Rapid pace of change is now top ‘emerging’ business risk: survey
- 25 July, 2019 08:53
Although the pace of business change is the top concern among organisations, we see a lack of tangible action among many organisations to address it
Organisations are concerned about their ability to keep up with a rapidly changing business landscape, driven in part by concerns about their own organisations’ lagging and misconceived digitalisation strategies, reports Gartner.
This is reflected in Gartner’s latest Emerging Risks Monitor Report which shows that “pace of change” has emerged as the top emerging risk among enterprises today.
Gartner says the report is based on the results of a survey among 133 senior executives across industries and geographies in the second quarter of 2019.
Meanwhile, last quarter’s top emerging risk, “accelerating privacy regulation,” has now become an established risk after ranking on four previous emerging risk reports, says Gartner.
Closely linked to the concern around pace of change are two operational risks, which Gartner analysts say may be partly driving the top concern around the pace of change and related threats from business model disruption.
The first is lagging digitalisation.
Gartner says executives are concerned that digital budgets are inadequate, a high number of digitalisation projects failing, and there were problems about scaling projects and project delays.
Risk leaders, it says, can help drive change management initiatives related to digitalisation, provide support to employees in a high-change environment, and help assess and manage expectations related to project success.
The second is digitalisation misconceptions.
Executives are concerned that digital budgets are inadequate and a high number of digitalisation projects are failing
With two out of three digital transformation projects failing to achieve their stated objectives, an increasing focus on digital projects can reveal enterprise weaknesses, says Gartner.
Progressive organisations favour clarifying strategic objectives early and taking an incremental approach to digitally driven business model transformation. “This helps the organisation learn at scale, with limited risk,” says Gartner.
Vulnerability to disruption
“Among the top five emerging risks in the quarter’s survey, the linkages are clear,” says Matt Shinkman, managing vice president and risk practice leader in the Gartner audit and risk practice.
Top 5 risks by overall risk Score: 3Q18-2Q19
Source: Gartner (July 2019)
“Organisations are concerned with the pace of business change and vulnerability to disruption. Part of the reason they may feel this risk so acutely is related concerns around their own operations, including digitalisation strategies and an inadequate talent pipeline.”
Seventy-one percent of respondents indicated that the pace of change was a key risk facing their organisations.
This risk was a consistent concern across industries, with particularly high ratings in healthcare, insurance and industrials, with executives in these industries indicating pace of change as a top emerging risk with a frequency of 70 per cent or higher.
The concern around the pace of change is driven by fears of being disrupted by nimbler competitors and a lack of clear avenues for growth.
This risk can materialise through a rise in the number of new, disruptive competitors, a failure of the brand proposition to meet client needs or demands and executives not responding to macro trends and changing consumer needs.
Gartner says risk leaders have a role to play in inserting themselves early in the strategic planning process and to work across function by collaborating with strategy and finance teams to encourage positive risk taking, such as transformative measures to the business.
“Although the pace of business change is the top concern among organisations, we see a lack of tangible action among many organisations to address it,” says Shinkman.
“Twenty-four percent of organisations report no action to address the impact of the pace of change, while only 28 per cent are elevating this risk to the board.”
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