Turn risks and opportunities into results
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August 2011 |
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CORNELIA BUMBĂCEA - Partner - Leader of Transaction Advisory Services
ERNST & YOUNG S.R.L. |
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011033 Bucuresti, Sector 1
Telefon
+40-21-402.40.00
Fax
+40-21-310.71.93
Website
www.ey.com
CORNELIA BUMBĂCEA
Partner - Leader of Transaction Advisory Services
ERNST & YOUNG S.R.L.
Executive summary
We first interviewed a panel of more than 75 sector commentators to identify the strategic challenges facing organizations in seven sectors both today and in 2013. We then surveyed more than 700 leading organizations in 15 countries to discover how companies and governments perceive and are addressing the risks and opportunities that were identified — or in some cases, are struggling to address these challenges.
The top 10 risks and opportunities, aggregated across the seven sectors, are presented on the next pages as ranked by our survey respondents, along with changes from last year and the outlook toward 2013.
THE TOP 10 RISKS
The top 10 risks for 2011 are, in rank order:
1 Regulation and compliance.
Unchanged from number one in the 2010 report.
In four out of seven sectors we surveyed, regulation and compliance risks rank first. Furthermore, the two sectors that rate the impact highest see risk levels rising still further by 2013.
Forecast for 2013: no change from the current ranking.
2 Cost cutting.
Up four places from the 2010 report.
Much of the pressure driving the rise of cost cutting appears to originate from government austerity programs. The most frequently reported mitigation strategy is process optimization.
Forecast for 2013: falling from the current ranking.
3 Managing talent.
Up one place from the 2010 report.
While never first, in almost all sectors human resources risks rank among the top four challenges. Many of the geographies where the risk is of particular concern are emerging markets.
Forecast for 2013: rising from the current ranking.
4 Pricing pressure.
Up 11 places from the 2010 report (where it was below the radar in fifteen place).
Organizations in many sectors are facing mature markets and slow organic growth rates, and thus pressure on prices. Additionally, like cost cutting, national austerity programs seem to be a driver of this risk.
Forecast for 2013: falling from the current ranking.
5 Emerging technologies.
Up eight places from the 2010 report.
The most frequent reported drivers of this risk are difficulties in developing an innovation culture and uncertainties inherent in untested technologies.
Forecast for 2013: rising from the current ranking.
6 Market risks.
New this year.
Market risks are a new entrant to the radar, combining issues such as commodity price shocks and real estate market volatility. Mitigation strategies based on active monitoring are most frequently reported.
Forecast for 2013: rising from the current ranking.
7 Expansion of government´s role.
New this year.
Another new entrant to the radar, expanding government ranks among the top four concerns of respondents from the world’s two largest economies, the US and China.
Forecast for 2013: rising from the current ranking.
8 Slow recovery/double-dip recession.
Down five places from the 2010 report.
Economic risks have fallen, as expectations of recovery have risen. Still, 50% of respondents from Germany report concerns related to fiscal tightening, and 50% of US respondents report continued weakness in private demand.
Forecast for 2013: falling from the current ranking.
9 Social acceptance risk/CSR.
Unchanged from number nine in 2010.
Oil and gas, life sciences and public administration respondents are most likely to report a rise in public pressures on their sector. The most frequently reported response is the integration of CSR into strategy.
Forecast for 2013: rising from the current ranking.
10 Access to credit.
Up eight places from the 2010 report.
Concerns about access to credit have abated overall. Still, one in four organizations worldwide report ongoing struggles to obtain the credit they need.
Forecast for 2013: rising from the current ranking.
THE TOP 10 OPPORTUNITIES
The top 10 opportunities for 2011 are, in rank order:
1 Improving execution of strategy across business functions.
The most frequently cited successful response to this opportunity is to enhance strategic communication. Respondents located in China are more likely to emphasize the development of the strategic planning function as a key to success.
Forecast for 2013: no change from the current ranking.
2 Investing in process, tools and training to achieve greater productivity.
The sectors vary in the degree to which cost optimization or staff development are emphasized in seeking productivity. Overall, the banking and public administration sectors report the greatest barriers to productivity improvements.
Forecast for 2013: rising from the current ranking.
