Businesses are becoming more cautious and very much compliance driven. Photo: 123rf
Businesses are being told to prepare for global risk factors, including regulation, fraud and geopolitics, as business leaders become more risk-averse dealing with increasingly complex issues.
The findings were outlined in the latest New Zealand Risk Landscape Report by consultancy firm BDO, following on from its global report.
The consultants said regulatory risk remained the leading risk factor for businesses across the world, including New Zealand. That was followed by fraud, geopolitics, talent and people, the environment, cyber crime, competition and technology.
BDO partner Tarunesh Singh said a "clear shift in sentiment" had seen regulatory risk become a top concern.
"Businesses are becoming more cautious and very much compliance driven," he said. "The focus has moved from resilience and recovery to managing complexity and avoiding missteps."
Singh warned that could come at the cost of innovation and growth.
"What we're seeing is a steady rise in regulatory complexity," he said. "Basically, there's been a number of rules and regulations that businesses need to comply with on a day-to-day and a year-to-year basis."
Singh said the shift wasn't only due to the number of rules, but also how quickly they changed.
Fraud was another major risk firms needed to be aware of.
"There is definitely fraud happening, and the work that we're doing is not just about fraud-risk management and prevention. We're also being called in increasingly to carry out a more formal investigation around a known issue."
Singh said the type of fraud he was seeing was more "opportunistic" and involved internal fraud within businesses.
He said the rise in fraud may be due to current economic conditions, but stressed that fraud levels remained low and New Zealand continued to be a "very clean, good place to do business".
On the risks around people and talent, Singh said, despite the competitive labour market and rising unemployment, firms were "struggling to find the right people".
"We've had a huge amount of disruption and we've had people, as a result, moving from job to job," he said. "I think a little bit of that disruption is playing out."
The other issue was the 'brain drain', and the exodus of young people to Australia and other places.
"We've got a lot of particularly younger people, who have been sitting tight, certainly as we dealt with Covid, who are now looking understandably to move offshore and get their experience," Singh said.
He said that was putting strain on employers' ability to find the right talent.
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