14 RESILIENCE SCENARIOS

  • 1.
    Inability to proactively plan for the future
  • 2.
    A corporate crisis damaging your reputation
  • 3.
    Uncovered fraudulent practices or victim of financial crime
  • 4.
    Litigations and contract disputes
  • 5.
    Activism or boycott by stakeholders
  • 6.
    Scrutiny of regulatory compliance and investigations
  • 7.
    Impacted by ESG and sustainability agenda
  • 8.
    Shift in investment strategies as a result of industry convergence, regulatory or geopolitical changes
  • 9.
    Drop in productivity or profitability
  • 10.
    Pressure to innovate business model and accelerate digitisation
  • 11.
    Disruption of cash flow
  • 12.
    Supplier disruption or disputes
  • 13.
    Cyber-attacks and threats
  • 14.
    Data privacy issues and leak of sensitive internal information

COVID-19 has shattered preconceptions about what a resilient company or economy looks like.

The latest FTI data indicates that the average large G20 company lost over 10% of its revenue in the second half of last year alone. A third of large US companies surveyed say they are in distress.

To continue navigating uncertainty in 2021 and rebuild resilience, businesses are starting to unpick the threats and challenges created by the disruption, from debt servicing to cyber threats and tectonic shifts in the regulatory and political landscapes. With over three quarters of G20 firms using artificial intelligence and analytics to monitor risk scenarios, resilient organisations are proactively taking steps to ensure they are prepared for what comes next. Patterns can be identified, and lessons learned.

Permanent changes in consumer behaviour – anticipated by 78% of business leaders across the G20 – will most likely prevent a return to ‘normal’. As we look to 2021, 77% believe that their business models must now fundamentally change​, and over half of companies are concerned about the mental health of their employees. We are not out of the woods yet.

62%

of G20 companies are facing challenges servicing their debt requirements

90%

now place greater emphasis on planning for unknown risks

82%

of G20 business leaders agree that companies should be run for the interest of all stakeholders, not just shareholders

0%
of G20 companies saw an increase in regulatory breaches and investigations in 2020 or expect to see one in 2021

The pandemic has cast doubt upon the assumptions underpinning past business models and operations. Do large service businesses need inner city office space for all their staff? Is main street presence still beneficial for retailers? Are global supply chains the right model in a fragmented world? Can company data be protected in a world where nation-state cyber attacks are on the rise? Resilient organisations are not waiting for answers; they create them, proactively identifying new threats and increasing preparedness.

Best practice is emerging across all dimensions of resilience, with 90% of firms now placing greater emphasis on planning for unknown risks. 63% of G20 companies have postponed or cancelled M&A deals as a result of the pandemic These seismic shifts have had an uneven effect across industries. While tech companies have managed to protect – and in many cases grow – their value and revenue, others have been severely hit at a fundamental level; the average G20 food and beverage company has lost over a quarter of its staff. Airlines and hospitality are in crisis. Significant investment deals, such as M&A, have been postponed.

0%
of G20 business leaders believe consumer behaviour has been permanently changed by Covid-19
0%
of G20 business leaders agree that companies should be run for the interest of all stakeholders, not just shareholders

Crises like the pandemic produce innumerable challenges, but can also strengthen the ties between us – and in 2020 businesses saw opportunities to reaffirm their social license to operate.

More than just an engine of financial value-creation, companies can work with public bodies and society at large to drive broader positive change. Even with the financial pressures of the pandemic, 82% of G20 business leaders stated that companies should be run for the interest of all stakeholders, not just shareholders.

If 2020 has taught businesses anything, it is that the best way to follow through on these commitments is to be resilient to crises and prepare for emerging threats – those businesses that invest in resilience will be well placed to succeed when we emerge on the other side.

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#ResilienceBarometer
Caroline Das-Monfrais
Global Resilience Lead
Matthew Bashalany
Media Enquiries, Americas
James Lloyd
Media Enquiries, EMEA

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