Economic conditions, including inflationary pressures, topped the list of concerns cited by executives, outranking the ability to attract talent and cyber threats, according to a new survey.
The annual
However, the executives were also asked to rank the top risks for a decade from now, and cyber threats ranked in first place for 2034, followed by the ability to attract and retain top talent in second place, and the adoption of digital technologies requiring new skills in short supply, which was in third place. In fourth place for 2034 was the rapid speed of disruptive innovations enabled by new and emerging technologies and/or market forces, and in fifth place was heightened regulatory risks and scrutiny.
Technology such as artificial intelligence was one of the main points of discussion during a luncheon panel Tuesday to discuss the latest survey results.
"Artificial intelligence is not new by any stretch of the imagination, and we've been developing, experimenting and playing with it for a very long time," said Christine Livingston, global leader of artificial intelligence services at Protiviti. "But the scale at which ChatGPT rose to 100 million users is unprecedented, and it really caught most of corporate America by surprise. There were very few companies that had been experimenting with it and had roadmaps and who had been deploying the technology. Those are the ones that became the early adopters and deployment partners with OpenAI and other large language models. But for the most part corporate America was a little flat footed and we've seen 2023 as really the year of catch-up, where companies are trying to figure out what is this technology and should I be using it. They now see it as necessary to their competitive differentiation and really staying in business in a lot of industries."
Cybersecurity threats rank as a top risk, and the spread of artificial intelligence is accelerating concerns. "You see a lot of bad actors that are now taking the power of AI and using that to actually scale up their attacks and look for vulnerabilities within organizations," said Sameer Ansari, global leader of the security and privacy practice in technology consulting at Protiviti. "They can do it quicker and faster, and what happens is now you have CISOs having that conversation of saying how do I use AI to really shore up my defenses, to be able to identify, detect, protect and respond to those attacks."
He is having conversations with chief information security officers about how they can leverage AI to protect their organizations.
The conflict between Israel and Hamas also had an impact on the results of the survey, which had already gotten underway prior to October 7.
"We had the ability to look at what people were thinking throughout October 7, and what did those that responded after October 7 indicate," said Mark Beasley, director of NC State's ERM Initiative. "We definitely saw a shift upwards and concern about a number of risks and just overall a higher rating for those responding after the events in the Middle East. That definitely caught their attention."
Respondents are also concerned about geopolitical and economic risks from China. "Decoupling from China is a question that every investor, every C-suite or corporate person I talked to recently at the Milken Institute is asking," said William Lee, chief economist at the Milken Institute. "How do I avoid the geopolitical hotspots? Where do I put my future factories? More importantly, where are my markets going to be? The decoupling issue is really top of mind on a lot of the C suite executives and policymakers. And demographics and the question of where are my future markets? Africa's population is 1.4 billion people. That rivals China. But in Africa, you've got a young and growing population. In China, we've got an aging shrinking population."
Respondents to the survey were less concerned about climate change risks, and Accounting Today asked the panelists about how it ranked on the list of concerns.
"Climate is obviously one that we're focusing on," said Beasley. "It did not make the top 10, but it did move up in priority for the short term from the 31st to the 22nd position. Where you see climate moving closer to the top 10 is the long-term view. It is 13 in the 2034 horizon, so I think climate is definitely growing from last year in significance in the minds of executives for the short term, but particularly growing as they look longer term out. Now the area where you definitely see it in the top five is in the energy space. It's in the 2024 and 2034 top five for energy, and particularly there's a layer of risk in our study looking at natural disaster risk. That is what's really on the minds of the energy companies in that space. This has been an interesting risk that we paid attention to over the last two to three years especially, and we're seeing it become of greater significance."
There were some geographic differences among the respondents. In Europe, climate risk ranked in the top five among respondents, as well as in the Middle East where it ranked as a major concern.
Accounting Today also asked the panelists about regulatory concerns easing if the Supreme Court decides to roll back the authority of the Securities and Exchange Commission and other federal agencies in a pair of high-profile cases currently before the court,
"Those are all cases we're all watching closely," said Matt Moore, global leader of risk and compliance at Protiviti. "Depending on how the courts rule on some of those, it may drive or shift back into a maybe a slightly more moderate environment. Clearly the authority to make rules and agency scope is being pushed a bit, depending on the outcome. Any regulatory change creates a cost, and they need to understand the change, incorporate it and adapt their processes accordingly. While the decisions in these cases may provide improved clarity, it also triggers change and change that they need to adapt to. I don't know that anybody is expecting things to suddenly get easier as much as a gradual reversion."
