The surprising biggest worry for UK chief executives is not Brexit or politics, but reputational risk

 
Lucy White
Sports Direct Founder Faces Commons Select Committee Over Working Conditions
In a year which saw business tycoons such as Mike Ashley vilified by the public, reputational concern may be understandable (Source: Getty)

Chief executive officers (CEOs) in the UK could be forgiven for feeling a little anxious at the moment, considering recent political uncertainty and the effect which Brexit may have on their business.

Yet according to a recent survey by KPMG, neither of these two factors are topping CEOs' list of worries. Instead, it is the threat of operational and reputational risk which is keeping them up at night.

This was a significant shift from last year, when neither featured on the list of top 10 challenges, and KPMG attributed it to the “heightened scrutiny of business practices by government and the public”.

“The CEOs who have ridden the storms facing their sectors over recent years have become more agile, constantly aware of the importance and the fragility of their brands, and doing their utmost to protect them,” said KPMG's chair-elect Bill Michael.

“This has also brought new demands for the CEO – they must be emotionally intelligent to navigate this change and guide and inspire their people through it.”

Over a year which saw the public turn hostile on Sir Philip Green over the BHS pensions fiasco, or where the relationship between Sports Direct boss Mike Ashley and investors turned sour due to governance arrangements in his businesses, perhaps reputational concern is understandable.

Read more: Sir Martin Sorrell says Brexit not the only uncertainty worrying businesses

But this is not an indication that CEOs are entirely blasé when it comes to political uncertainty, as seven out of 10 revealed they had recruited specialists to help plan for the future and mitigate geopolitical risk.

It is also worth noting that KPMG surveyed respondents before the results of the General Election, when the Conservative party was forecast to retain a majority.

Cybersecurity was also a topic of concern, with 80 per cent of respondents saying they had attended a course on the subject within the last 12 months.

Read more: Businesses are more likely to Google cyber security guidance than use government resources

Yet despite CEOs' willingness to help themselves, they appear reluctant to offer the same opportunities to staff. A significant 42 per cent said they had no plans to invest in new workforce training over the next three years, except to maintain current business needs.

It isn't just staff whom CEOs are neglecting to invest in. Half of respondents to the survey said they had made no new investment in innovation over the last 12 months, defined as new products, services or ways of doing business.

“The financial crisis was a chastening experience for many and has left some business leaders inherently risk averse,” said Michael.

“However, this cautious approach could see British businesses risk missing out on new opportunities, which will instead be seized by their international counterparts who are investing now.”

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