Why taking risks in business may be best in uncertain times

In the current uncertain economic and geopolitical landscape, experts suggest that taking risks may be the most advantageous course of action for businesses. According to Tarunesh Singh, a national leader in BDO's risk advisory, the most significant risk is inaction while competitors continue to move. The report, which surveyed 500 business leaders worldwide, highlights that risk and disruption are no longer exceptional circumstances for businesses.

Singh notes that this perspective is consistent across the globe, although New Zealand businesses are becoming more willing to take risks compared to the past. The culture surrounding risk in New Zealand is evolving, with an increasing number of business owners and corporations demonstrating a willingness to take action.

Singh emphasizes that businesses are making decisions and taking action more frequently than they did three or five years ago. He warns that waiting for certainty before making critical decisions could prove costly, as the cost of delay is often underestimated. Factors such as fuel price surges, shipping and logistics disruptions, border settings, inflation, price volatility, cost-of-living pressures, and political instability, both domestically and internationally, paint a clear picture of the challenges businesses face.

The global findings suggest that crisis response has become a routine aspect of the business environment, but sustaining proactive risk management has become more difficult. Four out of five business leaders (80 percent) in the survey agree that the global risk landscape is dominated by crises, with 68 percent reporting an increase in the speed at which crises impact their organizations (up 14 percent).

Geopolitical instability is exacerbating risks, while fraud remains underestimated, and many organizations continue to respond reactively rather than proactively.

Singh suggests that the best way to manage risk is to demonstrate that efforts are being made to do so, as most cases of fraud originate from internal employees or close external stakeholders. Robust processes and controls deteriorate over time and are affected by factors such as role changes, turnover, new technology, and so they require regular review.