GLOBAL RISK LANDSCAPE 2021
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FOREWORD
By Nigel Burbidge, Partner and Global Chair of Risk & Advisory Services at BDO
The bedrock of profitable business is sound decision-making
There’s a concept in game theory called a “wicked problem”. This is a challenge that is hard to complete because of incomplete, contradictory, or changing information. There may be no right or wrong solution.
shows that this is more likely to happen in organizations that have managed to develop a risk-welcoming attitude. Businesses must accept the existence of unknown risks – and deploy key tools and strategies to manage them effectively. Learning to welcome risk is easier said than done. A quarter of respondents admitted their company did not adapt to the pandemic as fast as it should – and for 60% of these, reacting slowly was a conscious decision. Understandably, senior leaders chose to wait for more clarity on the situation before agreeing next steps. But when the information is as contradictory and fast- changing as it has been during the pandemic, waiting for certainty is risky in itself. So how does a company develop agile decision-making? Keeping open information channels is critical. In
The term perfectly captures the last year in business.
Nigel Burbidge, Partner and Global Chair Risk & Advisory Services, BDO
The global pandemic threw markets into turmoil. Wave after wave of new challenges hit in quick succession. Sudden and unprecedented lockdowns, mass remote working, travel bans, and a deluge of contradictory information have defined the last year. How long will the crisis last? We don’t know. A truly wicked problem. In this worldwide turmoil, some companies managed to steady the ship faster than others. Those who managed to make fast, effective decisions were better able to pivot business models and keep staff up-to-date and motivated. Others suffered from decision paralysis, waiting for news to inform their next steps. At BDO we work side by side with entrepreneurs and industry leaders, and wanted to pool knowledge about decision- making in a crisis. What are the best methods? This year’s Global Risk Report has examined the mechanics of decision-making under pressure, and in immense uncertainty. The chief finding is the importance of an agile mindset. When information is limited and conditions are chaotic, businesses must be ready to react and adapt to the reality of their situation. Our survey
of the respondents who agreed, cited “uncertainty, or deliberately waiting for more clarity on the pandemic” as the main obstacle to responsiveness respondents agreed that their company did not adapt to the pandemic as quickly as it could have 60 % 1 IN 4
particular, our survey shows the importance of trust in facilitating information flow. Trust empowers
employees to speak up without fear of reprisals. To reap the benefits of this, effective business leaders need to foster a high-trust, low-blame company culture. Now the crisis is passing, it’s time to learn the lessons. The bedrock of profitable business is sound decision-making. This report makes a major contribution to that mission.
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