In 2024, companies should expect to face unprecedented disruptions and uncertainty driven by trade and geopolitical strains, economic volatility, ongoing inflation, and increased interest rates. Furthermore, there are disruptions in technology and business models, heightened cybersecurity threats, climate-related risks, and the impact of advancing artificial intelligence (AI) coupled with intensified regulatory measures, all contributing to the complexity of the business landscape in Nigeria.
In this volatile operating environment, demands – from investors, regulators, employees, and other stakeholders – for greater disclosure and transparency, particularly around the oversight and management of risks to the company’s operations and strategy, will continue to intensify. The pressure on management, boards, and governance will be significant.
Drawing on insights from our latest survey work and interactions with directors and business leaders, we highlight nine issues for boards to keep in mind as they consider and carry out their 2024 agendas.
Link boardroom discussions on strategy, risk, and global disruption
The current geopolitical and global economic landscape has undergone significant changes, exposing companies to a multitude of risks ranging from increasing fuel prices, policy uncertainty, foreign exchange scarcity, infrastructure deficit, security issues, currency devaluation, exit of multinational companies and investors amongst others. Additionally, businesses have to contend with challenges such as supply chain disruptions, cybersecurity threats, inflation, fluctuating interest rates, market volatility, and the looming possibility of a global recession.
At the same time, companies are grappling with potential disruptions to their business models and strategies due to the rapid advancement of digital technologies, particularly artificial intelligence (AI), including generative AI, and blockchain. Reflecting on these complexities, it is crucial for boards to assist management in re-evaluating the company’s processes for identifying and navigating the risks and opportunities arising from geopolitical, economic, technological/digital, social, and environmental disruptions. This reassessment should extend to understanding the impact on the company’s long-term strategy and the associated decisions regarding capital allocation.
Is there an effective process to monitor any changes in the external environment and provide early warning that adjustments to strategy might be necessary? That includes risk management, as well as business continuity and resilience processes. This necessitates regular updates to the company’s risk profile, increased scenario planning, stress testing of strategic assumptions, analysis of potential downside scenarios, consideration of the interrelationships between risks, and seeking independent third-party perspectives. Companies should not only focus on reacting to specific ‘events’ but also proactively assess how these events may impact their business model and strategy. Furthermore, it is crucial to gain a deep understanding of the underlying structural shifts occurring in various domains, including geopolitics, demographics, technology, economics, climate, the global energy transition, and societal dynamics.
Recognizing these longer-term implications is essential for informed decision-making and strategic planning.
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