More than three-quarters of global business leaders believe their organisation is being influenced by ‘hype cycles’. That’s according to the latest Global Risk Landscape Report published by accountancy and advisory firm BDO LLP. The survey of 500 global C-Suite executives and senior risk experts, which spans all major industries, found that social media and the 24-hour news cycle have overtaken issues such as regulatory risk and cyber attacks to pose the greatest perceived risk to businesses.
Almost three-quarters (74%) of participants believe that ‘grey rhino’ events (ie highly obvious risks) are being neglected by the Board in favour of ‘black swans’ (ie random, unexpected events which deviate from what’s normally expected).
Not all sectors are equally affected by hype cycles: more than half (52%) of respondents in the oil and gas industry, for example, believe their organisation is regularly impacted, compared to less than one fifth (17%) of those working in the leisure and hospitality sector.
The research also presents regional disparities, with 84% of respondents in the Middle East feeling the impact of hype cycles. This exceeds the global average of 76%.
This year’s report, which is the fourth in BDO’s Global Risk Landscape series, identifies significant changes in the risks for which respondents feel least prepared. Having topped the list in 2018, regulatory risk fell out of the Top Three risks for which global businesses are least ready. Senior executives also feel better prepared for environmental risks than last year, the research reveals.
The findings suggest that firms with larger revenue ($10 billion-plus) are significantly more welcoming of risk than firms in other size groups. However, there’s an increased risk-taking appetite among the smallest group by revenue ($100-$500 million).
Nigel Burbidge, BDO partner and the firm’s global chair of risk and advisory services, explained: “There’s a much greater amount of information and it’s travelling more quickly. In a world of increasing noise, distinguishing true risk from hype requires a high level of focus. To identify risks and come up with a measured response is incredibly hard. Instead of being a task, risk management needs to be part of a company’s culture. It’s not a job, but a way of life. An awareness not only of risk, but of what to do about it should be in the DNA of every employee. It’s up to the C-Suite to take the lead in ensuring today’s hazards don’t sit in a risk function silo.”
*Download the Global Risk Landscape Report for 2019 to read the full research analysis