These and a host of other notable risk drivers are all contributing to significant levels of uncertainties, making it extremely difficult to anticipate what risks may lie just over the horizon. Unanticipated events are unfolding at record pace, leading to massive challenges to identify the best next steps for organizations of all types and sizes, regardless of where they reside in the world. No one is immune to the significant levels of uncertainty, and C-suites and boards need to be vigilant in scanning the horizon for emerging issues. Because no one can possibly anticipate everything that lies in the future, organizations must focus on building trust-based, resilient cultures, led by authentic leaders, that can pivot at the speed of change.
In this ninth annual survey, Protiviti and NC State University’s ERM Initiative report on the top risks on the minds of global boards of directors and executives in 2021 and, in a new dimension to this study, over the next 10 years, into 2030. Our respondent group, which includes 1,081 board members and C-suite executives from around the world, provided their perspectives about the potential impact over the next 12 months and next decade of 36 risk issues across these three dimensions:
- Macroeconomic risks likely to affect their organization’s growth opportunities
- Strategic risks the organization faces that may affect the validity of its strategy for pursuing growth opportunities
- Operational risks that might affect key operations of the organization in executing its strategy
Commentary – Technology, Media and Telecommunications
While technology, media and telecommunications (TMT) companies coursed through the wreckage of 2020 better than other industries, the path ahead is filled with many uncertainties, including operational, macroeconomic and strategic risks, which could hurt recovery and impede growth over the next 12 months.
Specifically, TMT executives singled out additional government response to the COVID-19 pandemic, adoption of digital technologies, data privacy and information security, cyber threats, and diminished economic activity as their top five risk concerns this year. The concerns over aggressive government policies and cyber threats are new to this year’s top five list for the TMT sector.
Fallout from a lingering pandemic
Aided by a strong demand for digital services, collaboration tools and other technology infrastructure, TMT companies recorded record strong growth and profits during the pandemic. Still, TMT board members and executives indicated that their biggest concern has to do with the lingering impact of the pandemic. Mostly, they are concerned about the impact of government policies surrounding public health practices, social distancing, return-to-work, crowd limits, and other pandemic-related regulations and protocols on the performance of their businesses. The survey results show this risk issue is the primary concern among all organizations (not just TMT) this year.
In 2020, government restrictions on travel, congregating for social events and opening businesses had devastating impacts on organizations of all types and sizes. Even with the ongoing rollout of COVID-19 vaccines, many organizations still worry governments could introduce aggressive actions to stem the virus and its new variants. Tighter restrictions on the movement of goods and people (such as requiring international air travelers to test negative for COVID-19) and the imposition of workplace safety measures (such as mask mandates) may create operational challenges for some businesses. Regarding possible return-to-work restrictions, TMT appears to be better positioned to deal with related disruptions than other industry sectors. The industry’s tech-savvy workforce was among the first to migrate to a remote set-up and many of its largest companies have fully embraced the new labor model, with some (like Twitter) offering employees the choice of working from home permanently.
Aside from pandemic-driven regulations, additional industry regulation is a big concern, with many leaders worried about further pressure and scrutiny from the new Biden administration. This risk issue ranks tenth on the list of top risk issues for the TMT sector.
Disruption from digital technologies
Digital technologies to support remote working, contactless payments, online entertainment and other physical distancing needs during the crisis have been a boon for TMT companies. However, the rapid rollout of technology has also created some big challenges for the industry. In the survey, TMT respondents identified the shortage of skilled workers to support the digital demand and increased cyber threats as their second and fourth top risks, respectively.
Talent-wise, TMT industry group executives worry that the need to adopt digital technologies such as AI, robotics, natural language processing and visual recognition software in the marketplace and in their respective organizations may require new skills that either are in short supply or require significant efforts to upskill and re-skill existing employees.