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External Risks Present Biggest Threat to US Businesses

External global threats are weighing heavily on the minds of U.S. business exe

When considering risk management, more and more executives are turning the attention away from the company and toward international politics.

A recent report from audit and accounting firm PricewaterhouseCoopers found that political uncertainty at home and economic calamities abroad have created an atmosphere of uncertainty for U.S. businesses. And while enterprise risk management initiatives have done a lot in recent years to stabilize businesses and protect against certain internal factors, it will be unpredictable external events that pose the greatest threat to companies over the next year and a half.

"Since these risks come from outside of the company, and usually without warning, management is often taken by surprise and may not be prepared to manage them effectively," said Dean Simone, leader of PwC's U.S. Risk Assurance practice. "To address these emerging risks, companies must look to new tools and take an innovative approach to understand their vulnerabilities and become more resilient."

Some of the solutions the PwC report recommended are things companies should be doing as a matter of course, like incorporating risk management into their strategic planning processes or preparing a company-wide response to events. Something like reverse stress testing, however, in which companies "start from a failure scenario and work backward to understand their organization's level of resilience," could help address potential specific occurrences.

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