk Management Solutions

Protiviti’s risk management professionals partner with management to ensure that risk is appropriately considered in the strategy-setting process and is integrated with performance management. We work with companies to design, implement and maintain effective capabilities to manage their most critical risks and address cultural and other organizational issues that can compromise those capabilities. We help organizations evaluate technology solutions for reliable monitoring and reporting, and implement new processes successfully over time.


Cory Gunderson
Executive Vice President
[email protected]
Jim DeLoach
Managing Director
[email protected]
Andrew Clinton
Executive Vice President
[email protected]
Matthew Moore
Managing Director
[email protected]
Jonathan Wyatt
Managing Director
[email protected]
Jason Daily
Managing Director
[email protected]


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