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BDO: Companies must adapt or fail in the scenario defined by the crisis
Businesses need to change the way they respond to global risks if they want to remain competitive, warned BDO.
The company’s annual risk report found that business leaders face near-permanent disruption, with 84% of respondents to its survey saying the global risk landscape is now more defined by crisis than at any time in recent history.
However, the report concluded that while there has been a tendency among business leaders to view risk in a negative light, as a threat to be minimized, there may be competitive gains to be made through responding positively to challenging circumstances.
BDO’s survey of 500 business leaders found evidence of a rapidly changing risk environment facing companies around the world.
Compared to the previous year, regulatory risk rose 13 places to first place in the league table of identified global risks, with 37% of respondents marking it as a major concern, compared to just 7% last year. This may be due to anxiety surrounding the impact of elections in major economies that will take place this year.
Supply chain risk moved up one place to second place, likely a response to the impact of disruption to shipping routes in the Gulf of Aden and economic uncertainty and inflation. Meanwhile, geopolitical tensions moved up three spots to third place, with Russia’s ongoing war in Ukraine and the conflict in the Middle East being the main focus of attention.
Cyber risk – the second biggest risk highlighted in 2023, fell to fifth place in 2024, while environmental risk also fell to ninth place in the league table, underlining how quickly risk priorities can change in a context of constant disruption.
The survey also found that business leaders have become less optimistic about AI opportunities. Although three in five respondents (59%) said they see AI as an opportunity, this number is lower than the 83% recorded last year. This may reflect a growing pragmatism after a year of separating hype from reality.
Tim Fosterhead of risk advisory services at BDO, said: “Faced with a landscape of constant disruption, it is clear that business risk priorities are changing quickly and significantly.
“While all organizations need to be aware of the risks they face, they also need to be agile enough to respond in a way that keeps their business moving forward.
“Our research suggests that risk appetite among companies has been undermined following a period of sustained disruption. However, companies that change their mindset and lean into the risks they face can often become more resilient and thrive when exposed to stress.”