Law firms and their leaders are usually willing to gaze into any crystal ball to divine what their clients are thinking, and more importantly, determine the practice areas where the clients are feeling most vulnerable.
This might help.
A new study, the third-annual Executive Perspectives on Top Risks Survey, by global consulting firm Protiviti and North Carolina State University polled more than 275 board members and C-suite executives from across the world about risks that are likely to affect their company in 2015.
More than two-thirds of respondents (67%) indicated that they expect regulatory risk to “significantly impact” their companies this year. While that level of concern had decreased compared to previous years, respondents continue to have high anxiety that regulatory challenges may affect their strategic direction, the report stated.
“The pressures created by regulators, plus the potential for major adjustments in light of regulatory change, are understandably tremendous concerns and present substantial risk,” said Mark Beasley, Deloitte professor of enterprise risk management (ERM) and director of the ERM Initiative at NC State, in a written statement that accompanied the report. “Having to comply with new regulatory requirements can dramatically affect the profitability and growth of an organization.”
The big mover in the survey was worries about cybersecurity issues—little surprise given recent well-publicized data breaches at large corporations like Sony Pictures Entertainment, Home Depot and Target. More than half of the global survey respondents (53%) indicated that they were concerned that their companies were not sufficiently prepared to handle cyber threats and that risk would likely significantly impact their organizations this year. These ramped-up concerns jumped cybersecurity issues to the third-biggest risk worry in the survey, up from 6th place last year.
“With the apparent level of sophistication of perpetrators and the impact breaches can impose, most organizations recognize the significant risk threat linked to their reliance on technology for executing their global strategies,” the report stated.
Also not surprisingly, the continued fears over the health of the global economy and the worries that unfavorable economic conditions could hamper future growth was also a big worry as 56% of respondents cited this concern, which was 2nd-highest in the survey, the same as last year.
Interestingly, and perhaps the best news from the survey for law firms: While most respondents judged the overall climate for risk somewhat less perilous than in past years, most also indicated they were willing to increase their company’s spending on additional risk management resources in 2015.
Rounding out the Top 10 Risks, according to the survey, were:
1. Regulatory changes and heightened regulatory scrutiny may affect the manner of production or delivery of products or services.
2. Economic conditions may significantly restrict growth opportunities.
3. Cyber threats have the potential to disrupt core operations and/or damage brand.
4. Succession challenges and the ability to attract and retain top talent may limit the ability to achieve operational targets.
5. Organization’s culture may not sufficiently encourage timely identification and escalation of risk issues that can affect core operations or damage brand.
6. Resistance to change may restrict necessary adjustments to the business model and core operations.
7. Privacy/identity management and information security/system protection will require significant resources.
8. Not sufficiently prepared to manage an unexpected crisis significantly impacting reputation.
9. Sustaining customer loyalty and retention may be increasingly difficult due to evolving customer preferences.
10. Existing operations not able to meet performance expectations related to quality, time to market, cost and innovation as well as competitors.