Global risk consultancy Control Risks recently released its annual RiskMap Report, a global risk forecast for business leaders and policy makers across the world released at the start of each year, that identifies the top five risks for global businesses in 2021. The top five risks identified in the 2021 RiskMap Report are: the COVID-19 pandemic, emerging digital threats, climate change, the US-China relationship, and missing the economic rebound. This year has been unlike any other year due to the pandemic, and these events will have a great impact on businesses in 2021. Specifically, businesses will be challenged by vaccine rollouts, geopolitical tensions, environmental disruptions, emerging technologies, and economic threats.
As we look towards the year ahead, businesses have an opportunity to capitalize on the risks outlined in the report and begin to plan and prepare for the ways in which these five risks will impact their business models. The report outlines several ways businesses can begin to prepare for each risk, including:
1. A world with long COVID
We will experience a year of stuttering and patchy vaccine rollouts and pockets of “forever COVID.” A highly fragmented exit from the pandemic will create tensions among – and within – an emerging group of “have” and “have not” countries. All of this will disrupt how nations work with each other, how companies work with nations, and how companies and nations interact. 2021 will not work without strong global leadership, in national capitals and in company headquarters. Both have room for improvement based on 2020. In order to survive a world with long COVID, businesses will need to be alert to flare-ups of COVID-19, not only of infections, but of the pandemic’s related ills of regulatory, reputational, and operational risk. Internally, they will need to manage the transformation of the workplace. Externally, they will have to lead, join or else be trampled by the changing marketplace.
2. US-China relations – stabilization without normalization
For businesses, relative respite in US-China escalation will be time to refocus, not relax. US-China rivalry will continue to loom over the global business risk landscape in 2021. A change in US leadership may offer some respite from the bilateral buffeting. However, businesses must not be lulled into a false sense of security: 2020 locked both the US and China into trajectories that will drive geopolitical shifts and disruption for years to come. Still, a break from constant firefighting will be welcome in the C-suite. Business leaders should take the opportunity to focus on strategic responses to long-term US-China rivalry. Rather than plan for a single geopolitical future, businesses must anticipate a range of geopolitical scenarios and implications that are specific to their organizations, and they must improve resilience accordingly.
3. Go green or go bust
An inflection point is coming for the relationship between businesses and climate change in 2021. The year just passed saw the issue pushed onto the geopolitical back burner, even while the impacts of climate change were highlighted by enormous wildfires across the globe. But the geopolitics is changing – governments that have kicked the climate can down the road will start to feel the heat. In the wake of COVID-19, businesses are more alive than ever to the risks of inaction today on issues that will shape the business landscape for decades. And though the pandemic has forced the activist society indoors and online, it has not gone away and has forced it to evolve. Many businesses took the lead on environmental commitments during the pandemic while others struggled to keep up. Moving forward, consumers, shareholders, and employees will lean hard on companies that do not have a handle on their climate risk. Businesses must take a stance on climate change because they cannot afford not to.
4. Digital acceleration hits emerging threats
Three challenging dynamics will converge in the digital space for companies worldwide in 2021. In every sector the pandemic-propelled surge in technology investment will continue as a necessity to operate in our new reality. The technological charge will dramatically increase connectivity across all industries and, with it, the exposure to digital threats. The pace of adoption required in this new world is already compounding exposure through rushed procurement and implementation of new technology. Planning for resilience in the digital space is critical for 2021. There should be an increased focus on scenario-planning for large-scale disruptive events – from ransomware attacks to industrial sabotage – in order to prepare for increased digital threats.
5. Missing the rebound
An uplift is coming, and opportunities are there for those that embrace risk. After a year of economic contraction, operational disruption, and policy uncertainty, the arrival of COVID-19 vaccines and heightened expectations of a significant global economic recovery are fueling a more optimistic outlook for 2021. While the emergence of a more highly contagious strain and increased variants has knocked back short-term expectations, pathways out of the pandemic are in sight. In order not to miss the rebound, companies will have to monitor three categories of risk and opportunities: when will vaccines unlock pent-up demand in individual countries; what are the post-COVID supply-side requirements and competition (particularly in technology and talent/skills); and what are the key enabling/constraining public policy responses, including rapidly evolving regulatory environment. Those that fail to embrace opportunity and risk will fail to capitalize on the economic uplift.
In today’s volatile world, it’s critical that businesses plan for the unknown in order to succeed in the post-COVID environment. The 2021 RiskMap Report, detailing more information about the top five business risks, can be viewed here.