The 10 Biggest Risks And Threats For Businesses In 2023
Commentary from crisis management expert Edward Segal, author of the bestselling and award-winning Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies (Nicholas Brealey, 2020)
Risks and threats can be forerunners to crisis situations for companies and organizations. An informal survey of CEOs, advertising, and other executives and experts yielded what they thought are the most significant dangers businesses will face this year.
“The biggest and most obvious threat to companies and organizations in 2023 is the global rise of inflation and subsequent economic downturn,” Richard Osborne, founder and CEO of UK Business Forums, said via email.
“Recession is the word on everyone’s lips heading into 2023. While profiting during a period of high inflation isn’t completely impossible, it’s far from ideal when consumers have less purchasing power. The value of a currency is only as high as the number of goods or services that one unit of money can buy,” he noted.
“The raised interest rates will continue to burn working capital for businesses across the economy,” Salvatore Stile, chairman of Alba Wheels Up International, an international shipping and customs clearance company, said via email.
“Because retailers are concerned with consumer demand, they will likely be more cautious in purchasing inventory to prevent over-supply in the retail market,” he predicted.
“This will burden small and medium-sized companies, who will have to be de facto warehouses for the retailers, as they hold products for more extended periods. We expect freight rates to reduce in 2023 when compared to 2022, as demand for overseas goods has reduced across the board,” Stile observed.
“Today’s labor shortage and skills gap challenges will continue into 2023 as HR teams bolster their recruitment and retention efforts to reach and retain talent across all levels of the organization,” Veena Bricker, chief people officer of data center provider Flexential, said via email.
“HR teams will explore more diverse avenues, job boards and organizations to find the shared skills needed to support the business, dipping into all major and secondary markets. We’ll also see attrition measurement practices increase as organizations will be held accountable for their own diversity spectrum—something proved invaluable to existing and prospective talent,” she predicted.
Rapidly Changing Market Trends
Risks and threats can be forerunners to crisis situations for companies and organizations. An informal survey of CEOs, advertising, and other executives and experts yielded what they thought were the most significant dangers businesses will face this year.
“The biggest risk companies have in 2023 is that market trends change much more rapidly than they used to, and being slow to react can be detrimental,” Isabella Sun, CEO of Short Story, a San Francisco-based clothing retailer, said via email.
This year “will require companies to develop an ultra-fast reaction time to macro movements and to use their data and technology to make rapid decisions…organizations need to get maximum utility from the technology and data they have to turbocharge their reaction time,” she advised.
“We’re still far from solving issues related to global supply chains. And that’s a problem that will continue to plague businesses as we head into 2023,” Bob Rogers, CEO of Oii.ai, a data science company specializing in supply chain modeling, said via email
“What people don’t realize is that most supply chains are configured manually. That means there’s a human adjusting the parameters every time an interruption occurs. But that’s a tedious task that people are simply too inefficient to do successfully on a large scale,” he commented.
“Cybersecurity is a hot button for business executives in 2023. This burden is no longer limited to the responsibility of just the IT department,” Howard Globus, founder and CEO of IT on Demand, said via email.
He noted that, “In a 2022 report, Gartner research shows that 88% of board regard cybersecurity as a business risk rather that solely a technical IT problem. The same report says that by 2026, at least 50% of C-Level executives will have performance requirements related to cybersecurity risk built into their employment contracts.”
Damage To Reputations
“The biggest threat to brands and businesses in 2023 will be reputational damage,” Ashlene Larson, the director of PR and social media for advertising agency Planit, said via email.
“Reputational damage continues to be a threat as a result of increasing political extremism, social justice issues, environmental concerns and more. As the media landscape and social media networks become more fractured, consumers do not always know what to believe,” she noted.
“It’s not easy to undo or correct misinformation once it’s out there, and brands will need to remain vigilant with monitoring for threats, being proactive with their responses and continuing to nurture direct relationships with their audiences,” Larson concluded.
Inability To Reach Target Audiences
“It’s become increasingly difficult for brands to reach their audiences as consumers have been inundated with information overload and so many new ways to access and view content across screens,” Amy Leifer, chief advertising sales officer for DIRECTV, said via email.
“To truly resonate with consumers in 2023, we’ll see brands continue to think outside the box to better understand and connect with their most valued customers through relevant and personalized advertising that leverages creativity and utilizes new technology,” she predicted.
Mental Health Issues In The Workplace
“The biggest risks facing business in 2023 will include an ongoing epidemic of mental health issues that show up at work,” Dr. Christy Gibson, author of The Modern Trauma Toolkit and co-founder of a company that focuses on stress-related work issues, said via email.
“Organizations are ill-prepared for this wave of psychological distress that inevitably shows up in the workplace. They don’t have mandatory trauma-informed training to keep their environments safer.
“They have no skills for psychological first aid. There aren’t in-house skillsets to help people manage emotional problems. The expectations of leaders for employees to return to the status quo as if the pandemic and other collective traumas aren’t happening will further contribute to the global distress,” she warned.
Lack Of Succession Planning
“Boomers are the most massive American population cohort, and as boomers exit the workforce, there’s not enough succession planning or workforce replacement,” Robert Jordan, CEO and co-founder of Interim Executives, said via email.
“Likely, we’ll see more businesses changing hands to outsiders. Successfully transitioning business ownership to either next-generation family members or external new owners will require more time and dedication to training young leaders to take on the reigns,” he predicted.