The top risks and opportunities facing business

To prepare for what lies ahead, organizations need to understand the risks and opportunities that await them. According to our recent report, Business Pulse: exploring the dual perspectives on the top 10 risks and opportunities in 2013 and beyond*, the biggest three threats for companies are pricing pressure; cost cutting and profit pressure; and market risks.

And the top three opportunities are innovation in products, services and operations; emerging markets; and investing in processes, tools and training.

Tread carefully

Dealing with pricing pressure is a major challenge for companies, but it can be helped with the right strategy.

“When all companies are thinking about emerging technologies, there’s a danger that you will miss the boat without sufficient investment.”

Paul van Kessel
Global IT Risk and Assurance Leader, Ernst & Young

For example, productivity can be improved through technological innovation; working practices can be made more flexible, or work can be offshored or outsourced; and products and services can be innovated.

Cost cutting and profit pressure is another big concern for the world’s commercial executives. After five years in a global downturn, the big challenge facing today’s executives is making further cuts without damaging products and services. But businesses that get it right will benefit.

Cost cutting and profit pressure are pushed in large part by market risks, including commodity price volatility, interest and exchange rates, and equity risk. Such market volatility was named as the third-biggest risk facing companies.

Opportunity knocks

When picking the top opportunity, most respondents chose innovation in products, services and operations. However, innovation is not always a managed process, tending to be messy, unpredictable and spontaneous; “one size fits all” is rarely a productive approach.

Emerging markets is the second major opportunity. Although these markets may have struggled at times during the downturn, they still offer good opportunities to investors – providing they target the right nations. For example, it’s surprising that more companies don’t focus on the Philippines, Vietnam and Indonesia, which have populations of 100 million people or more, creating a huge target market.

Investing in processes, tools and training to achieve greater productivity is the third biggest opportunity, according to respondents. Productivity is an area where many companies feel there is much room for improvement, especially in developed markets, such as North America and the EU, where companies place this opportunity second. Rapid-growth markets place it fourth.

Thoughts on the biggest risks and opportunities may change depending on how economies and industries perform. Whatever happens, though, one thing is sure, forecasting the future is risky, but businesses that fail to look forward will almost certainly be left behind in an increasingly competitive, globalized world.

*  Business Pulse: exploring the dual perspectives on the top 10 risks and opportunities in 2013 and beyond, Ernst & Young, 2013.

The complete article was written by:

  • Randy Miller 
    Global Risk Leader, Ernst & Young
  • Paul van Kessel 
    Global IT Risk and Assurance Leader, Ernst & Young
  • Steve Watson 
    Global Performance Improvement Leader, Ernst & Young

Read the full case studypdf2.16 MB

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