7 RESILIENCE LEVERS

With the Covid-19 pandemic continuing to cast a shadow over the global economy, G20 companies are taking increasingly strenuous measures to service their debts and meet their financial obligations

And whilst there are firm indications that economies are entering an initial recovery growth phase, a potential perfect storm of stress events looms on the horizon – one that will require a longer-term preparedness and resilience to navigate.

Our data indicates that despite the widespread rollout of vaccines across most G20 nations, the impact of the pandemic continues to be significant, with 58% of companies having experienced a reduction in turnover since the start of the pandemic.

As economies begin to open again, there are some initial signs of growth recovery. In comparison to Q4 2020, a higher proportion of companies say they are growing (35% today vs 27% Q4 2020) and fewer say they are in distress (12% today vs 16% Q4 2020).

These indications of a resurgence of growth may, however, be deceptive, and do not indicate that G20 companies are out of the woods yet.

of organisations predict that they will discover fraud or financial misstatement in their business in the next 12 months

71%

of companies say they expect to have to refinance or restructure over the coming 12 months

As our data indicates, 40% of G20 companies have had to introduce cash flow management strategies over the last 12 months, and 24% of those surveyed have had to defer loan repayments to manage cash flows as a result of the pandemic. 69% of G20 companies are also now facing challenges to service their debt, up from 62% in Q4 2020. As a result of these financial issues, 71% of G20 companies say they expect to have to refinance or restructure over the coming 12 months as a means of increasing resilience.

Many business leaders are also increasingly concerned about the wider financial effects of these factors, including a lack of access to finance, government support drying up and regulatory concerns.

REGULATORY CONCERNS & OPERATIONAL RESILIENCE

At the top of regulatory concerns will be the potential fraudulent practices that emerged during the crisis – particularly those related to government contracts or use of government aid. Nearly half (45%) of G20 companies report that they are proactively managing the risk of fraud; furthermore, 40% of expect to have experienced either media or regulatory scrutiny in relation to their use of state financial aid in the next 12 months.

Given the shifting nature of business, operational resilience is another key priority for G20 companies. Encouragingly, businesses have demonstrated a clear ability to proactively pivot and adjust their operations - 90% of G20 companies understand they will need to apply a hybrid working model, and 99% are using some form of workplace productivity analytics to manage their remote workforce or are considering using it.

40%

of G20 companies expect to have experienced either media or regulatory scrutiny in relation to their use of state financial aid in the next 12 months

90%

of companies understand they will need to apply a hybrid working model

INSIGHTS

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Developing Robust Relevant Alternative Analysis

September 13, 2021—The recent Hurricane Energy Restructuring Plan judgment emphasises the importance of the Relevant Alternative analysis for Restructuring Plans. The cross-class cram down function of Restructuring Plans, together with the possibility to apply to exclude a class from voting where the court is satisfied that none of the members of the class has a genuine economic interest means that robust Relevant Alternative analysis is fundamental to a successful plan.

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The Benefits Risks and Limitations of Lifestyle Audits

May 25, 2021—The ‘lifestyle audit’ is a buzzword on the South African anti-corruption agenda. In 2018, incumbent president Cyril Ramaphosa called for lifestyle audits on people in positions of responsibility. Some state employees, including members of the Western Cape cabinet and South Africa’s national power company Eskom, have already been subjected to lifestyle audits.

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Achieving Successful Restructurings in a Time of Crisis

November 26, 2020—In this article Simon Granger, Head of the Corporate Finance & Restructuring EMEA practice, shares his views on key current financial restructuring issues, the implications for businesses, and what boards can do to help drive a successful restructuring that will leave their business model better able to sustain itself in the long-term.

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Doubling Down on Digital: EU Sets Course for Digital Finance and Payments

September 24, 2020—The European Commission has proposed a comprehensive new digital finance and retail payments strategy. This is a blueprint for the future of digital finance in the EU, and an unprecedented expansion of financial services regulation over technology. FTI Consulting Brussels explains how it could affect Europe’s global role in digital finance.

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