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Regulatory risk and economic uncertainty top the list of risks for 2020

Source: Asia Insurance Review | Feb 2020

Regulatory risk and economic uncertainty have topped a poll for 2020 conducted by the consultancy Protiviti as the top threats, according to business executives.
Regulatory risk was seen as the biggest overall risk with 70% of respondents to the survey rating this strategic threat as significant.
“The overarching issue relates to perceived concerns about how all types of regulatory requirements and oversight seem to be expanding in multiple areas that may lead to even greater disruptions in business models and constrict companies’ ability to innovate in certain areas,” said the report.
“Expanding rules as to what is acceptable business practice are impacting all types of organisations, even those in nonregulated industries.
“Regulations relating to privacy, product development and approval, the environment, social issues have been changing globally, at the same time that broader governance expectations have grown. Many of these rules impact businesses that undertake cross-border trade. In effect, the regulatory climate adds uncertainty to an already disruptive business environment,” the report said.
While economic volatility had been languishing at 11th place in last year’s survey, this year it jumped to number two in the risk rankings. Despite the fact that the overall global economy seems to be performing well, executives taking part in the survey doubt whether the current situation will continue throughout 2020. “Concerns about the economy are in the top five list of risks for all regions of the world, except for organisations based in North America,” the report said.
The survey found that the more senior a person was in the organisations surveyed, the more aware of risk they were. “This is positive news, because a lack of appropriate understanding of risk can be a barrier to ensuring that an enterprise takes appropriate action to address that risk,” the report said. This awareness, though, did not always translate into effective risk management practices.
“It is noteworthy that enterprises realise that risk is increasing and have a high degree of awareness for the risk that their enterprises face, but they do not have a higher maturity of risk management processes in place,” said the report. “These results show the opportunity for improvement in the way that enterprises assess, track and manage their risk overall and a global need for improvement of risk management maturity.” A 
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