Few would argue with the view that the economy is the biggest issue confronting business in 2008. Indeed, that's one of five major areas identified by analysts of AMR Research in their annual look at the top business risks for the coming year. On the economic side, AMR points to the ailing housing market, credit crunch, weakening dollar and sliding consumer spending as indicators that the U.S. might be due for a recession. Yet another concern is soaring energy prices, with oil having recently topped $100 per barrel. "Capacity is stretched so thin that the slightest disruption anywhere will send shockwaves throughout the world," AMR writes in a recent alert. "The result is that every piece of the economy will be squeezed as companies grapple with how to source, make and transport product to market while paying more to do it." The weakening dollar will pose an additional challenge to U.S. companies sourcing product and raw materials abroad.
The ripple effects of recession could also impact hedge funds and venture capital markets. Both sources of money could quickly dry up in the event of a stock-market plunge. The result would be multiple business failures, AMR says. At the very least, business spending on information technology will be affected. AMR's clients are moving ahead with critical enterprise projects, but smaller initiatives - those in the "nice-to-have" category - would likely be postponed. Other risks identified by AMR relate to brand reputation, technology, a shortage of global talent, and growing supply chain complexity. Technology gives rise to worries about the theft of personal data and intellectual property, as well as cyber attacks. With regard to supply chain trends, AMR notes that consumers are beginning to suffer from excessive product complexity arising from too many choices. In addition, crumbling infrastructure will continue to hinder the flow of goods, and raw-material costs are skyrocketing. To deal with these crises, AMR says, companies need to install a formal government, risk management and compliance (GRC) framework. Such capability is available from a number of software vendors in the area of business intelligence and performance management.
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