High taxation is the biggest risk for global companies. That’s according to the 2013 Lloyd’s Risk Index, a biennial global assessment of business leaders’ attitudes toward risk. In 2011, the last time the survey was conducted, high taxation ranked number 13.
That taxes have become the number-one source of concern is likely the result of recent high-profile news stories where it is reported companies like GE, Starbucks and Apple pay little or no taxes, or they are perceived as gaming the system to generate lower taxes.
The Lloyd’s survey, tax concerns were followed in order by loss of customers/cancelled orders (number one in 2011), cyber risk, price of material inputs and excessive regulation. Apart from loss of customers/cancelled orders, none of the top five risks from 2011 was still in the top five in 2013. However, despite these changes, 94 percent of respondents feel as prepared or more prepared to manage their top risks than they did in 2011.
Regionally, high taxation ranked either first or second in Asia, Europe and the Americas, but it did not make the top five in South Africa, where loss of customers/cancelled orders was number one. This risk was ranked in the top five for all other regions surveyed.
The survey also noted that companies in Europe and North America are moving toward a “more prepared than prioritized” approach, recognizing their vulnerability and investing in more insurance and mitigation measures. However, companies in faster-growing emerging markets, while they recognize and prioritize risks, also recognize that they are relatively less prepared to deal with them.
The survey results were based on 588 C-suite and board level executives around the world.