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GLOBAL RISK LANDSCAPE 2021
EXECUTIVE SUMMARY Organizations that embraced risk during the coronavirus pandemic have coped better with the crisis and survived, even thrived, despite the global calamity
Businesses are used to having to deal with a wide range of risks and uncertainty, but the COVID-19 pandemic wrought disruption on an unprecedented level. Lockdowns across the globe shook the foundations of our world economy. In our sixth survey on risk, BDO set out to discover how senior business leaders coped with the prolonged uncertainty of 2020, and the main obstacles they overcame to be able to continue their operations. We surveyed 500 C-suite business leaders globally across a wide range of industry sectors to find out how they adapted their business models and reinvented products and services – or if they suffered from “disaster paralysis”.
had been “less significant” or “much less significant” than they expected in April 2020, compared to just 16% of companies that admitted to being risk-averse. In fact, 52% of risk-averse firms said they experienced worse impacts than initially anticipated, while this was the case for only a quarter (25%) of organizations that welcome risk. One in four respondents admitted they did not adapt to the pandemic as quickly as they could have, with 60% citing “uncertainty, or lack of clarity” as the reason. This was much higher in companies that thought the impact had been “much worse” than expected (42%), as well as companies that were risk-averse (49%). The professional services sector felt the least impact from the pandemic, with just 3% of respondents stating the impact had been “much worse” than expected. Family businesses and those in the leisure and retail sectors experienced the brunt of the crisis, with 37%, 22% and 22% saying the impact was worse than they had anticipated.
Companies faced many risks in 2020, with geopolitics, economic slowdown and increasing competition all showing major upticks. Geopolitical risks caused the most pressure for all companies in 2020, but for those that said the pandemic’s impact had been much worse than expected, inflexible process was the top choice. For the respondents who categorized themselves as risk averse, inadequate technology was the top reason. The results suggest that anticipating and acknowledging major crises helps companies to react quicker. More than half (53%) of respondents had a global health crisis on their 2020 risk register, and 58% of these said this helped them to manage the risk in reality. A quarter of all respondents said “ignoring or failing to acknowledge the situation” is the greatest inhibitor to fast and effective decision-making.
RISK-AVERSE COMPANIES LOSE OUT
The survey’s headline finding is that companies which embrace risk responded better during the pandemic than those who actively avoid it.
COPING WITH FUTURE CRISES
How should long-term risk management practices and principles evolve after this extraordinary year? In this report, we set out key themes that companies should
More than half (53%) of risk-welcoming businesses said the impact of the coronavirus
The impact of the pandemic compared to initial expectations, by risk appetite
Much worse
Worse
As expected
Less significant
Much less significant
2%
25%
27%
31%
14%
Risk averse
8%
17%
22%
46%
7%
Risk welcoming
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