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GLOBAL RISK LANDSCAPE 2021
GLOBAL RISK LANDSCAPE 2021
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CONTENTS AND KEY HIGHLIGHTS
consider. These include changing blame culture and attitudes to risk; the usefulness of formal risk management practices, such as assessments and frameworks; and the effective use of up-to-date technology in developing data-driven risk assessments. The data shows that companies with a risk-welcoming mindset respond better to crises. When asked which factors prevented their company from adapting quickly to the situation, 24% of risk-averse companies cited “stubbornness: choosing to continue with pre-pandemic plans”. Far fewer of those with different risk mindsets cited the same problem – 15% of risk-takers and 0% of risk-welcomers. While many factors shape the impact of crises, blame culture can significantly exacerbate problems. Almost a quarter (23%) of all respondents said blame culture stifles their company’s ability to respond effectively to disruption. Sectors where respondents agreed that blame culture is present are also those where the pandemic’s impact was much worse than expected. In this report, we look at who is responsible for a company’s culture, offer practical solutions to limit a tendency to blame and how to develop a positive, risk-welcoming culture. Formal risk management practices, such as assessments and frameworks, are invaluable. But has COVID-19 proven them to be too rigid to be effective, when faced with unprecedented disruption? Indeed, 90% of all respondents said the events of 2020 have triggered their organization to completely re-evaluate its risk framework.
governance (ESG) issues, which will last far beyond COVID-19.
The pandemic has also strengthened the relationship between technology and risk management. The use of up-to-date technology is essential to evolve risk management from being just reactive to proactive and predictive. Yet, only 11% of respondents use technology to forecast future potential risk, while investing in new technology or accelerating digital transformation efforts was the most common change that companies made in response to the pandemic (36% of respondents).
As Patrick Verkooijen, chief executive of the Global Center for Adaptation, said in March 2021, the pandemic has been a “wake-up call” for environmental risks and “we are utterly unprepared for the next crisis – the climate emergency”. The COVID-19 pandemic has demonstrated how quickly crises can escalate, and why businesses must be ready to react and adapt. Companies can thrive even in the face of massive uncertainty by altering their risk practices to become more accepting of risk. It is only by seeing crises as positive opportunities to expand their capabilities, rather than falling victim to disaster paralysis, that companies will thrive no matter what hits them.
The importance of a risk-welcoming mindset Respondents who are “very confident” about managing the COVID-19 risk in the next six months: P 8
Eradicating blame culture P 12
Are risk frameworks still fit for purpose? P 16
ACCEPTING RISK
From geopolitical tensions to climate change, companies will inevitably continue to face many risks and uncertainties. In particular, the pandemic has focused companies’ attention on environmental, social and
90%
23%
said the events of 2020 have triggered their organization to completely re-evaluate its risk framework
51%
Risk welcoming
believe a blame culture limits their performance
14%
Risk averse
P 18 Risk, technology and transformation Companies’ use of technology in risk management:
P 22
Limited 9%
Reactive 48%
The pandemic’s silver linings
We have improved our environmental credits, for example by reducing our carbon footprint
24%
We have refocused on the social purpose of our business, and become more socially responsible
20%
Predictive 11%
Proactive 32%
of risk-averse companies said that stubbornness prevented their company from adapting quickly to the pandemic 24 %
Embracing future risk P 24
Organizations that plan for and manage risk will be the winners in a post-COVID economy, no matter what the future holds
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