As our research highlights, companies are increasingly reconciling themselves not only to a long-term downturn in established markets, but also to their increased exposure to a volatile world economy and markets.
In turn, this new status quo brings with it several emerging challenges that companies must actively engage with and plan for.
The top five emerging challenges we have identified are as follows:
- The US enters a deflationary trap
- Deep recession in the Eurozone
- The end of rapid growth in the BRICs
- A full-scale inter-state war in the Middle East
- Cyber conflict that disrupts infrastructure and business operations
Each of these emerging challenges — developed with input from an expert panel, and Oxford Analytica's Global Risk Monitor — has an impact on the top 10 risks and opportunities.
In a globalized and interconnected world, companies cannot insulate themselves from these risks.
Many of these challenges are closely interconnected.
For example, a deep recession in the Eurozone remains a threat as the continent struggles to deal with its crippling debt issues. Elsewhere, the Brazil, Russia, India and China (BRIC) group of rapid-growth countries is already seeing a slowdown in growth. And all of this could have a knock-on effect on the US economy, with fears remaining that it could enter a deflationary trap.
Beyond such macroeconomic challenges, other issues remain highly pertinent: companies are already listing the threat of cyber conflict as one of the top 10 risks they face, while fears of a full-blown conflict in the Middle East remain valid.
In our research, we found that companies thriving in such a volatile environment share several specific characteristics. They:
- Focus more on the market and are more outward looking
- Respond smartly and quickly to change
- Understand what drives cost and value
- Engage closely with stakeholders and unleash their talent
All of these qualities remain highly pertinent for executives trying to grapple with an uncertain future.
Each of the emerging challenges discussed here has direct business implications, from considering which markets represent the most promising growth opportunities, to developing proactive strategies and technologies to engage in cyber defense.
Anticipating and adapting to these possible emerging challenges fosters a culture of flexibility and agility — putting companies in a better position to respond to inevitable global uncertainties, even if some of these risks do not come to pass.