The complex uncertainties posed by today's interconnected risk landscape do not seem to be keeping business leaders up at night. A recent survey of board members and C-suite leaders by Protiviti, in collaboration with NC State University's ERM Initiative, found leaders believe their corporate resilience and adaptability have been battle-tested over the past five years. Having navigated significant challenges, these leaders report high confidence in their organization's resilience and adaptability.
As businesses confront a volatile business environment, this confidence is facing its toughest test yet as economic uncertainty, people-related risks and the inevitability of cyber threats loom. The management teams and boards most prepared to confront these challenges will be defined by efforts to integrate risk management responsibilities, forward-thinking and continuous improvement mindsets, and willingness to leverage emerging technologies to generate opportunities for organizational growth.
Keep economic risk at the top of the agenda. The economy remains at the forefront of the risk landscape, with economic uncertainty and volatility expected to persist. Leaders across industries are grappling with market forces contributing to this uncertainty, including inflationary pressures, tariffs, growth in AI and other emerging technologies as well as policy changes from a new administration. For example, uncertainty regarding U.S. trade policy has made it difficult for leaders to plan and invest. Within this array, there are implications for talent availability and labor costs that may affect companies' ability to meet profitability objectives.
C-suites and boards will further sharpen their attention on growth and profitability as they navigate an uncertain economy. As part of these efforts, we expect to see a heightened focus on ROI, especially when evaluating technology and AI investments.
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Don't procrastinate on talent planning. People-related issues occupy three of the top five short-term risks, according to the survey. These results indicate significant ongoing challenges with attracting, developing and retaining top talent. Meanwhile, leaders must also balance changes in workforce expectations, anticipate labor costs and plan for succession challenges. While there is a sense of uneasiness for the future of talent, successful leaders note effective scenario-planning, informed by regular reporting on an organization’s health and talent forecasting, is imperative to mitigate these hazards. Pulse-checking helps determine areas of need and pain points, creating an understanding of what skills already exist in-house versus what new skills are required to achieve organizational objectives both now and in the future.
Quantify the challenge. To keep their eyes on the horizon and gain critical foresight, business leaders are deploying data analytics, scenario analysis, diversification strategies, technology modernization initiatives and rapid-response planning to ensure strategic agility. AI will play a critical role in the future of these efforts. This is especially true when looking at talent-related risks. As AI technology evolves, like the transition of generative AI to agentic and physical AI, the right talent investment and necessary reskilling and upskilling initiatives are key to preparing to meet the demands of the future.
Pull up a seat for cyber in the boardroom. C-suite and board leaders ranked cyber threats as the second-most-concerning risk over the next two to three years, outranked only by the economy. Directors and boards must adopt initiatives and frameworks that will allow their organizations to embrace AI and emerging technologies while focusing on their responsible deployment and use.
For organizations that might not have the in-house competencies to get the most out of these technological opportunities, partnerships will be vital. However, partnerships are not without risks. External relationships represent an extension of the so-called “boundaryless” organization and must be managed effectively. Business objectives can be affected by a third party's actions when there is a lack of strategic alignment across organizations and can pose a cyber threat if there are inconsistencies in security protocols and practices.
Organizations must strengthen communication between chief information security officers and the board, ensuring cybersecurity is a core part of ongoing board discussions — even to the point of considering the appointment of cyber experts and technologists as board members if circumstances warrant.
Instability on the Road Ahead
Economic, talent and cybersecurity challenges will persist over the long-term. Organizations that see these risks as inherently interconnected, and address them holistically, will be positioned for success in the near- and long-term. While leaders may feel confident in their ability to navigate change, it is evident the effects of today’s risks are likely to extend well into the future. Plus, new risks will emerge. Executives will need to strengthen their organization’s resilience by assessing these risks through a proactive lens that will allow them to be nimble in addressing strategic and operational concerns and keep pace with the speed of change.
