Businesses across the globe are ill-prepared to deal with a rise in government protectionism, making it one of the most serious risks they face according to a new report commissioned by BT Global Services.

The report ‘Risk 2018: Planning for an unpredictable decade’ which was prepared by the Economist Intelligence Unit, questioned 600 senior executives from around the world to determine their views on the risks facing their businesses over the next 10 years. Respondents rated a retrenchment of globalisation – affected by a rise in protectionism – as a particularly serious risk and admitted that their businesses were not well positioned to cope. Protectionism ranks amongst 12 tier one risks identified by the report, which includes the risk of an oil price shock, a collapse in asset prices, and the emergence of a disruptive business model.

An increase in business complexity will lead to risk management becoming a more integral element of companies' planning, moving responsibility for the issue away from traditional functional silos, according to the survey. More than two-thirds (68 percent) of respondents predict an increase in the importance of risk management as a strategic tool and 58 percent foresee an increased focus of boardrooms towards the issue. Despite this, only 31 percent of respondents predict that the number of employees with a dedicated risk management role will have grown by 2018.

The survey highlighted a generally low level of preparedness to deal with the risks associated with climate change, even though executives did not feel that its effects would seriously impact their business over the next 10 years. Interestingly, respondents in Europe felt least prepared to deal with climate change risk: 58 percent of executives here claimed a low preparedness towards the issue, compared to 53 per cent in North America and 48 percent in Asia Pacific.

Although technology risks were rated as relatively severe forms of risk, respondents generally displayed a high level of preparedness to deal with issues such as disruption from viruses, the exposure of confidential data and systems failure.

Download a PDF copy of the report.

•Date: 2nd April 2008• Region: World •Type: Article •Topic: Operational risk
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