CEO Pulse survey highlights continued global uncertainty as crisis risk

01 August 2017 Consultancy.uk

Uncertainty is increasingly affecting CEOs’ ability to make key business decisions, new research has revealed. Last year saw the unexpected decision to leave the EU by the UK, the election of Donald Trump to the White House, as well as continued economic uncertainty in China, political uncertainty in Latin America and fast paced technological change driving disruption in various markets.

PwC’s latest Pulse CEO study has shown that 2017 has so far been plagued by new disruptions, such as the triggering of Article 50, and the hung parliament after the 2017 general election, while the continuously unpredictable US Trump administration also adds to global uncertainty.

CEOs prededict a growing number of crisis in the next three years

CEOs were found to be relatively weary, following more than a decade of economic uncertainty, with around 15% indicating that they have experienced five or more crises in the past three years, while around 65% experienced at least one. The future remains fraught with crises, with around 30% of respondents say that they expect more than one crisis within the next three years, and 16% saying that they predict no crisis.

In terms of key threats, global economic uncertainty takes the number one spot, as cited by 72% of respondents. Changes within the regulatory landscape come second, cited by 55% as a number one threat. Increased rates in the US, the effect of Brexit on the pound, as well as global volatility as capital flows into safe havens, mean there is increased currency volatility, which is cited by 49% of respondents as a key threat. Geopolitical uncertainty, and the speed of technological change too feature, at 47% and 47% respectively.

Global economic uncertainty

In terms of critical triggers for companies, they tend to stem from across the business value chain. From legal issues related to compliance failure and sanctions to technological issues, pertaining to cyber breaches and R&D fallout. Infrastructure failures and product recalls are noted as risks for operations, while reputational effects may create adverse brand associations and loss of market share.

Recent events were also found to weigh heavy on executives minds, with 80% of respondents have faced a financial crisis, around half have faced an operational one or one pertaining to human capital risks.

Crisis triggers

The study asked respondents which aspect of a crisis result in the highest level of vulnerability for the business affected. Most felt most vulnerable during a crisis when it came to ‘gathering the right information quickly’, as cited by 65%, followed by ‘an out of date business continuity plan’, cited by 57%. ‘Communicating adequately with external stakeholders’ was noted by 55% as an area of key concern.

‘Communication adequately with internal stakeholders’ was the fourth most common area of concern at 51% of respondents, followed by an ‘unclear definition of a crisis’, at 47% of respondents.

Key areas of vulnerability

To manage a crisis, the respondents noted a number of areas in which pre-crisis preparation improve the outcome of the crisis. While 91% of CEOs noted that they were active at the start of a crisis, a well-developed plan of action tends to be required to meet the various challenges thrown up in a period of crisis.

The consultancy firm notes eight key features, including a shared vision and purpose throughout the crisis, and before it, a crisis ‘toolkit’ that is up-to-date and ready, well-trained leaders with clear roles and understood responsibilities, as well as a crisis cover and control structure in place. Getting to grips on key risks, as well as the right mix of skills and capabilities too were noted as important to the overall management of a crisis.

Managing a crisis

A well-managed crisis can actually leave an organisation in better shape, with the firm reinforcing a corporate version of the received wisdom ‘whatever doesn’t kill you makes you stronger.’ The authors concluded, “39% of respondents tell us their ability to manage a crisis well has actually contributed to revenue growth, while a further 44% say that a well-managed crisis has not had a negative impact on their top-line growth.”

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