RISK
Cybersecurity is far from the only risk that CFOs and CHROs are tracking and managing . There are three main elements in the risk picture these leaders see: macroeconomic and political risk factors; risks to supply, demand, and the business ecosystem; and company specific risks in operations, people, and compliance. Macroeconomic and political risks start with COVID-19. The pandemic’s effects are muted as of Summer 2021 but which, if vaccination rates flag or resistant and aggressive variants emerge, could again disrupt operations, travel, workplaces, and schools. Three out of ten middle market leaders put Covid on their list of gravest economic worries. There are also numerous more-traditional economic risks. One is that strong demand could ignite systemic inflation, beyond the price spurts of the spring and early summer; indeed, 47% of CFOs cite costs and prices as one of their top three economic concerns. But the reverse could also occur: A phasing out of the government stimulus payments that caused demand to fall, weakening the recovery. Tax and regulatory policies always pose a certain amount of risk, as noted earlier. Finance executives from mid-market multinational companies are still trying to assess the potential implications of a global minimum tax for their businesses, with many of them skeptical whether the plan will come to fruition anytime soon. In July 2021, the U.S. won international support for a global minimum corporate tax, which stipulates that companies based in the 130 participating countries pay a tax rate of at least 15% in the jurisdictions in which they operate. Led by the Organization for Economic Cooperation and Development, those countries want to make it harder for businesses to reduce their tax dues by shifting their profits and operations to low-tax jurisdictions. On the other hand (the taxman always has two hands), a global minimum tax might benefit smaller, non-globalized companies by leveling the playing field in their competition with larger rivals. Many business ecosystem risks were newly exposed by the pandemic, as companies of all sizes discovered that their supply and distribution networks were more vulnerable than they had known. When it comes to supply chains, only 42% of companies express strong or very strong confidence (the top two boxes of a five-point scale), and just 55% have similar strong confidence in their distribution. (By contrast, 75% have high confidence in their own operations.)
22 I ACHIEVENEXT SENTIMENT STUDY
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