Risk landscape in 2021 likely to be dominated by legacy of COVID-19

Governments face widening equality gaps and social unrest as the true economic cost of the pandemic will manifest over 2021 with emergency financial support packages reducing and governments making hard choices on managing increased public debt to fund recovery over social spending says Adam Seager, Chief Risk Officer – Americas, ArgoGlobal.

The geo-political stage is set to change with the potential to see China making a rapid and strong recovery relative to other economies, enabling it to increase its sphere of influence and with Joe Biden taking office as US President in January. We are likely to Biden step up to the global stage, possibly trying to establish better relationships outside of the U.S., which in turn could impact on the delicate balance of international politics in regions such as the Middle East.

More broadly, the accelerated investment in, and adoption of, technology in 2020 will continue at a pace seeing the world tackling new threats and opportunities associated to these risks earlier than anticipated. Leading these are those risks associated with the rapid and marked change in the way we work that has occurred in 2020.  Whilst initially seeing benefits of flexibility and financial saving from the enforced remote or dispersed working model, the long-term negative effects of a whole scale adoption of this model are unknown. The majority of companies operating on a remote basis currently were not built to operate virtually, nor did their employees sign up to such a model.

Employees are the lifeblood of any corporation and their understanding and embracing of a company’s implicit culture, direction, goals and purpose which collectively create its ‘corporate cohesion’; all of which are difficult to translate virtually. This is particularly true as new people join and company veterans leave.

Heading into 2021, businesses will need to acknowledge the threat of erosion of corporate cohesion that loss of proximity and social amenity bring, and address this emerging risk, in a more holistic manner. Moving your workstation to the home and using video conferencing is a small part of the remote working reinvention required to operate a sound, socially cohesive business with a single sense of purpose.

The accelerated investment in, and adoption of, technology in 2020 will continue at a pace seeing the world tackling new threats and opportunities associated to these risks earlier than anticipated.

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