7 RESILIENCE LEVERS

Despite the adverse impact of the pandemic, the majority of G20 companies have grown more financially resilient over the past year

However many companies continue to be plagued by operational issues, and are struggling to establish operational resilience in the face of growing supply chain and climate change disruption

 

Despite 69% of G20 companies stating that the pandemic has caused lasting damage to their industry, many have actually developed greater financial resilience over the past year – with 58% having returned to or exceeded pre-pandemic levels for turnover and number of employees.

While 55%  are growing, and a further 39% are sustainable or covering expenses, the percentage of companies that report being in distress has more than halved compared to the February 2021 Resilience Barometer (7% in January 2022 versus 16% in February 2021).

One of the key factors driving businesses’ improved financial resilience is increasingly the ability to manage debt. In September 2021, 69% of G20 businesses said that they were struggling to service all their debts, compared to 62% today – a 7 percentage point decrease.

Our data also reveals a strong rebound in expected M&A activity, which serves as a further indication of financial recovery. In February 2021, 13% of G20 companies said they did not expect to conduct any M&A; this has dropped by 5 percentage points to just 8% in January 2022.

BELIEVE THAT THEIR BUSINESS MODEL MUST FUNDAMENTALLY CHANGE TO MAINTAIN OR RESTORE COMPETITIVENESS

71%

WILL REQUIRE OPERATIONAL RESTRUCTURING IN 2022

Companies that have sought financial restructuring or refinancing in response to conditions over the last 12 months have also fallen to 26% of respondents in January 2022 compared to 33% in September 2021 and 29% in February 2021 – another clear indicator of growing financial resilience.

On the other hand, operational resilience issues continue to affect G20 businesses: 76% still believe that their business model needs to fundamentally change to maintain or restore competitiveness in the market, while two-thirds (66%) report that they are struggling to embrace digital transformation.

 

Businesses continue to be plagued by supply chain issues; more than 10% of the turnover lost by G20 companies surveyed was caused by disruption to supply chains – the highest proportion after shortage in workforce and skills (12%) and cyber-attacks and threats (11%)

 

The Food and Beverage industry in particular reported that the greatest impact on their lost turnover from resilience scenarios was disruption of supply chains (17% of revenue loss due to resilience scenarios). Despite this, only 49% of companies are taking mainly proactive steps to manage supply chain disruption scenarios.

To compound these resilience risks, businesses face a shifting operating environment. In 2022, companies will have to – as a means of increasing resilience – evolve or fundamentally change their business model in the wake of the pandemic.

The high proportion (72%) of G20 respondents that stated they expect to require operational restructuring in 2022 is likely a reflection of the increased risks faced by businesses and the growing need for resilience.

82%

OF G20 COMPANIES USE ARTIFICIAL INTELLIGENCE AND PREDICTIVE ANALYTICS TO ANTICIPATE AND MONITOR RISK SCENARIOS

10%

OF TURNOVER LOST IN 2021 WAS CAUSED BY DISRUPTION TO SUPPLY CHAINS

INSIGHTS

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