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The debt ceiling isn’t the only threat on the minds of executives and investors right now. According to PwC’s annual CEO survey, 73% of global CEOs believe economic growth will decline this year – the most pessimistic outlook in a decade. What’s even more surprising is that 40% of CEOs believe their companies will go under within the next decade if they continue on their current path. Wow.

In line with that mood, yesterday’s NYT Dealbook shares that the key word at Davos this week has been “polycrisis” – the “swirl of global emergencies that include economic slowdowns and rising inflation, the war in Ukraine and more.” The World Economic Forum’s Global Risks Report and summary delve into the near-term and longer-term risks that are keeping execs up at night. Lawrence observed last week on PracticalESG.com that boards, execs & advisors are not only facing immediate risks, but also can’t take their eye off the ball when it comes to longer-term issues. The PwC survey reinforces that:

Climate change exemplifies a time-horizon challenge that comes into clearer focus when we look at a broader set of external threats to the global economy. Over the next 12 months, CEOs feel most exposed financially to inflation, economic volatility and geopolitical risk. All three are immediate, headline-grabbing issues that can reinforce and compound one another, as, for example, the war in Ukraine pushes up prices, encouraging central banks worldwide to intervene through growth-dampening interest rate hikes.

The picture changes for CEOs’ medium-term (five-year) outlook. Over that time frame, cyber risks and climate change join inflation, macroeconomic volatility and geopolitical conflict in the top tier of risk exposure.

The question that will come to mind for securities lawyers is, “Do we need to update corporate disclosures to reflect this ‘polycrisis’?” It’s a sensitive area, but this environment does seem to be calling out for a careful overview and update of risk factors, forward-looking statements, and MD&A “known trends & uncertainties” disclosures. If the company knows of specific risks & consequences, it can protect itself by warning shareholders (in a “non-hypothetical” way). I blogged a few months ago about risk factor tips – and we have lots of practical resources in these Practice Areas:

– “Risk Factors”

– “Risk Management”

– “MD&A”

Also check out our deep dive into the practical aspects & process for updating your risk factors in the January-February 2018 issue of The Corporate Counsel newsletter – which recommends using your risk management program, minutes, and analyst reports as a resource for your risk factor review.

If you don’t already have access to our Practice Area resources or electronic back issues of newsletters, reach out to sales@ccrcorp.com for a no-risk trial.

– Liz Dunshee