Global insurer, Allianz, recently published their 2021 Risk Barometer Report, which identifies the major business risks around the globe. This report outlines the most important corporate perils for 2021 and beyond, based on a global survey of 2,769 risk management experts across 92 countries.
This article will highlight the top 5 business risks for global companies and how organisations can fight back against these adverse events.
1. Business Interruption
After 2020, this one goes without saying.
The amount of business interruption from manufacturers to restaurants due to lockdowns and quarantine measures was unprecedented.
Just how severe were business interruptions in 2020? A study by Euler Hermes found 94% of surveyed companies reported a COVID-19 related business interruption. Business continuity and disaster recovery will be hot commodities in 2021, to help businesses better prepare for global risks that are systemic in nature.
2. Pandemic Outbreak
The pandemic outbreak and business interruptions went hand in hand last year, with the effects still lingering today. Even though global pandemics have been documented as possible (i.e., covered in the 2019 WEF Global Risk Report) the COVID-19 outbreak completely caught the world by surprise and resulted in heavy financial losses and disruptions to supply chains on a global scale.
Added to this, the pandemic also sped up the transition of businesses to a more digital landscape, a survival technique that had to be used by business, education, and government. This will create a risk in 2021 and beyond for businesses still running on legacy systems that are outdated and less useful in today’s digital age.
3. Cyber Incidents
One risk which did not get the attention it would have had COVID-19 not dominated global news was cyber-attack events, which increased heavily in 2020 and 2021.
Increased ecommerce traffic, virtual work arrangements, and lax security protocols are just a few sources breeding increased cyber-attacks on a global scale.
The healthcare industry is a massive victim that has been the target of cyber incidents for years but is now getting hit even harder. In one scary example, hackers are accessing patient medical devices used remotely (due to patient care having to go virtual) which, once breached, provides a clear path to a healthcare organisation’s IT systems.
Cybercriminals see cash not compassion. Strong cybersecurity systems and processes are vital in fighting these cyber criminals.
4. Market Developments
The global pandemic was not kind to markets across the world. Insolvency rates climbed significantly highlighted by six “mega” bankruptcy filings of businesses with at least $1 billion in reported assets during the first quarter of 2020 alone.
A key concern going forward is what will happen once governments remove credits serving as COVID relief? This is one risk source that will need greater attention moving forward.
A silver lining of COVID is that is has also opened new channels of innovation. Some markets were ripe for disruption after this global pandemic turned the world on its head. We would expect the digital revolution to continue to push legacy industries (e.g., finance, insurance) to innovate – or die going forward.
5. Changes in Legislation & Regulation
With leadership in the United States changing to a more progressive stance, climate change will be once again see renewed awareness on the world stage.
As countries all over the world seek to achieve zero-carbon economies, regulations supporting sustainability will be an emerging revolution. Businesses will be scrutinised and their social responsibility efforts with regards to their operations having an impact on the environment will be of interest to the marketplace.
Also, as the world changes its ways around social issues (e.g., LGBTQ+, social justice) businesses that are prepared for changes in legislation/regulations to increase inclusivity and equality will be better off than those who sit back and wait for the government to force movement.
It befits all organisations to monitor the changing legislative environment on a global scale to see how best they can use this time to establish competitive advantages to improve their reputation in their marketplace.