By Gcobani Tunyiswa ,
Risk Management Segment Leader
10/03/2022 · 2 minute read
Many have lamented that more strategic planning was not done ahead of time to build resilience against a pandemic. It is important now to build greater resilience ahead of future crises – not only pandemics and health risks. Doing so will require a concerted, collaborative effort by governments and businesses. It will also mean developing the funds to allocate risks more meaningful, agile regulations that embrace resilience properly, and more effective data sharing mechanisms.
At the same time, businesses would do well to focus on such areas as reducing the “resilience deficit” exposed by the pandemic. Over time, efficiency has often been rewarded over resilience, growth over sustainability. As shown by the pandemic, being too lean left some companies vulnerable to shocks. Allowing for redundancies – which some may consider inefficient – may enable businesses to adjust and find alternative models in a more timely fashion.
The pandemic has also highlighted the importance of connecting risk to strategy. The companies that have best weathered the pandemic are those that quickly made needed shifts in strategy, strengthened communications with stakeholders and empowered their leaders and employees to make real-time decisions.
There has also been an accelerator effect on digitization and technology development and dependence. While cyberattacks are not new, they have intensified and become more costly, with the past year being no exception. 2021 saw the highest average cost of a data breach in almost two decades, rising from $3.86 million to $4.24 million on an annual basis. The growing frequency and severity of attacks has significant implications that include supply chain, critical infrastructure disruptions and changing regulatory schemes.
According to surveyed experts, societal risks – including the “erosion of social cohesion” and “livelihood crises” – have worsened more since the start of the pandemic than any other risk. Only 16% of respondents to the WEF Global Risks Perception Survey felt positive and optimistic about the outlook for the world, with only 11% believing the global recovery will accelerate. Volatility, they said, is the keyword for the coming three years.
Over a 10-year timeframe, the main concerns center on environmental threats, with the top three risks being the failure of climate actions, extreme weather events, and biodiversity loss.
While many countries, sectors and businesses strive to meet the challenges of transitioning to a low-carbon future, there are sizeable obstacles that remain. For instance, the global maritime industry aims to decarbonize shipping, but feels inadequately prepared to do so.
The Global Risks Report is an important resource for organizations as they navigate the ongoing pandemic and its divergent responses while also seeking guideposts for managing future emerging risks. It is not enough to consider the day-to-day risks of doing business – planning to be resilient in the face of the unexpected is critical.