Research conducted by business risk and insurance firm, Aon, in 2019 identified that economic slowdown, business interruption, rapidly changing market forces, and failure to innovate were among the top ten risks feared by organisations.
Interestingly, a pandemic or health crisis was at the very bottom of the list.
The world scenario over the past year has been very different to what was being predicted. The economic and human cost of COVID-19 has been very high. Organisations, governments and industries have had to work together to respond to the crisis.
At present, there are countries which are on the road to recovery, some are still struggling to kick start the economy, and there are countries which are facing a second or the third wave of the pandemic.
There is no question the COVID-19 pandemic has changed the way companies operate forever. However, as companies focus on reshaping their future, they are facing a number of challenges and emerging risks, and how they address these will be deeply intertwined with their approach to risk and resilience.
Some of the key emerging risks for organisations include:
Digitalisation: Expanding the digitalisation of human interaction, e-commerce, online education and remote work will transform society. Increase in the digital gaps can be detrimental to the success of any organisation and undermine prospects of the economic recovery.
Legacy IT infrastructure, lack of digital IQ in the workforce and insufficient embrace of digital thinking and capabilities can lead to slow organisational recovery.
Skills: Skill shortages are becoming a significant barrier, particularly for the businesses attempting to make a recovery out of the pandemic. Australian Prime Minister Scott Morrison has highlighted workforce skills as the “single biggest challenge facing the Australian economy”. The Committee for Economic Development of Australia (CEDA) has stressed the urgency of increased and more flexible temporary and permanent migration as global competition for skills and talent intensifies in the post-pandemic recovery. The ability to attract and retain talent in these times may limit the ability of the organisations to achieve their goals.
Geopolitical risks: The geopolitics of COVID-19 will shape the global operating environment for companies for the remainder of 2021 and beyond. The export/import sanctions and restrictions on cross-border people movement of the pandemic will create political risks in markets around the world. The pandemic therefore underpins the need to re-evaluate supply chains, talent decisions and approaches to building enterprise resilience.
Cyber security: The acceleration towards greater digitalisation and remote working driven by the pandemic is also further intensifying IT vulnerabilities. The ransomware incidents are becoming more damaging, increasingly targeting large companies with sophisticated attacks and hefty extortion demands, as highlighted in the recent Allianz Global Corporate and Specialty cyber risk trends report. Employers and employees must work together to raise awareness and increase cyber resilience.