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Economy

Protectionism tops business concerns

Written by Adrie van der Luijt

Friday, 28 March 2008

Businesses across the globe are ill-prepared to deal with a rise in government protectionism.

A new report commissioned by BT Global Services, 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.

Breadth of risks

Respondents rated a 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.

Francois Barrault, chief executive of BT Global Services said that the report highlighted 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,” he added.

Risk management as a strategic tool

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.

Climate change

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: