A macroeconomic downturn has moved into the top five risks among senior executives, according to Gartner’s recent Emerging Risks Report, which surveyed 330 senior executives in the first quarter of 2022.
“The macroeconomic environment was already challenging before Russia’s invasion of Ukraine, marked by persistent inflation and supply chain bottlenecks, which remain largely unresolved,” said Matt Shinkman, vice president with the Gartner Legal, Risk & Compliance practice. “Executives now face a spread of risks that are difficult to plan against, including contagion effects from war in Europe, aggressive Central Bank tightening, and continued COVID-19 pressure on growth in major global markets.”
Major factors for the fears include Central Bank rate hikes, Russia’s invasion of Ukraine and potential expansion of the war, as well as the persistent presence of COVID-19 and the potential for new variants.
Concerns about an economic downturn were felt most acutely in some of the most economically sensitive sectors, including consumer discretionary, basic materials and financial services, where 75% or more of industry respondents indicated it as a top risk. The economic downturn risk was ranked highest regionally in the Asia Pacific region.
Shinkman noted that the potential for an economic downturn has significant implications for enterprise risk management (ERM) teams who may have initially planned for a more aggressive organizational risk posture this year in anticipation of an economic rebound and diminished impacts from COVID-19.
“ERM leaders must work with their business partners to reset many assumptions that occurred before the outbreak of war and confirmation of aggressive quantitative tightening,” said Shinkman. “Without adjusting plans for these new realities, organizations face an appetite risk balance that could see them taking either too much risk, or otherwise being unprepared for opportunities presented by a downturn.”
Channel partners should weigh these concerns into their sales strategies and attempt to mitigate risks wherever possible.