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The Changing Landscape of Business Risk

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The Changing Landscape of Business Risk

The Changing Landscape of Business Risk

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In the modern era, the pace of business is fast – but the pace of technological change is even faster.

As a result, the landscape of business risks is constantly shifting and changing, and both entrepreneurs and investors need to be on top of the potential factors that could disrupt their chances of success. At the same time, they also need to be prepared to address and mitigate new risks as they crop up.

Today’s Biggest Risks

Today’s infographic comes to us from Raconteur, and it highlights the forces that have been shaping the business risk landscape – both today and as projected for the future.

Using data from the 2017 Global Risk Management Survey done by insurance company Aon, it shows the top business risks according to 1,843 risk decision-makers from 33 industry sectors in over 60 countries.

Here were the top risks from 2017, as well as the corresponding portion of business leaders that said they were prepared for each risk:

Rank (2017)Business RiskReadiness
#1Damage to reputation/brand51%
#2Economic slowdown/slow recovery30%
#3Increasing competition45%
#4Regulatory/legislative changes44%
#5Cybercrime, hacking, viruses, malicious codes79%
#6Failure to innovate/meet customer needs59%
#7Failure to attract or retain talent57%
#8Business interruption67%
#9Political risk/uncertainties27%
#10Third-party liability70%

The insurer noted that many of these top business risks were uninsurable – and that in general, that such risks are continuing to gain precedence.

Future Business Risk

Interestingly, the survey also asked respondents to predict the risks in 2020 based on current trends and conditions.

Here is the same list, but for 2020, including the current ranks as well:

Rank (2020)Business RiskPrevious Rank (2017)
#1Economic slowdown/slow recovery2
#2Increasing competition3
#3Failure to innovate/meet customer needs6
#4Regulatory/legislative changes4
#5Cybercrime, hacking, viruses, malicious codes5
#6Damage to reputation/brand1
#7Failure to attract or retain talent7
#8Political risk/uncertainties9
#9Commodity price riskn/a
#10Disruptive technologies/innovationn/a

Damage to risk/brand fell out of the top spot all the way to #6, and two new entrants appear for the first time: commodity price risk and disruptive technology/innovation.

Cybercrime Overconfidence

Raconteur’s infographic also points to the biggest long-term risks to business, and the risks that get the most underestimated. These both come from a 2018 report by German asset manager Allianz, which includes opinions from a selection of risk experts.

The Biggest Long Term Risks
1. Cyberincidents
2. New technologies
3. Climate change/increasing volatility of weather

The Most Underestimated Risks
1. Cyberincidents
2. Business interruption
3. New technologies

As you’ll notice, the risk of “cyberincidents” tops both lists.

This is particularly interesting, because in the previous survey of business leaders, the potential business risk of “cybercrime, hacking, viruses, and malicious codes” was the one that leaders said they were most prepared for, with a 79% readiness level.

Yet, cyberincidents – which have an estimated annual impact of $450 billion per year – are both the top long-term risk and the most underestimated risk according to risk experts in the Allianz report.

Could business leaders be overconfident about this kind of threat?

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Entrepreneurship

How Leadership Accountability Drives Company Performance

What impact does leadership accountability have on the performance of an organization? As it turns out, a lot.

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Leadership accountability

Leadership plays a big role in determining the success of an organization.

Effective and accountable leadership can help propel a company forward. On the flip side, a failure to live up to the expectations of leadership can have cascading and lingering effects across an entire organization.

Bridging the Leadership Accountability Gap

Today’s infographic, from bestselling author Vince Molinaro, is a revealing look at the impact that leadership accountability can have on an organization.

Leadership Accountability

Pre-order Vince Molinaro’s new book, Accountable Leaders

The Value of Leadership Accountability

The majority of people within organizations understand the value of leadership accountability – yet, in practice, many leaders fail to deliver on that promise.

A global survey of over 2,000 HR leaders and senior executives revealed that a mere 27% believed they had a strong leadership culture. Two-thirds of those surveyed believed that leadership accountability is a critical issue within their organization, while only one-third are satisfied with the degree of leadership accountability demonstrated at in their workplace.

What impact does this leadership accountability gap have on the performance of a company? As it turns out, a lot.

The Critical Link Between Accountability and Performance

Once survey responses were organized into three distinct categories – low performers, average performers, and industry leaders – interesting trends began to emerge.

Companies in the “industry leaders” category were far more likely to have a culture of leadership accountability. In fact, industry leaders were twice as likely to have clearly established expectations for their leadership team than respondents in the average or lower performing categories. These high performing companies were also far more likely to:

  • Have formal succession programs to help identify high-potential leaders
  • Have practices in place to foster more diverse leadership teams
  • Implement development programs to effectively build the capacity of leaders

Industry leading companies had leadership teams that ranked higher in a number of key areas. Leaders at high performing companies were far more likely to:

  • Understand customer needs and desires
  • Understand external trends affecting the business
  • Demonstrate a high level of emotional maturity
  • Demonstrate passion for executing on the company’s vision

In many of these areas, the gap between industry leaders and the other categories is significant, which presents a compelling case for embracing leadership accountability as a core value.

Building a Strong Leadership Culture: Questions to Ask

The first step to building a culture of leadership accountability is self reflection. Here are questions leaders can ask to help assess how their organization is doing:

  1. Is leadership accountability a critical priority in your organization?
  2. Has your organization set clear leadership expectations for leaders?
  3. Do you believe your leaders at all levels, are fully committed to their leadership roles?
  4. Have you built a strong and aligned leadership culture across your organization?
  5. Does your organization have the courage to identify and address mediocre leadership at an individual and team level?

Answering “no” to any of the questions above means there’s an opportunity to develop a more accountable and effective leadership team.

Only three things happen naturally in organizations. Friction, confusion and underperformance. Everything else requires leadership.

– Peter Drucker

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Business

The Habits of Highly Effective Leaders

This infographic delves into what it takes to become an effective leader, and how those qualities can impact a company—beyond employee satisfaction.

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How Strong Leadership Impacts the Bottom Line

Organizations of all shapes and sizes are under immense pressure to retain good talent.

High employee turnover can directly impact a company’s bottom line—with many studies suggesting poor leadership is one of the main causes.

Today’s infographic from Online PhD Degrees explores what it takes to be an strong leader, and the behaviors of poor leaders that should be avoided at all costs.

In today’s rapidly changing world, how can the qualities of a strong leader positively shape a company’s future?

The Benefits of Investing in Leadership

Effective leadership is worth its weight in gold, with 58% of employees claiming they would choose having a great boss over a higher salary.

Not only that, 94% of employees with great bosses feel passionate about their jobーnearly twice as many as those working for a bad boss. A strong leader increases employee loyalty, creating a conducive environment for reaching a company’s goals.

In fact, research shows that companies with strong leaders are crucial when it comes to outperforming industry competitors and are three times more prepared to react to the speed of change. Moreover, a company with a strong leader is almost five times more likely to have higher customer engagement and retention rates.

How to Lead Effectively

While each company has its own processes and demands different skill sets, there are core behaviors that separate leaders from managers:

  • Clear Purpose: Clearly articulating the company’s future vision to all levels of staff in a clear and concise way.
  • Contagious Passion: While managers light fires under people to motivate them, leaders light fires in people.
  • Self-Accountability: The expectation to work harder than employees and set a standard of excellence.
  • Flexible Determination: Leaders are agile and open to change.
  • Sustainable Outlook: Focusing on long-term goals proves to a team that a leader is invested in the long-haul.
  • Dual Focus: Beyond thinking big picture, leaders provide employees with a clear and actionable strategy for success.
    • Effective leaders are born from this combination of behaviors. However, one of them has the farthest-reaching impact, both on employees and a company’s bottom line: purpose.

      Purpose and Performance

      The Global Leadership Forecast finds that a strong and well-executed purpose can build organizational resilience and improve long-term financial performance.

      effective leadership purpose

      Leaders who amplify an organization’s purpose create a culture of optimism where employees feel safe in proposing new ideas that will shape the trajectory of a company.

      The Future of Leadership

      To stay competitive, continuous learning and re-skilling should be at the heart of every organization’s leadership strategy. Leaders of the future should possess the ability to redesign jobs in a more fluid way and lean in to the changing nature of work.

      “If we don’t disrupt our business, somebody else is going to do it for us.”

      —McKinsey Analysts

      While management is a foundational skill, organizations need to invest in their leaders to ensure constant growth. Embracing the traits of an effective leader can not only provide improved returns—it also empowers organizations to thrive in an uncertain future.

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Pre-order Accountable Leaders by Vince Molinaro

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