The COVID-19 pandemic has sent ripples through global economies, affecting lives and livelihoods – but the effects are far from over. As companies seek to recover from the fallout, they need to proactively anticipate and safeguard themselves not only against subsequent waves of infection, but also the emerging risks generated by the repercussions of the pandemic.

In a recent COVID-19 Risks Outlook report released by the World Economic Forum (WEF), 350 senior risk professionals were surveyed on their top concerns emerging from the pandemic.

Top ‘most worrisome’ fallouts for companies:

Chart taken from WEF COVID-19 Risks Outlook Report

While results revealed that a prolonged recession of the global economy is still the ‘most worrisome’ fallout for risk professionals, they were also concerned about other far-reaching societal, technological, geopolitical and environmental implications brought about by the pandemic.

Thus, a priority for risk management teams should be to assess how these compounding repercussions will impact their companies, and whether sufficient measures are in place to address them.

We will be taking a deeper dive into the top three categories of risks being – economic, technology and geopolitical - and examine steps companies can take to mitigate them.

Disruptions of global supply chains have tested companies more in the past six months than many will have experienced in a lifetime. With airplanes grounded, restrictions on trade of essential goods and unexpected shifts in consumer demand, companies have had to radically rethink how they can both acquire and ship inventories. These adjustments could very well solidify into longer-term standard arrangements as the global economy continues to operate in a post-pandemic state. This will have significant effects on the supply chains of companies of all sizes, and companies are already reacting quickly. A recent report published by DHL and the Business Continuity Institute (BCI) found that out of over 350 organisations surveyed from 77 countries, 53.2% plan to write a comprehensive pandemic plan, and a further 32.3% will adapt current plans to ensure they cover supply chain issues in enough depth. Companies which are not already taking similar proactive steps are likely to find themselves lagging behind their competitors. The report summarises a few steps companies should consider taking:

1. Conduct deeper due diligence of suppliers beyond tier 1, such as determining their location, assessing their financial and operational health, and obtaining their business continuity plans. Good practice suggests that such due diligence should be done in the pre-contract phase so organisations can be aware of any potential risks before engaging suppliers (e.g. an over-reliance on a particular geography). In the report published by DHL and BCI, 60% of organisations planned to perform deeper due diligence post-pandemic.
2. Invest in specialist supply chain tools and leveraging on AI and supply chain mapping software that can dramatically improve visibility across the end-to-end supply chain. In the same report, 57.1% of organizations are using their own internal systems and spreadsheets for supply chain mapping, whilst 13.5% are using specialist tools – a notable uptick on the 22.6% recorded in the same survey in 2019.
3. Diversify its supplier base, in particular to seek for local sources if possible. In the report, two-thirds of organisations stated that they were planning to source goods more locally post-pandemic.

Cyberattacks and Data Fraud (technological)

The widespread and accelerated adoption of technology to enable the shift to work-from-home (WFH) during the pandemic has greatly increased the risks of businesses to cyberattacks and exposure of sensitive information, amongst others. Managing these risks are critical to a more secure and sustainable transition to digitalisation in the workplace. Here are some initial areas that companies can address:

1. Conduct a thorough review of new vectors for cyberattacks that can result from WFH arrangements, and whether the company’s existing tools and policies are in place to protect against them. Safeguarding measures include implementing VPN and multi-factor authentication, revisiting safe remote working protocols, and training employees on guarding against malware or phishing threats. More importantly, companies should assess whether the scale of current security measures is sufficient to cover the increased activity on the digital platforms they operate (e.g. increased activity on a customer service chat application or an online booking system).
2. Test any security plans or measures implemented for managing technology and cybersecurity risks for efficacy and to close any vulnerabilities. Simulate cyber threats to assess the adequacy and effectiveness of their risk response as well as staff preparedness.
3. Step up monitoring on areas with increased activity or exposure, such as customer-facing networks, collaboration tools, etc. to ensure early detection of potential data-loss incidents and malware threats before they are full-blown.

Tighter restrictions on the cross-border movement of people and goods (geopolitical)

In our globalised world today, international trade and investments have always relied on the cross-border mobility of individuals. As countries worldwide impose sweeping travel restrictions, the only cross-border travel that remains today is the movement of “essential” workers and specially-created travel corridors with quarantine-free mobility between certain countries.

While the most direct casualties are industries such as tourism, aviation and education, almost all sectors have been affected by the loss of access to the global talent pool. According to a World Trade Organisation (WTO) report published in August 2020, companies should expect these disruptions to continue in the long-term as the restarting of international mobility is unlikely to proceed in a linear fashion.

In these unusual circumstances where WFH is likely to become the norm, companies can consider investing in the following in the long recovery ahead:

1. Take deliberate effort to establish and maintain a positive culture among a remote workforce. For example, to recreate the ‘watercooler effect’ in physical office spaces by setting up a company online chat tool (e.g. on Slack) where employees can discuss topics of any interest.
2. Invest in protecting the mental health of your employees. The pandemic will continue to take a toll on mental health due to social isolation, financial worries, and the strain of adapting to remote work and home schooling. This could well affect work productivity and morale. It would thus be worthwhile investing in initiatives such as establishing free counselling hotlines, training employees to provide peer counselling, or paying for subscriptions to wellness apps.

For businesses, perhaps the opportunity exists to turn these “worrisome risks” into an opportunity for growth. An example where this has already happened is among hospitality companies which repurposed event and meeting spaces as shared-workspace options for companies. Companies with a robust risk management approach which are able to anticipate and respond to change, will ultimately be able to build a more resilient operating model. Furthermore, these new risks could even accelerate a transformation towards greater innovation and technological adoption. The pandemic has already provided a testbed for companies to experiment with new ways of working – from sourcing locally to managing a remote workforce. In this new normal marked with volatility, only the most nimble, resilient and forward-looking companies will thrive.