The global COVID-19 pandemic has significantly altered the risk landscape. From major supply chain disruptions and heightened employee health and safety concerns to an economic recession and shifts in consumer behavior, the pandemic has created new risks and magnified perennial concerns. Organizations have altered their operations to respond, implementing changes that will likely become permanent. Large-scale remote work has amplified existing information security risks, while unplanned or accelerated adoption of cloud and other technologies increases the likelihood of service outages and system breaches.
These factors are creating risks of lost productivity and reduced employee engagement. As the line between work and personal lives continues to blur, employers will have to adjust performance management metrics and adopt flexible productivity expectations.
Organisations need to consider the risks highlighted in these hot spots:
- Organizations are looking to reduce the likelihood and impact of supply chain disruptions by modifying their supply chain strategies and adopting more digital supply chain technology.
- Standard risk events, such as supply chain disruptions and adverse weather events, have been exacerbated by the unprecedented nature of the pandemic, making business continuity and disaster recovery a high priority.
- Large-scale shifts to remote work amplified the effects of inadequate cyber hygiene practices. IT capacity is increasingly strained. These pressures also magnify access management challenges and increase the likelihood of system outages and data breaches, heightening risks related to IT governance.
Elevated Macro Environment Uncertainty
Organizations face a highly uncertain operating and risk environment through at least 2021. Although there were signs of a looming recession before the pandemic, pandemic-induced declines in demand and economic activity, necessitating rapid changes to business models are amplifying operating challenges.
In light of macro uncertainty, organisations must pay attention to risks from these hot spots:
- Increased change, stress and uncertainty are creating ideal conditions for fraud and negatively impact risk culture and decision making.
- Challenges with maintaining liquidity and the elevated risk of credit default are adversely affecting the ability of organizations and their debtors to meet financial obligations. This increases the likelihood of excess bad debt and reduced profitability, creating new corporate financial management risks.
- Consumer behavior has changed significantly in the wake of global lockdowns and the economic downturn, disrupting historical data patterns and heightening the need for accurate data and analytics to support rapid decision making. At the same time, data inaccuracies continue to limit successful implementation of advanced analytics tools, resulting in wasted investments and missed opportunities.