The volatility and uncertainties brought about by the pandemic will have an impact well into the next decade, with executives foreshadowing struggles tied to evolving security requirements and the need to transform digitally on a dime.
Those predictions came from a new report released by consulting firm Protiviti and North Carolina State University (NCSU) Poole College of Management, which surveyed 1,081 board members and c-suite executives – the biggest sample yet in the report’s nine-year history. Respondents were asked to not only rank 36 macroeconomic, strategic and operational risks for 2021, but also to look out over the horizon and rate the expected impact of those risks in 2030.
Clearly, the results show that the pandemic and the subsequent changes to the workplace will ripple out well into the future, as companies more fully harden work from home models and continue their digital transformations. Adoption of technologies like artificial intelligence, automation, visual recognition software all emerged as likely requirements to remain agile and competitive with “born digital” companies.
Indeed, digitally mature companies fared better as the pandemic hit, providing the agility needed to adjust quickly, the report reiterates. And “born digital players can completely alter the game by operating more efficiently, changing their customer experience much more quickly, being more innovative, and transforming a bit of their business model,” said Kim Bozzella, managing director at Protiviti.
In this year’s study, “cyber threats remain a moving target” while concerns over data privacy “promise to become even more complex in the digital age,” said Jim DeLoach, managing director at Protiviti's solutions leadership team and co-author of the study. “There is no reason to believe these realities will change.” Cyberthreats slipped in the rankings a few notches from 2021 to 2030, sliding from sixth place to tenth place, while privacy stayed steady in fifth place for both years’ rankings.
“We don't expect privacy and identity concerns to be weakened; they're going to grow in importance,” said Mark Beasley, professor and director of the Enterprise Risk Management Initiative at NCSU. “From a resiliency perspective, there's the technology infrastructure that continues to be a concern and that's long lasting.”
That continuously evolving nature of cyber and privacy risks underscores the need for a secure operating environment in which "nimble workforces can regularly refresh the technology and skills in their arsenal to remain competitive,” according to the report.
Workforce issues – or more specifically workers’ skill levels – will persist and amplify, respondents said, as organizations grapple with sharpening their skills. Challenges tied to hiring, upskilling or reskilling will continue to permeate the workforce, particularly as millions of employees are potentially displaced and new technologies like AI and automation become widely adopted.
'The future of work' topic was the fourth-ranked issue in 2021 as well as the top risk for 2030, "making it one of the defining business challenges for the next decade,” according to the report. “The top risk for 2030 also reflects a long-term concern regarding the sourcing and retention of top talent needed to compete and thrive in a disruptive environment.”
Also deemed critical by respondents is risk associated with rapid speed of disruptive innovations enabled by new and emerging technologies or, more simply put, market forces outpacing an organization’s ability to compete without making significant changes to its business model. That specific risk tied to the ability to keep up with innovation moved from 18th place in 2021 to third place in 2030.
Similarly, participants pointed to risk tied to competition with born digital companies into the future, which ranked eighth on the 2030 risk list. Using data analytics and big data properly to gain market intelligence and increase their companies’ productivity and efficiency nine years down the line ranked ninth.
Respondents also expect to feel regulatory heat on their operational resilience as well as their product and service offerings. “There's a perception that it's getting more complex and expectations are increasing,” said Beasley. Regulation “ties into the privacy and identity management – when you think about GDPR and some of the other regulations tied to just technology.”
Survey respondents expect to feel the impact of regulatory change and scrutiny on their operational resilience as well as product and service offerings. Cyberthreats slipped a few notches from 2021, sliding in at number 10 in the list of risks.