Ernst & Young releases Business Risk Report for 2009


The Ernst & Young’s Business Risk Report for 2009, released on Friday, outlines the top 10 risks to business across 11 industries.

“There are great opportunities despite the difficult times ahead,” said Ernst & Young director of advisory services Celestine Munda. Risk management will help South African companies prepare for the worst to achieve the best, the report said.

  1. In the 1st place is the credit crunch with firms in asset management, real estate, insurance and banking being hardest hit. Capital-intensive sectors like power and utilities are also feeling the pressure of a tighter credit environment.
  2. Regulation and compliance, 2008’s top threat, has dropped to number two this year. Experts anticipate more regulations will be put in place due to global market conditions, but they believe these regulations should be more balanced. “There needs to be a more pragmatic approach to regulations, especially in the financial sector.” said Munda. “As we globalise, we are exposed to different regulatory practices in different countries, making it more complex.”
  3. Deepening recession is in the third spot with funding drying up, numerous leading global firms closing their doors and consumer confidence spiraling downwards. “The global economic crisis is probably going to get worse, we don’t know how much worse, before it gets better,” said Munda.
  4. In the fourth place is Radical Greening (What is your carbon footprint?).Environmental & Sustainable practices will be under the spotlight.
  5. Non-traditional entrants are named as the fifth business risk.(This impact has already been seen – through surveys conducted by the Reputation Institute and Weber Shandwick. As Prof. Charles Fombrun have said:”Watch out for competitors, they will come into your industry and do it quicker, faster and better than you. Just ask Sony when they were surpassed by Samsung  in the World’s Most Admired Company survey)
  6. Cost containment. Ernst & Young said companies have to maintain a careful balance between the risks of cost-cutting and talent management if they are to succeed. These business risks are ranked sixth and seventh respectively.
  7. Attracting and retaining talent. Just because there is a recession, due thought needs to go into giving people the red card.
  8. The eighth business risk is executing alliances and transactions. This remains crucial to business strategies of leading firms in telecommunications, media and utilities, even as tightening credit conditions have resulted in fewer mergers and acquisitions.(Think about who you want to get into bed with)
  9. The ninth risk is business model redundancy, forcing industry leading firms to reinvent their corporate strategies.
  10. Lastly, reputation risks need to be considered. Companies are here to make money, but they cannot survive on profit alone. There needs to be a combination of both profit and a good reputation if businesses are to survive, said Munda. “Corporate governance is becoming more transparent and I believe this will continue.”

See, you cannot ignore your reputation. It is woven into the fabric of the company.

Question to you: Is Reputation part of your company’s DNA? If you say yes, how do you know THAT. If not, what strategies will you use to embed it?

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