In a series of in-depth interviews, over 70 leading industry executives and analysts across 14 industrial sectors were asked to identify and rank the top business risks for each sector for the next 12 months as well as risks currently below the radar that could rise into the top ten in the years ahead.

Regulation and compliance regained the top spot across the majority of sectors driven principally by the general uncertainty surrounding regulation which commentators believe is stalling business decision-making. However, access to credit and the threat of continuing weak economic performance in parts of the word remained high on the list of potential concerns.

Risks associated with a return to normality

Recruiting and managing talent was a significant climber up the risk table this year as was dealing with emerging markets; and social acceptance risk and corporate social responsibility (CSR) was new to this list this year, suggesting different strains on business as the economic recovery takes shape.

Gerard Gallagher, Advisory Partner and Head of Private Sectors at Ernst & Young said, "Although there is some sense of normality with firms now refocusing on how to compete with available talent and looking at the risks as well as the opportunities of investing in emerging markets, access to credit is still the second highest risk that business face and the risk of a double dip recession the third. Now is not the time for companies to take their eye off the ball."

Analysis by sector

The report highlights the different ways in which key risks surface across sectors. With the most important business risks for 2010 concentrated in the areas of regulation and compliance, many of these threats are related to the aftermath of the global financial crisis.

Asset management, banking, and to a lesser extent, insurance are facing a political backlash and regulatory overhaul following the global financial crisis. Oil and gas, real estate and mining and metals are contending with efforts by resource-constrained governments to gain revenues. In addition public sector organisations must cope with challenging decisions made by political leaders under pressure.

Social acceptance risk and CSR are seen as a particular threat to the reputation of the asset management and banking industries, managing planning and public acceptance risk to power and utilities companies, maintaining social license to operate in mining and metals, and several below-the-radar threats in technology, telecoms and the public sector.

There were considerable variations in the sector-by-sector impact of a lack of access to credit which was highlighted as the second most important risk. This ranges from residual credit quality issues in banking, to general financial shocks in insurance, to access to capital in power and utilities and mining and metals, to the broader question of ?capital access and allocation in life sciences and the growing threat of failure to manage debt and fiscal policy in the public sector.

Gallagher concludes, "It is clear that across the sectors, organisations need to continue to scan the environment to identify emerging risk issues. The ability to anticipate threats, respond and continually adapt is as a critical a part of the management process as it ever has been."