Businesses need to look beyond the immediate challenges posed by the pandemic and consider the potential and actual repercussions from existing as well as new and emerging risks.
The sheer impact of COVID-19 caught us all off-guard. Whether societally or economically, we were not prepared for the catastrophic and defining fallout of the pandemic. It has exposed numerous shortcomings – from pandemic preparedness to economic safety nets to governmental cooperation.
Marsh and McLennan has supported the World Economic Forum to produce a report, ‘COVID-19 Risks Outlook: A Preliminary Mapping and Its Implications’, which provides an initial picture of the known risks which may be amplified by the crisis and new ones which may emerge. The report is based on the survey results of nearly 350 senior risk professionals who were asked to identify their biggest concerns over the next 18 months for both the world and their business.
As economies start to reopen and look to recover, businesses need to cast a glance beyond the immediate challenges posed by the pandemic, and consider the potential and actual repercussions from existing as well as new and emerging risks, including a possible second wave of COVID-19, our dependency on technology and the ongoing societal unrest being witnessed around the globe.
Unsurprisingly, the likely depth and longevity of the economic fallout dominates companies’ risk perceptions. These include a prolonged recession, the weakening fiscal position of major economies, tighter restrictions on the cross-border movement of goods and people, the protracted disruption of global supply chains, and an increase in cyber attacks and data fraud.
The pandemic has significantly reduced economic activity, and we have witnessed trillions of dollars in response packages, which could potentially cause structural shifts in the global economy going forward, as countries plan for their recovery. Businesses could face increasingly challenging consumption, production, and competition patterns.
Far reaching consequences
With many people concerned about a potential second wave and/or the outbreak of another pandemic, this perception has far reaching consequences both societally and for organisations. High structural unemployment – perceived as the second most concerning risk for the world – could intensify inequality and affect mental health and societal cohesion, in addition to its direct economic consequences. Individual and social well-being could also be affected by an accelerated automation of the workforce.
Technology has played a central role in the way people and companies have responded to the crisis, and our increased dependency could lead to new career opportunities in a contact free, post-COVID-19 world.
However, greater dependency does come with increased cyber risks and organisations need to take a proactive approach to cyber security to ensure they have the correct governance and protection in place.
On a more positive side, as firms start to re-open their offices, new working practices and attitudes towards travelling, commuting, and consumption may make it easier to achieve a lower carbon footprint and a more sustainable recovery.
Overall, the crisis offers a unique opportunity to shape a better world and for organisations to relook and adjust their business models. Businesses that have the ability to reimagine their operations and build resilience for a sustainable future will be able to find opportunities for growth. M