Each year, Ernst & Young releases a Global Business Risk Report, which highlights the ten most significant risks to global businesses. Compiling views from leading analysts, academics and industry executives, the report does a nice job of showing what companies need to be on the lookout for in 2011 and beyond. Here is the preliminary 2011 list, with the number in parenthesis being the rank from 2010:
1. Regulation and compliance (1) – Rising government intervention after the crisis has kept regulatory concerns at the top of the risk list.
2. Cost-cutting (6) – In a weak global economy, pressures for cost control have continued to rise.
3. Slow recovery/double dip recession (3) – Fears for the Eurozone, sovereign debt and consumer deleveraging have kept economic risk relevant.
4. Market risks (New) – The usual commodity price concerns are joined by worries about bubbles and fear of speculative attacks.
5. Pricing pressure (15) – Regulatory pressure on pricing is driving the rise of this risk.
6. Managing talent (4) – Despite economic weakness, the war for talent continues to heat up.
7. Access to credit (2) – The peak of the credit crunch has passed, but liquidity concerns have not.
8. Social acceptance risk/Corporate social responsibility (9) – Public pressure on, and scrutiny of, business and government continue to escalate.
9. Expansion of government’s role (New) – Not only a regulator, the state is increasingly a player in many sectors.
10. Emerging technologies (13) – Competition in many sectors continues to be driven by innovation.
Cost-cutting, market risks, and pricing pressure have all made significant jumps from 2010. As competition intensifies in the global marketplace, optimizing costs and setting the right prices for your goods are becoming an ever increasing challenge. Combine that with high regulatory pressure, and companies need to look now at their strategies and compliance or risk losing ground.