Global businesses are going to have to change the way they structure their operations in the wake of the COVID-19 pandemic according to Marsh President and CEO John Doyle.
Speaking as the World Economic Forum launched a new report on the impact on COVID-19 on the world’s economy Mr Doyle (above) said while the world was complex before the pandemic new challenges will require a rethink from businesses going forwards.
“Even before the COVID-19 crisis, organisations were faced with a highly complex and interconnected global risk landscape,” he said. “From cyber threats to supply chains, as well as the well-being of their colleagues, businesses will now rethink many of the structures they formerly relied on. To create the conditions for a speedier recovery and a more resilient future, governments and the private sector need to work together more effectively. Along with major investments to improve health systems, infrastructure, and technology, one of the outcomes of this crisis has to be that societies become more resilient and capable of withstanding future pandemics and other major shocks.”
The WEF has warned economic distress and social discontent will rise over the next 18 months unless world leaders, businesses and policymakers work together to manage the fallout of the pandemic.
It added as economies restart, there is an opportunity to embed greater societal equality and sustainability into the recovery, which would unleash a new era of prosperity. The WEF has issued COVID-19 Risks Outlook: A Preliminary Mapping and Its Implications, which seeks to identify the challenges the world faces both now and in the future.
The report, produced in partnership with Marsh & McLennan and Zurich Insurance Group, sought the opinions of 350 senior risk professionals who were asked to look at the next 18 months and rank their biggest concerns in terms of likelihood and impact for the world and for business. The immediate economic fallout from COVID-19 dominates companies’ risks perceptions. These range from a prolonged recession to the weakening fiscal position of major economies, tighter restrictions on the cross-border movement of goods and people, and the collapse of a major emerging market.
In examining the interconnections between risks, the report also calls on leaders to act now against an avalanche of future systemic shocks such as the climate crisis, geopolitical turbulence, rising inequality, strains on people’s mental health, gaps in technology governance and health systems under continued pressure.
“These longer-term risks will have serious and far-reaching implications for societies, the environment and the governance of breakthrough technologies,” states the report. “It reinforces the calls made in the Global Risks Report 2020, where a multi-stakeholder community rated environmental risks as being among the top five global risks for the next decade, and also warned of the extraordinary stress on health systems.”
Two-thirds of respondents identified a “prolonged global recession” as a top concern for business. One-half identified bankruptcies and industry consolidation, failure of industries to recover and a disruption of supply chains as crucial worries.
With the accelerated digitisation of the economy in the midst of the pandemic, cyberattacks and data fraud are also major threats – according to one-half of respondents – while the breakdown of IT infrastructure and networks is also a top concern. Geopolitical disruptions and tighter restrictions on the movement of people and goods are high on the worry list.
A second report, Challenges and Opportunities in the Post-COVID-19 World draws on the experience and insights of thought leaders, scientists and researchers to outline emerging opportunities to build a more prosperous, equitable and sustainable world.
“The crisis has devastated lives and livelihoods. It has triggered an economic crisis with far-reaching implications and revealed the inadequacies of the past. As well as managing the immediate impact of the pandemic, leaders must work with each other and with all sectors of society to tackle emerging known risks and build resilience against the unknown. We now have a unique opportunity to use this crisis to do things differently and build back better economies that are more sustainable, resilient and inclusive,” said Saadia Zahidi, Managing Director, World Economic Forum.
Peter Giger, Group Chief Risk Officer, Zurich Insurance Group added: “COVID-19 has shown it is crucial to keep existential risks in focus, and climate change is one of these. As we reboot our economies, changes in working practices and in attitudes towards travelling, commuting and consumption all point to new ways to achieve a lower-carbon and more sustainable future.
“The pandemic will have long-lasting effects, as high unemployment affects consumer confidence, inequality and well-being, and challenges the efficacy of social protection systems. With significant pressures on employment and education – over 1.6 billion students have missed out on schooling during the pandemic – we are facing the risk of another lost generation. Decisions taken now will determine how these risks or opportunities play out.”