Former NCAA basketball coach Bobby Knight once said, “The key is not the will to win... everybody has that. It is the will to prepare to win that is important.” Whether it’s winning a basketball game or managing a business, the fundamental message of Knight’s quote rings true: preparation is vital. Preparation can be particularly important when it comes to risk management.
Sophisticated cyberattacks, advancements in technology and new government regulations that catch executives unaware can lead to devastating consequences to their business. Reducing your company’s exposure to the risks inherent in new developments and technology is essential to protecting your company, but this can be difficult if you are blind to your areas of vulnerability. The trick to managing risk is not just seeing the storm brewing this week, but also to anticipate any potentially nasty weather coming in the months ahead.
From information security threats to regulatory changes, businesses will have a lot to monitor for in 2017. Here are the top risks that can threaten your company this year and how your business can develop a plan to deal with them:
Cyber hackers have become a threat to businesses in every sector and every size. Health care, manufacturing and financial services have been among the hardest hit and topped IBM’s 2016 X-Force Cybersecurity Intelligence Index list of industries most frequently attacked by information security threats.
Unfortunately breaches are becoming more sophisticated than ever. Symantec found that vulnerabilities were found in three quarters of websites, and there were over one million web attacks against people each day in 2015.
This risk is an expensive one. Cyberattacks cost the average American firm $15.4 million per year, according to a 2015 report by Hewlett Packard and the U.S.-based Ponemon Institute of Cyber Crime. Protecting your company is just as expensive. The average U.S. company of 1,000 employees or more spends $15 million a year battling cybercrime, the report states.
In 2017, businesses must continue to invest time and money into securing their assets. They can do this by purchasing up-to-date software, encrypting mobile devices that belong to the business, training employees on the dos and don’ts of cyber protection, buying property and casualty insurance and partaking in a penetration test of their information technology systems.
Rapid technology changes
Companies’ infrastructures and networks are constantly changing, and executives must spend time understanding their technological needs and stay ahead of the curve. The rapid rate of technological and digital advance was the biggest challenge for global business leaders according to a survey conducted by CEMS, which questioned recent graduates from the CEMS Masters in International Management program. Technology updates require changes to internal controls and information security protocol, as well. The new technology may be involved in data sharing and business activities that involve the transfer of potentially sensitive information, and businesses will want to ensure adequate controls are in place to protect their data.
LinkedIn and online job posting sites have opened up the door to hundreds of new job recruitment opportunities, but hiring managers continue to struggle to fill critical positions within their firms. Unfilled vacancies may cause more employees to work longer hours, which may lead to more turnover and disruption for your business.
To solve this problem, more companies are following the creative workforce to innovative cities to find young, qualified talent. In the recent months, General Electric has announced it is making the move from suburban Connecticut to downtown Boston to capture a broader talent pool. McDonalds is doing the same, moving from Chicago’s suburbs to its downtown West Loop neighborhood, and social media giant Pinterest recently moved from Paolo Alto to tech-centric San Francisco.
If your company can’t afford to move its location to where the majority of the talent is living, it should focus on investing time and money in developing their best young employees. It may also want to review its policies and procedures for employee relations, recruitment and selection, employee development, and compensation and benefits to identify places where these retention strategies may be improved.
Changes in government administration bring uncertainty, and the start of President Trump’s term is no exception. President Trump has advocated for major overhauls to taxes, regulations and foreign relations, which could usher in new risks for your business.
Trade negotiations could have an impact on supply chains. A repeal and replacement of the Patient Protection and Affordable Care Act could have an impact on your employee benefit packages. Reductions in regulations could affect your decision-making.
Companies should monitor political developments closely and consider folding some of these considerations into their enterprise risk management approach. There may be adjustments to policies and practices that can be made proactively that will mitigate your company’s risk of being blindsided by drastic regulatory overhauls.