What Are Emerging Risks that Companies Should Be More Aware of?
In the ever-evolving landscape of business risks, investment professionals weigh in on the emerging challenges that companies should brace for. From a Co-Founder & CEO emphasizing the need to invest in cybersecurity protections to additional insights on building flexibility for geopolitical changes, we present a spectrum of expert advice and additional answers. Here's a compilation of eight critical emerging risks and strategies to help companies stay ahead of the curve.
- Invest in Cybersecurity Protections
- Leverage Data Against Mega-Platforms
- Proactive Cybersecurity Measures
- Diversify to Mitigate Climate Risks
- Stay Informed on Data Privacy Laws
- Embrace Continuous Technological Innovation
- Build Flexibility for Geopolitical Changes
- Strengthen Remote Work Data Security
Invest in Cybersecurity Protections
As an investment advisor, one emerging risk I see is the increasing vulnerability of data and technology systems. Cybercrime directed at financial companies is on the rise, threatening client accounts and sensitive information.
My firm has invested heavily in cybersecurity protections and planning. We conduct regular audits to identify weak points in our systems and have strict controls on data access. Employees go through frequent security training to minimize human error. We also have insurance to help cover costs in the event of an attack.
Despite best efforts, some risk always remains. Clients should have strong, unique passwords for their accounts and enable two-factor authentication if available. They should be wary of phishing emails and malicious links, never providing account numbers, passwords, or other sensitive data. Regularly monitoring accounts for unauthorized activity is also important.
Though technology underpins modern finance, we cannot become complacent. Continuous vigilance and investment in security are crucial to limiting risks from cyber threats. Companies staying ahead of vulnerabilities and hackers alike will be best positioned to thrive in an increasingly digital world.
Leverage Data Against Mega-Platforms
As an entrepreneur focused on empowering small businesses, one emerging risk I see is the rise of "mega-platforms" that threaten to dominate industries. Massive companies expanding into new verticals can displace smaller players and limit competition.
My company helps clients anticipate how platform companies might enter their market. We identify ways to leverage data, customer experiences, and partnerships to strengthen their position. For example, one client faced competition from a large payments processor moving into lending. We helped them launch new data-driven loan products and an improved digital experience. This boosted conversion rates and revenue, protecting their market share.
Rather than resist the platforms, smart companies should look to benefit from them. Exploring open banking solutions or partnerships with platform companies can drive new opportunities. Many large companies also lack the agility and customer focus of startups. Spotting these weak points creates openings for smaller players.
The rise of dominant platforms is inevitable, but not an end for startups and SMBs. With foresight into industry changes and the right strategies, companies can continue to compete and even thrive. But they must act quickly, investing to build advantages that will sustain them long-term. Waiting too long means playing catch-up in a race that may already be lost.
Proactive Cybersecurity Measures
One emerging risk that companies need to be more aware of is the growing threat of cybersecurity breaches. With increasing reliance on digital infrastructure, a single attack can cripple operations, damage reputation, and lead to significant financial losses. I suggest businesses invest in robust cybersecurity measures, regularly audit their systems, and ensure they have comprehensive incident response plans. Training employees to recognize phishing attempts and securing third-party vendor access are also critical. A proactive approach is key; waiting until a breach happens is too late.
Diversify to Mitigate Climate Risks
The instability of the world's climate poses significant threats to the reliability of supply chains. Unpredictable weather patterns and natural disasters can lead to unexpected delays or loss of resources, which can severely impact a company's operations. Companies must consider diversifying their suppliers and developing adaptive logistics strategies to mitigate these risks.
This might include sourcing materials from different geographic areas or investing in more resilient infrastructure. Companies should start evaluating their supply chain for weaknesses that could be exposed by climate change and begin fortifying them immediately.
Stay Informed on Data Privacy Laws
With the ever-growing digital economy, data privacy has become a critical concern for customers and regulators alike. Companies are required to navigate an increasingly complex landscape of rules that govern how personal information is collected, stored, and shared. These regulations can vary greatly between regions and change frequently, making compliance a significant challenge.
Failure to comply can result in substantial fines and damage to the company's reputation. It is essential for businesses to invest in robust data management systems and stay informed about changes in legislation to ensure ongoing compliance.
Embrace Continuous Technological Innovation
The pace of technological change is accelerating, leading to a phenomenon known as rapid technological obsolescence. Companies may find that the technology they invest in today could be outdated in a very short time, necessitating continual updates and strategic pivots. This can affect not only operational efficiencies but also customer expectations and market competitiveness.
Organizations should foster a culture of continuous innovation and be prepared to adapt their business models in response to new technological advancements. They should proactively seek to understand emerging technologies and assess how they can be integrated into their business strategies.
Build Flexibility for Geopolitical Changes
Geopolitical tensions can emerge suddenly and have significant impacts on international business operations. Trade agreements and tariffs can change with little notice, causing disruption to global supply networks. Companies involved in international trade must be aware of these risks and consider building flexibility into their contracts and partnerships.
Monitoring political developments and having contingency plans in place is crucial for minimizing disruptions. It is advisable for companies to regularly assess their exposure to geopolitical risks and develop strategies to manage them.
Strengthen Remote Work Data Security
The rise of remote work has introduced new challenges for protecting company data from insider threats. Employees working from various locations often use personal or less-secure networks, which can increase the risk of data breaches or leaks. While remote work offers flexibility and cost savings, it also necessitates stronger security protocols and employee training on data protection best practices.
Companies must emphasize the importance of cybersecurity awareness and ensure that their workforce is equipped to handle sensitive information safely. Consider reviewing and updating your company's cybersecurity policies to better address the vulnerabilities posed by remote work.