/>iFor the remainder of 2013 we are likely to see pricing pressure and cost cutting, along with innovation in products, services, operations and rapid-growth market demand. These are the top risks and opportunities, respectively, as presented by Ernst & Young’s lastest study, Business Pulse: Exploring the Dual Perspectives of the Top 10 Risks and Opportunities in 2013 and Beyond.
The top three risks for the remainder of 2013 and projected for 2015:
- Pricing pressure — Ernst & Young reports that the strength of low-cost competition and online shopping has intensified the battle for market share and that “brand-driven price premiums have become difficult and expensive to maintain.” Other factors include regulatory actions and its effects on profitability; worsening terms of trade for goods; and high wages and benefits in mature economies.
- Cost cutting and profit pressure — Companies have cut just about all they can since the 2008 global economic crisis. This puts firms under extreme pressure to continue cutting without damaging company performance. “These pressures have intesified in recent years, reflecting the narrower margin that firms can absorb and still remain operations,” the report states.
- Market risks — Commodity price volatility, interest and exchange rates, and equity risk are all market risks influencing cost cutting and profit pressures.
The Top 10 Risks
The top three opportunities for 2013 and beyond:
- Innovation in products, services and operations
- Emerging market demand growth
- Investing in process, tools and training to achieve greater productivity
Top 10 Opportunities
What are some emerging challenges that firms may face in the future? Ernst & Young points to the following specific and possible events:
- The U.S. enters a deflationary trap
- Deep recession in the Eurozone
- The end of rapid growth in the BRICS
- A full-scale interstate war in the Middle East
- Cyber conflict that disrupts infrastructure and business operations
