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Tariffs, Trade Policy Rise on List of Concerns for Risk Officers

A recent slowdown in global growth has prompted U.S. businesses over the past year to grow more cautious, with some retailers moving factory operations out of China as tariffs on clothing and other imports take effect.

Those decisions reflect a growing perception among executives and board members that economic-policy decisions could hinder their companies’ growth opportunities in the year ahead, according to an annual ranking of business risks published Thursday by North Carolina State University’s Enterprise Risk Management Initiative and consulting firm Protiviti Inc.

“The trade war has been a drag on the global economy,” said Peter Henry, an economics and finance professor at New York University, who also serves as a member of Protiviti’s advisory board.

Concerns about economic policy jumped nine spots to second place on this year’s list. In addition to worries about trade and tariffs, executives—particularly in the financial services sector—said they worried a prolonged period of low interest rates could continue to put pressure on profits.

The annual ranking of corporate risks is based on responses from more than 1,000 corporate executives and corporate directors, 41% of whom are chief risk or audit executives.

Top Business Risks for 2020

Executives ranked economic conditions as their second highest risk factor in the year ahead, up nine spots from a year earlier.

  • 1. Regulatory changes
  • 2. Economic policy and conditions
  • 3. Ability to attract talent
  • 4. Digital competition
  • 5. Cultural resistance to change
  • 6. Cyber threats
  • 7. Privacy and information security
  • 8. Organization may not escalate risks
  • 9. Retaining customers
  • 10. Training employees to use digital technology
  • Sources: North Carolina State University, Protiviti Inc.

Other top risks included cybersecurity concerns, regulatory changes and the ability to attract top talent, among other perennial concerns.

Companies have faced challenges in recent years when it comes to planning for the business impact of foreign or economic policy decisions, Sophie Heading, global geopolitics lead at KPMG International, said Tuesday during an event hosted by The Wall Street Journal and Dow Jones Risk & Compliance in London.

She used the trade war between the U.S. and China as an example, adding that export controls and other regulatory restrictions—to say nothing of tariff battles—are complicating trade between the two countries. “That is a pretty complex picture to navigate,” Ms. Heading said.

U.S. retailers have taken short-term measures to reduce the impact of tariffs on their operations. A fresh round of tariffs on Chinese imports is scheduled to kick in on Dec. 15.

AutoZone Inc.,

an auto-parts retailer, said during an earnings call Tuesday that it has raised some prices to offset the impact of U.S. tariffs imposed on trading partners.

Designer Brands Inc.,

the operator of DSW shoe stores, is working to move some of its manufacturing operations and sourcing out of China, and has negotiated agreements with its vendors to minimize the impact of new tariff policies,

Roger Rawlins,

chief executive, said during an earnings call Tuesday.

“As we look ahead,” Mr. Rawlins said, “the unmitigated exposure to tariffs is incredibly meaningful to our business.”

Write to Kristin Broughton at

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