New Delhi, Mar 27 (UNI) 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 titled ''Risk 2018: Planning for an unpredictable decade,'' 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.
The objective of the study was to look at emerging global trends and how every enterprise is worried about the same set of risks that could affect their businesses.
A seemingly local issue of credit crunch is now a global problem. The key findings of the report were that there is a fear of reversal of globalisation and return to protectionism.
The top 12 risks rated by the authors in this report are common areas of concern to all businesses engaged with globalisation.
Respondents rated retrenchment of globalisation ''affected by a rise in protectionism'' as a particularly serious risk and admitted that their business was not well positioned to cope.
It 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.
BT Global Services Chief Executive Francois Barrault said, ''This report highlights the sheer breadth of risks that are now primary boardroom concerns. Globalisation is driving risk management to become an issue of strategic importance. Companies that integrate their risk planning and infrastructures will be more resilient and will reap the rewards in this more complex trading environment.'' 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 the survey.
More than two-thirds (68 per cent) of respondents predict an increase in the importance of risk management as a strategic tool and 58 per cent foresee an increased focus of boardrooms towards the issue.
Despite this, only 31 per cent 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 per cent of executives there claimed a low preparedness towards the issue, compared to 53 per cent in North America and 48 per cent 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. The following were rated as the 12 top tier risks faced by businesses: *Retrenchment of globalisation/increase in protectionism *Oil price shock *Asset price collapse *Emergence of disruptive business model *International terrorism *Unexpected regulatory change *Global recession *Instability in the West Asia *Increased competition from emerging market companies *Talent shortages *Climate change *Increased industrial pollution McKinsey estimated that 12 per cent of all current labour activity can be transformed by more distributed and networked innovation.
As global firms learn to trust, collaborate and innovate the return to protectionism should become impractical. In many ways protectionism is the collapse of trust in the process of globalisation.
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