Most CEO’s that I know don’t sleep much. They travel extensively, take meetings at all hours, and seldom shut down. This is probably the typical personal nature of those who strive for high-level leadership positions. Most seem to thrive on challenges that businesses have, create and produce, and the demands they make on leadership.
Business challenges are myriad, and many are exciting (in a good way). New products and ventures. Expansion into new markets. The pursuit of growing profits. The rewards and accomplishments can be great and come with effort and diligence. But it’s not always easy.
As a leader, our overarching concern is one of meeting company needs. Do I have enough? Enough information. Enough capital. Enough time and resources to achieve our company objectives. We know we need rich resources of time, people, money, ideas, and technology, but without adequate depth in critical areas, business risk is increased. Staying on top of continually moving markets and their risks and needs is undoubtedly a challenge.
Each year, both Deloitte and the World Economic Forum survey CEO’s around the world to determine the areas about which they were most concerned. Each area of concern holds worry because of the potential lack of knowledge, resource, or control that CEO’s can wield if a situation becomes problematic. Threats can be internal or external, mounting or sudden, but for those in the C-suite hot seat, concern over these five areas can keep them up at night.
- Fiscal Crisis. There are some market indicators of an impending global recession. Even the largest, developed economies could be impacted. And our minds are fresh off the last damaging down cycle. Because a recession tends to impact just about everyone negatively and because it is something completely out of one person’s control, it can be a daunting thing to anticipate, much less to combat. Preparing within each company might demand that new projects be held until economic stability is more certain.
- Cyber-Crime. Whether it is ransom acts or malicious hacking, cyber-crime is on the rise. The anticipated loss to companies worldwide in 2021 represents the largest transfer of wealth in history—a transfer to criminals at the cost of business. Ransoms paid each year by affected companies are increasing exponentially—and this is just for reported crimes. In many cases, ransoms go unreported for fear of reputation damage. Even the most sophisticated companies have been affected by breaches that undermine their ability to remain viable businesses and increase fears of hackers’ ability to access or disable networks. Most CEO’s think they are doing what they can to protect their organizations–keenly aware of potential issues with offsite data use, laptops, phones, and other portable data devices. But have they considered every vulnerability?
- Lack of Skills. For some CEO’s, employment concerns are regionally based in other geographic areas, states, or countries with limited economic viability. For others, the concern is expertise as it can be difficult to obtain employees who are highly skilled in automation and technology. Companies will hire from without and train within to close the skills gap, but the speed of technology advancement makes this a difficult challenge. It’s simply hard to keep up. Couple that with historically low unemployment rates, and the inability to obtain the skills required to meet the job is a significant threat.
- Out-of-Area Influence. Government action worldwide can affect a company (take recent trade war tariffs as an example). Government involvement or failure to regulate causes uncertainty regarding trade and regulation. For organizations based in places less stable than the US, lack of governance can create failures, and economies are more easily disrupted. Corrupt governments or social violence can effectively freeze commerce with little warning. Sometimes, the effect is direct, but sometimes a critical vendor in the supply chain can no longer provide a needed part. And there is little that a CEO can do to prevent it. While market risk is, by definition, something outside the control of the CEO, it is still something that keeps them up at night.
- Legal Liability. In an increasingly litigious world, the cost of legal risks can cripple a company. From contaminated food products to a disgruntled employee, to an electronic product that sparks fires, all businesses are one catastrophe away from losing customer trust and financial stability. A good reputation can change overnight when something goes awry. It can take decades to earn respect in the market, and one terrible miscue can unravel all that goodwill.
Being Prepared for Crisis
The CEO’s typically know what risks are most likely to damage their companies. The challenge is in developing strategies to offset the risks (including insurance and hedging). Of course, it takes time and information to evaluate situations and likely risks. Crisis management plans are critically important to have in place for various, highly risky scenarios. A failure to plan, some CEO’s note is a plan to lose.
Naturally, the CEO’s want to know that an eventuality will not be a complete disaster should it occur. They desire to understand the ins and outs of global risks and advancing technological threats, and they want to develop good back-up plans. It’s not that easy. CEOs recognize the need for information to keep them ahead of risk, but only 15% of their companies are collecting the data needed to mitigate the risks that worry them so much.
From financial forecasts to supply chain key performance indicators, data is paramount for making informed decisions. Brand reputation and ultimate company health are dependent on it. Building an enduring business isn’t easy work. Building contingency plans to ensure its continued health is even more difficult. By focusing on appropriate data collection, business leaders will be better able to prepare for the risks that threaten their hard-earned successes. Developing contingency plans for nearly every eventuality will give leaders what they need: enough information and resources to protect themselves and their organizations. And a good night’s sleep.