Political risk and technology are front of mind for global business executives: A.T. Kearney 2017 Views from the C-Suite
Source: A.T. Kearney , Author: Posted by BI-ME staff
Posted: Wed August 2, 2017 2:45 pm

UAE. Global executives expect economic and financial volatility to be higher over the next 12 months than it was in the past year, according to the 2017 report “Views from the C-Suite” published by A.T. Kearney’s Global Business Policy Council. Volatility is perceived as yielding both positive and negative prospects.

One-third of global C-suite executives surveyed identify a stronger macroeconomic environment as a top external opportunity this year.

Global executives express concerns about a variety of political risks. The unstable geopolitical environment is the top challenge executives expect to face in the external environment this year. 36% of global executives indicate that unstable geopolitical dynamics are a central challenge, including refugee/migration crises, armed conflict, terrorism, piracy and crime. A close second is the worsening tax and regulatory policies—the second year in row that global executives have identified this as a top challenge.

Relatedly, roughly three-quarters of executives believe that populist policies will continue to gain strength in democracies around the world over the next year, with global trade declining due to the growing prevalence of protectionist measures. In fact, executives believe that trade is the feature of globalization most likely to be under threat from rising populism and protectionism. 67% of global executives believe that global commodity prices will remain at current low levels affecting global trade.

For the second consecutive year, the C-suite survey maintained a focus on the role of technology. Executives see technology as their biggest operational focus over the next 12 months. The top operational challenge for the global C-suite is rising cybersecurity risk, with 43% of executives pointing to this as a key concern. 85% of global executives believe that cyberattacks will become more frequent and costly over the next year. And while 33% of those surveyed view technology adoption as a top challenge, 38% see it as a top opportunity. In addition, 78% of executives believe technological advancements will lead to increased global productivity growth in the next year.

“The degree to which technology and political risk dominate this year’s results is striking. Technology continues to represent both opportunities and challenges," says Erik Peterson, managing director of the Global Business Policy Council and co-author of the study. “At the same time, global executives are paying more attention to government actions and identifying risks stemming from geopolitical tensions and domestic regulatory and tax policy changes.”

69% of global C-suite executives reported that government policies have a greater influence on their companies’ overall decision making than they did in the past few years. As a result, more than 90% of the C-suite executives we surveyed are making or are considering making changes in their supply chains and international footprints due to the current political and economic environment. Almost all executives say they are placing greater importance on employing strategic foresight techniques to manage risk. Executives are thus “adapting to disruption” in the current global environment.

“These results suggest that the all-too-visible hand of political risk is increasingly driving economic outcomes and business decisions,” says coauthor, Paul Laudicina, Chairman of A.T. Kearney's Global Business Policy Council and Partner and Chairman Emeritus, A.T. Kearney.

“I would advise business leaders worried about the future to take action to manage risk. The high level of uncertainty in the global and regional operating environment means that increased agility and a heightened awareness of the risks and opportunities are keys to success.”

The Global Business Policy Council offers concrete recommendations for businesses wondering how best to thrive in the current global operating environment:

Improve cybersecurity defenses and protocols. While many aspects of technology adoption and disruption provide business opportunities and challenges, executives’ most crucial priority over the next year should be improving their firm’s cybersecurity. Recent cyberattacks have demonstrated the increasing effectiveness of hackers’ actions. Such attacks are likely to increase in frequency in the next 12 months. Delaying any hardware or software investments to bolster a business’s cyber defenses could prove very costly in the near to medium term. Just as important—if not more so—is the imperative for executives to invest in cybersecurity training for all employees, and to then model good cyber behavior within the C-suite.

Actively monitor political risks. The global C-suite is clearly attuned to the risk that geopolitics and domestic policy and regulatory developments pose to their businesses. But effectively managing these political risks requires more than just awareness. Executives should invest in active political risk monitoring and government relations capabilities in key markets in order to mitigate the risks from an otherwise potentially surprising policy development and to help shape business-friendly government policies.

Utilize strategic foresight to stay ahead of the curve. Many of the global trends and developments that global executives now see clearly had their antecedents a year or more ago. Those executives who were able to correctly spot these emerging trends before their peers are now better positioned to succeed in the current global operating environment. Incorporating strategic foresight methodologies into a company’s strategic planning process will enable executives to stake out differentiated, market-winning strategic positions.

Assess globalization strategy. Global executives agree on the need to shift their globalization strategies in the current environment, but not on the way in which they should shift. The appropriate strategy will depend on how geopolitical tensions and anti-globalization trends affect each company’s unique international footprint, supply chain, and business model. Executives will need to carefully consider their options in order to mitigate current and future risks in this new era of globalization.

Photo Caption: Erik Peterson, managing director of the Global Business Policy Council and co-author of the study

About A.T. Kearney
A.T. Kearney  is a global team of forward-thinking partners that delivers immediate impact and growing advantage for its clients. We are passionate problem solvers who excel in collaborating across borders to co-create and realize elegantly simple, practical, and sustainable results. Since 1926, we have been trusted advisors on the most mission-critical issues to the world’s leading organizations across all major industries and service sectors. A.T. Kearney has more than 60 offices located in major business centers across the world.

From our Middle East offices in Abu Dhabi, Dubai, Manama, Doha and Riyadh, A.T. Kearney supports both private and public sector clients as well as nations to excel and prosper by combining our regional expertise and global business insights to achieve results. 

For more information, visit www.middle-east.atkearney.com



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