Privacy regulation a top emerging risk for businesses

Gartner's latest quarterly survey includes recommendations on how business leaders can navigate privacy concerns.

Privacy regulation is back on top as the number one emerging risk in the eyes of global business leaders, according to the latest results of a quarterly survey by Gartner.

Findings from its first-quarter 2019 Emerging Risks Survey is based on responses from more than 90 senior execs at leading companies in Canada, the U.S., Europe, the U.K. and Ireland across the banking, energy and utilities, financial services, food and beverage and consumer goods categories.

Respondents were asked to identify the top five risks and to estimate the probability, impact and velocity (the likelihood of a risk emerging in the next 12 months) for each. Risks were then assigned a score based on frequency of mention and percentage of respondents who selected the risk as their top five.

The survey revealed leaders are most concerned about accelerating privacy regulation, followed by the pace of change and talent shortage – the latter ranking as the number one perceived risk in the last quarter of 2018. Privacy regulation and pace of change were also cited as some of the fastest moving, high-impact risks.

Accelerating privacy regulation

The E.U.’s General Data Protection Regulation (GDRP) was implemented in May 2018, which likely explains why the regulatory measures were a top concern for executives surveyed in the Q3 edition of Gartner’s 2018 risk report. Privacy was again top of mind at the beginning of 2019, overtaking talent shortage in the number one spot amid concerns over protecting consumer data, complex legal regimes and potential for legal and financial exposure. The issue is a particularly sensitive issue in the banking sector, where 100 percent of survey respondents ranked it as a top-five risk.

It seems many leaders are concerned about the challenges new AI and data capabilities will bring. As previously reported in strategy, more than half of Canadian businesses (57%) own confidential information on their clients and 79% have experienced a cyber-attack.

Canadian leaders are also likely thinking about new rules under the Personal Information Protection and Electronic Documents Act that came into effect late last year, imposing mandatory disclosure for privacy breaches in cases involving “risk of significant harm.”

To help mitigate those privacy challenges, Gartner’s survey respondents recommend companies appoint data protection offers and expand their breach response protocols. Additional measures include addressing new rights as outlined by the European legislation, implementing privacy impact assessments and identifying cross-border data transfer.

Pace of Change

The pace of change continues to keep executives up at night. According to the report, “The fear of disruptions and inability to grow is also propagated by the fear of becoming the next Blockbuster, Toys R Us, or Sears of their industry.”

According to the study, 86% of food and beverage and consumer goods respondents ranked pace of change as a top-five risk. To help tackle those challenges, respondents suggest establishing monitoring mechanisms and possible “course correction” options to help identify changing market conditions. Moreover, the executives recommend participating early in the strategic planning process to get a solid understanding of organizational growth ambition and working with strategy and finance to encourage more transformative moves.

Talent Shortage

According to a 2018 Manpower Group survey, 41% of Canadian employers report difficulty filling jobs. Concern over a tightening labour market is also reflected in Gartner’s survey, with talent shortage being the second most frequently cited risk.

When it comes to talent shortage, 65% of financial services respondents cited it as their primary concern, ahead of any other sector. According to the report, organizations should look to invest internally to meet those needs. Respondents also suggest that heads of of risk management should collaborate with their HR leaders to put effective risk mitigation plans in place, working together to uncover trends and understand key drivers of talent risk.