Coronavirus-related government policies and regulations that could affect business performance ranked as the top risk cited by board members and C-suite executives, according to a new survey.

The annual survey, released Wednesday by the consulting firm Protiviti and North Carolina State University, ranks the top 10 risks seen by 1,081 business executives in different industries and parts of the world. Topping the list this year was the impact of COVID-19, followed by economic conditions that constrain growth opportunities, pandemic-related market conditions that reduce customer demand, and adoption of digital technologies that require new skills or significant efforts to upskill/reskill existing employees.

Privacy/identity management and information security ranked in fifth place, followed by cyber threats; the impact of regulatory change and scrutiny on operational resilience, products and services; succession challenges and the ability to attract and retain top talent; resistance to change operations and business model; and lastly the ability to compete with “born digital” and other competitors.

While COVID-19 surely ranks as a top concern among the general population across the world in the past year, the specific concern about the impact of government policies and regulations on business performance represents a perspective that may be unique to the C suite and corporate boards. Other concerns such as climate change and diversity that have featured prominently in the news over the past year didn’t make the top 10 list in the survey, but may fall within some of those categories. Nevertheless, the study did find that corporate leaders managed to adjust to the demands of the pandemic.

“When COVID-19 hit, many digital leaders did not have to do a whole lot to pivot,” said Jim DeLoach, managing director of Protiviti’s Solutions Leadership Team, who co-authored the study. “They were future-ready and able to adjust quickly to operate in a manner that enabled them to thrive in the pandemic’s new normal. The message: Plan for the future. Don’t just talk about it. Recognize the megatrends and where those trends will take the market over time, and plan your transition to that new normal.”

DeLoach said that he expected the risk of climate change would rank higher on the survey. “I think that if you take a step back and look at the full picture for 2021 and 2030, you realize that there’s a lot of risk on the minds of business leaders,” he said during an online presentation about the results.

Mark Beasley, a professor and director of the Enterprise Risk Management Initiative at North Carolina State University, who co-authored the study, was also surprised that climate risk didn’t rank higher. “I think it’s built into increased concerns about growing expectations from a regulatory scrutiny perspective,” he said. “As we think about the ESG side, it could be driving some of the regulatory focus. They’re concerned about how changing expectations could lead to regulations that restrict how I currently make my product or sell or even offer the product that I have. I think it could be behind that broader regulatory concern as a part of that.”

He noted that when the survey results are examined on an industry basis, respondents in the energy and utilities industries ranked environmental, social and governance risks among the top five risks.

Diversity, equity and inclusion may be showing up within some of the other risk categories in terms of the risks related to shifts in expectations around social issues. “It did not make the top 10, but it’s in the top risk issues at No. 16,” said Beasley. “It’s particularly a concern across some in the C suite, particularly linked to technology and the chief strategy officer. Those rated it a significant impact risk, so it is one of the macroeconomic concerns on the minds of executives.”

DEI issues also fit into the ability to have an innovative, resilient culture. “Our experience in the marketplace is that cannot be done without authentic and empathetic leadership and a compelling commitment to diversity, equity and inclusion,” said DeLoach. “The workforce expects it, and we’ve seen examples in the marketplace where there’s a falling out between leadership and the workforce when the workforce doesn’t perceive the leadership to be authentic. Leadership must embrace that and drive it, not just with chitchat, but with definitive action with intention. That’s going to be extremely critical going forward, particularly dealing with the talent issue, because if you want to fulfill your talent acquisition objectives, a diverse perspective will be an imperative.”

Beyond this particular study, outside research also supports the need for greater diversity in corporate America. “In addition to the employees demanding it, we’re seeing increased shareholder demand for it as well because the evidence is increasingly showing that more diverse companies outperform non-diverse companies,” said Peter Henry, a professor of economics and finance at New York University, who was on the panel with DeLoach and Beasley. “It’s one of those things where it’s in the data, but it’s still hard to do. As Jim said, leaders have to be authentic or else they won’t get it done.”

Technology risks continued to rank high on the survey, especially in terms of the need for companies to train their workforces in the newest technologies, especially during the pandemic. “The adoption of digital technology into their organizations may require new and different skills than they have currently, and that are in short supply,“ said Kim Bozzella, a managing director at Protiviti who leads financial services technology consulting and technology strategy and operations consulting at the firm. “Upskilling for existing employees is going to be a challenge. COVID further emphasized this need to embrace digital technology and reach customers in a virtual, socially distant, touchless manner, as well as support the digital needs of a remote workforce.“

The risks of the COVID-19 pandemic tie into wider concerns related to globalization, the supply chain and the distribution of vaccines.

“With the pandemic, we see we don’t have a public health infrastructure to keep up with our trading infrastructure, and there’s been a lot of questioning of whether countries need to bring their supply chains completely back onshore,” said Henry. “That’s a real threat. Globalization has been the single biggest driving force for higher standards of living over the past 30 years and a pullback on global trade would damage long-term growth prospects. That is a real risk, and one that needs to be watched very carefully.”

He also sees risks related to climate change. “The other long-term risk that is worth watching is the pressure for commitments to net zero emissions,” said Henry. “Companies around the world have to be very careful to endorse pressure on them, rightly so, to adhere to those zero targets, but companies have to be careful not to over-promise what they can deliver when they go find themselves in trouble with their stakeholders.”