Section 1 – The risk landscape
T E C H N O L O G I C A L R I S K S
P O L I T I C A L R I S K
OVE R A R E LAT I VE LY SHORT P E R I OD OF T I ME WE ’ VE GONE F ROM 3 0 0 P EOP L E ENAB L ED FOR R EMOT E WORK I NG TO MOR E THAN 2 0 0 0 I NC LUD I NG CAL L CENTR E S TAF F B E I NG AB L E TO DO THE I R J OB S F ROM HOME .
This risk factor was on the wane prior to COVID-19 with Brexit seemingly settled and US-China trade tensions easing. However, COVID-19 has caused government intervention on a scale that hasn’t been seen for decades. How much, how fast, and in what ways governments reduce their economic role will be one of the most important questions of the next decade. Last year, Brexit and the US-China trade war caused concerns about political risk to spike to the highest levels in the study’s history. The global trade relationship with China is now more uncertain than ever and organisations are rapidly re-evaluating their supply chains and manufacturing strategies. With most businesses likely to be operating to some extent with public money (for example, the furlough schemes introduced by many governments), government scrutiny of business is likely to increase. This could mean increased regulation, particularly in the areas of supply chain management and employee and public health.
Already a top concern, technology risks are now writ even larger in organisations with the digitalisation of operations having accelerated at a pace unthinkable at the start of 2020, with profound implications for operations, security, business accommodation and customer delivery and distribution. O R G A N I S AT I O NA L R I S K S This had moved up the hierarchy of risk concerns prior to COVID-19 with worries about managing people and change an increasing concern, particularly for General Counsel. Clearly the risks they face as a result of COVID have changed rapidly. Staff well- being and mental health has become a short-term priority and has highlighted practices that may well prove to be beneficial in the long-term as remote working becomes more common. Employee engagement initiatives have accelerated at pace alongside digital engagement. Team management and managing change had already moved up the hierarchy of concerns prior to COVID-19 as attraction, development and retention of skilled teams had become an increasingly pressing challenge, exacerbated by the need to develop skill resources to deliver digitalisation and defend against data privacy and cybersecurity threats. The crisis has also revealed shortcomings in succession plans as leaders have fallen ill and replacements have been required across all departments.
Paul Donovan, NED, Thames Water
COVID-19 WI LL HAVE A LONG-TERM EFFECT ON THE UTI L I SATION OF OFF ICE AND INDUSTRIAL SPACE . THE IMPACT WI LL PLAY OUT IN DI FFERENT WAYS : REDUCED OFF ICE SPACE DUE TO INCREASED REMOTE WORKING, AND INCREASED E-COMMERCE POTENTIALLY LEADING TO INDUSTRIAL SPACE OPPORTUNITI ES .
MY CHA I RMAN AND I REAL LY RAMMED HOME ON DAY ONE THAT AL L OF OUR SEN I OR L EADERS NEED TO SUP PORT OUR STAF F AND I DENT I FY AND HE L P VULNERAB L E PEOP L E .
Haidee Klein, CHRO, Gazeley
STAFF WELLBE ING HAS BEEN HIGH ON OUR AGENDA, SUCH AS ENABL ING WORK SCHEDULES THAT ARE FLEXIBLE TO ALLOW PEOPLE TO GET FRESH AIR AND DAYL IGHT.
Head of Legal, Technology
MA R K E T A N D E C O N OM I C R I S K
CEO, Business Services
AWARENESS OF MENTAL WELLBEING HAS BEEN CENTRAL TO OUR APPROACH AND WE’VE WORKED WITH A CLINICAL PSYCHOLOGIST WHO’S HELPED US FOCUS ON BUILDING RESILIENCE. THIS WELLBEING FOCUS, ALONG WITH PROACTIVE COMMUNICATION, HAS HELPED OUR LEGAL FUNCTION TO COPE WITH THE RECENT, SUDDEN CHANGES. WE HAVE ALSO ORGANISED JOB EXCHANGES TO MATCH RESOURCE SUPPLY AND DEMAND ACROSS THE GROUP AND ITS LOCATIONS.
THERE WI L L BE A REAP PRA I SAL AROUND THE ROL E OF OUTSOURC I NG AND THE MANAGEMENT OF THE SUP P LY CHA I N I N ORDER TO BETTER MANAGE R I SK GO I NG FORWARD.
In our survey, these risks were relatively low on the priority list and had subsided on the prior year as markets leapt to record levels and growth was stable. This relative calm felt at the start of the year was swept away by COVID and our conversations suggest that dealing with the existential threats of maintaining liquidity and access to cash in the context of suddenly plummeting customer demand is the primary focus for most organisations.
General Counsel, Financial Services
Oliver Canning, Chief Legal Counsel, NBCUniversal International
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