10 Various Important Business Risks That Cannot Be Ignored
With Malwarebytes and ransomware attacks making headlines and the coronavirus pandemic pushing businesses to adopt remote working and online business structures, cybersecurity has become an area of serious threat for many leaders in businesses. In this article, we will be discussing the various business risks and solutions of the present times that one needs to overcome.
You may not be in the intelligence technology sector, but it is probably impossible to think of your business without IT. Presently, computing technology plays an important role in the way you serve, communicate, and work with your clients. But the present days’ advantage of IT came from various risks. Your systems and network services as your partner in functioning.
Top 10 Business Risks In Present Scenario
The various top 10 business risks involve the impact of the pandemic that includes business interruption risks, economic risks, and supply chain exposure. These risks are an integral part of any business and they cannot be ignored. All these risks have to be taken care of. So without any further delay, let us begin with the business risks examples.
Respondents to the survey that was conducted in 2019, cyber-attack/data breach was ranked in sixth place. Since then, they have come to witness online attacks as an epidemic of their own.
Cybercriminals were fast to capitalize on the move to remote work and online business at the time of the pandemic. For instance, ransomware attacks increased dramatically, growing 400% from the first quarter of 2018 to the fourth quarter of 2020, as per a report on Cyber Security Risk. The report predicts that business costs related to ransomware attacks could attain $20 billion this year.
The hike in losses has pushed cyber insurers to raise their rates while decreasing capacity. However, cyber assurance is just part of the solution to online attacks. Businesses must endeavor to keep pace with hackers and those starting ransomware attacks, endowing in cyber security and continuously assessing their potential exposures.
Businesses across the globe witnessed functioning come to a screeching halt in the beginning of 2020 as governments enforced travel restrictions and lockdowns to combat the Covid-19 pandemic.
The journey along with the raised reliance on technology and an associated world altered the way many assume about business interruption, identifying that such disruptions can be systemic and not just local happenings. That changed perspective drove the jump of business interruption to the second spot ranking in 2021, up from the fourth place in 2019.
As the business interruption threat develops, entities should strive to better understand how they might be impacted by the altered threat. Then, they must construct solutions to address the risk, which includes appropriate risk transfer and creating resilience against the potential for more frequent extreme scenarios that could interrupt business.
Economic slowdown/slow recovery
The global economy abbreviated 3.2% in 2020 because of the impact of the pandemic, and while a recovery is ongoing, troubling signs of fluctuations remain. The recent impact of the omicron variant on economic activity portrays that uncertainties still surround the economies of the world.
Economic Slowdown was the top risk in the survey that was conducted in 2019, as business leaders eyed the chances of an impending recession. Encountered with ongoing economic upheaval, businesses should look for avenues to maintain and raise revenue, control expenses and take steps to create resilient functions and workforces. A sound enterprise risk management program can have a good impact on that resilience and help improve businesses’ agility and competitiveness.
Commodity price risk/scarcity of materials
The interruption to consumer and manufacturing activity, along with port closures and transportation interruptions in the early days of the pandemic, led to a dearth of materials and items. Now, as businesses look to return to normal levels of action, many item producers are unable to keep up with increasing demand. There are various financial risks in businesses as well.
For this, commodity price risk of materials attained its highest level ever in the survey, increasing from seventh place in 2019. Meanwhile, as businesses wait for commodity supply to rebalance with demand, there is doubt about whether the global economy has experienced fundamental alterations that will lead to lasting increases in the values of some commodities and materials, fuelling inflation.
In these risk surroundings, businesses will require to take such steps as implementing detailed cost tracking, assessing various scenarios, and taking the benefit of risk analytics. Meanwhile, procurement departments should struggle for agility and familiarise themselves with the complete range of hedging chances.
Damage to brand or reputation
As the Covid-19 pandemic progressed, some observers predicted that it might offer a distraction from reputation-threatening occurrences. A look at the negative fallout many businesses experienced in 2020 as a result of various mistakes, events, and transgressions showed the reputation threat stayed in full force.
Brand and reputation damage slipped a bit in this ranking of the year down from second place in 2019 — but the threat is still prominent. Given the influence of social media on the spread and speed of potential reputation-damaging news, businesses should recognize their exposures and make addressing them part of their enterprise risk management programs. Scenario analysis and developing and testing response plans can also decrease the risk.
The regulatory landscape of the business globally grew more challenging now than ever. With governments around the globe looking to raise their authority in such areas as financial markets, public health, taxation, climate change, and technology, complexity in regulation is likely to increase.
Health crisis or pandemic risks
As businesses continue to address the numerous and broad impacts of the Covid-19 pandemic, they clearly recognize the potential threat of health crisis and pandemic risks. The peril made a huge leap when the survey was conducted.
The nature of the present crisis is testing the leaders of the businesses in new ways. Both nations and businesses will be changed by this pandemic as the behaviors of the consumers change, reshaping of the supply chains, and expectations of the government shift.
Supply chain or distribution failure
Beyond the effect of the Covid-19 pandemic on supply chains, added disruptions have followed from natural catastrophes, climate change, and even a container ship wedged in the Suez Canal. Among the impacts: risk decision-makers shifted supply chain or distribution failure into the top 10 business risks.
Other hazards can also threaten supply chains, that includes political unrest, cyber-attacks, credit failure, and product recalls. With governments and consumers rising their aim on environmental, social, and governance (ESG) problems, ESG risk could pose a future supply chain threat.
The risk of raised competition has long been among the top business risks. While it slipped in the ranking of this year down from fifth place in 2019, that likely carries more to do with respondents’ rising concerns over other perils stated by the Covid-19 pandemic.
Numerous factors can influence the own competitive position of the organization. Its own new competitors, comparative resilience, changing consumer trends, technological advances, economic trends, regulatory changes, and changing competitor strategies can all play a part.
Failure to innovate/meet customer needs
Innovation is crucial to future business success. One silver thread of the Covid-19 pandemic has been many successful efforts of organizations to develop the latest products and services to address pandemic disputes and innovations that may have a crucial role in their businesses going forward. This is among the small business risks.
The Bottom Line
Businesses prevail with various risks, and the present coronavirus scenario has added more to the existing hurdles. Many businesses are facing losses for these above mentioned business risks and no one can avoid this. All organizations have to take serious actions to combat all these risks and move forward with their operations.