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GLOBAL RISK LANDSCAPE 2021
THE IMPORTANCE OF A RISK-WELCOMING MINDSET Agile businesses with a risk-welcoming attitude have been able to adapt to challenging circumstances and beat the pandemic slump
The COVID-19 pandemic exposed huge cracks in many business models. But it has accelerated the development of, or even strengthened, others. Companies that embraced risk were generally better equipped to deal with the crisis. Not only were risk-welcoming firms less affected than they had expected, 51% of them are “very confident” about managing the COVID-19 risk in the next six months (compared to 14% of risk- averse organizations). In contrast, businesses that neglected or avoided risk suffered. 25% of respondents cite ignoring or failing to acknowledge the situation as the biggest inhibitor to fast, effective decision-making. The ability of companies to pivot their business models quickly and smartly during the last year has been key. It’s also intrinsically correlated to how well they have handled risk: almost half of respondents who said their companies were of risk-averse respondents agreed that their company did not adapt to the pandemic as quickly as it could have 25 % 49 % of respondents stated that “ignoring or failing to acknowledge the situation” is the biggest inhibitor to fast, effective decision-making
risk-averse later conceded they didn’t adapt to the new business landscape as fast as they could have. This is largely down to mindset around the pandemic, says Risk Advisory Services partner at BDO, Emanuel van Zandvoort. “Being risk averse means that companies are less open to uncertainty – including opportunities and change. They see the pandemic as something negative – a risk – and are less capable of seeing the upside,” he says. So which industries were quickest to adapt and realize the opportunity? What was their success down to? What informed senior management’s timing and reasoning behind switching to offer new products and services? And how did they manage the continual pressures on their business?
MANUFACTURERS LEAD THE WAY
Manufacturing was at the forefront of this change, with many firms switching at the start to make essential products such as ventilators and personal protective equipment. It paid dividends, with one in four manufacturers reporting the pandemic’s impact was less or much less significant than expected after major initial pessimism. “At the start, we were going into the unknown and firms tended to fear the worst,” says Jack Semple, alliance secretary at the Engineering and Machinery Alliance of trade associations. “Firms saw projects being put on hold across the economy, there were strong fears over getting paid and employees were worried. In the event, however, the picture has started to become less gloomy. Invoice payments have held up remarkably well and supplies have got back on track.”
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