Devising Risk Management Strategies to keep up with the evolving business landscape in 2021
Every now and then we come across the same concept that we need to adapt to the changes in our surroundings and respond accordingly. In this article we will go through the effects of the corona virus pandemic that almost halted the business around the globe last year and what strategies need to be adapted to overcome its effects in 2021.
With the end of 2020 and commencement of the year 2021, we now enter an era of uncertainty that is unprecedented like never before. If 2020 had been a year of lost hope, 2021 has to be a year of revival, a year of settling down and a year of resurgence not just to each and every individual but also to societies, businesses and economies across the globe. While businesses and economies have been pushed back several years due to the pandemic that spread all over the world in a matter of a few initial months of 2020, there is an increasing belief that the risks affecting businesses in every sector and industry have not declined but rather have significantly grown as we enter 2021. This rapidly changing landscape requires all the businesses to revisit their risk management strategies and make necessary adjustments to make amends for the controls and opportunities compromised in 2020 due to Covid-19. Here we go through some of the challenges that will be faced by businesses in 2021 and how they can work around to mitigate them
I.T Security Risk
While information technology has made life so much easy for every individual / organization, it carries with it a fair share of risk. From the first known cyber-attack in 1988 known as The Morris Worm, there have been countless such incidents on individuals, organizations and countries overall. Thus the need to update I.T Security according to the fact paced technological changes is of clinical significance. The recent SolarWinds hacking incident is just a reminder of the I.T Security risks faced by businesses in the post Covid-19 era. While one can argue that hacking an Information Technology Services provider company by reportedly “foreign hackers” should not be as easy it was made to look let alone remain undetected for months as was the case here, the incident in itself is a reminder that businesses need to step up their I.T Security measures in 2021 or risk being compromised of data security. If 18,000 of the affected customers of the SolarWinds included the Department of Homeland Security and the Department of Treasury of the United States of America as well as private companies of the magnitude of Microsoft, Intel and Delloitte, then any business who does not adapt to the continuously changing I.T landscape of the post Covid-19 era stands at the risk of an imminent I.T security breach.
Diversification across infrastructure providers while being an expensive alternate is one of the ways to mitigate the risk but even that will not be adequate if the businesses do not significantly increase their security protocols. The basics of data sharing i.e who can access the data and to what extent needs to be strictly adhered to at the individual as well as organizational level. While one can find it mildly amusing that SolarWind’s password for its FTP Server was “SolarWinds123” according to the Forbes, it also highlights the significance of strengthening the basics of I.T Security that businesses need to perform at their level before services from outside are acquired. Another basic measure to improve cyber security can be periodic testing of the company’s security protocols which can serve as a proactive approach towards necessary changes of security measures. As reported by businessinsider.com, as many as 15 cyber security companies are poised to boom as a direct result of the SolarWinds attack with a 200 billion growth opportunity in 2021. The news only serves as a reminder that major businesses are now not only recognizing the significance of cyber security measures but are also prepared to invest in it.
Unambiguous Competition Market
If 2020 was to be described in a single word, for many it would be unpredictable. What happened last year, was unforeseen by many businesses since their inception. In order to witness the last time the world encounter such a deadly pandemic, one might have to go back to more than a century to the 1918 Spanish Flu which caused at least 50 million deaths worldwide. So it would be safe to say that a significant chunk of the currently operating businesses across the globe would have never witnessed what happened in 2020 let alone make a contingency plan to cope with such a situation. 2021 poses an entirely different challenge to the businesses in terms of devising their strategies. While some organizations will be hoping to regain their Market Leader status which they lost during the last year, majority of the organizations will be looking to make up for the lost opportunities of the 2020. While some will be looking set the pace for 2021, some would still look for the situation to settle down before taking a too aggressive or too conservative approach. The competition market, therefore, remains unambiguous and the companies will find themselves reluctant to take the initiatives which they would do in the normal course of business to drive forward. Furthermore, the wave after wave of the virus and also the changing mutations is also making it difficult for the organizations to devise strategies for the future.
To cope with such a volatile market situation, businesses need to be flexibile and diverse. We have many examples of organizations initiating a product delivery mechanism to reach out to customers during the lockdown period. The Covid-19 pandemic also highlighted the importance of adapting to technology changes as organizations that adapted to more technology driven approaches continued to excel even whereas the majority of businesses merely hoped to survive during the most part of last year. That trend is set to continue during 2021 but with other players joining the frame as more and more companies continue to use information technology as a platform to uplift their businesses. An interesting example is that of Netflix which back in 2020 was enjoying arguably its most successful year but is now facing stiff competition from the likes of HBO, AMC and Disney among other streaming channels. While flexibility and diversification remain the “dos” for businesses, there are “don’ts” as well. What organizations need to avoid is taking a more “financial” approach that revolves around cost-cutting or price hikes without a compromise on quality or an improvement thereto respectively. Embracing the competition and trying to outperform the competitors in terms of quality will ultimately prove beneficial in bringing the best out of any business.
Virus Mutations and Variants
The possibility of the virus causing the Covid-19 mutating into a deadlier and vaccine resistant virus was always under discussion but now evidences are in place as the British experts were the first to report the evidence of a variant called B.1.1.7 in the fall of 2020. CDC has also reported variants in South Africa called B.1.351 and Brazil called P.1. While the patchy vaccination process has initiated on a global level, we could yet witness millions of more deaths if, in worst case scenario, any of these variants is much more dangerous or could not be treated by the current vaccine. While the situation is still unfolding, a challenge facing almost all the Governments is that of strengthening their supply chain mechanism to effectively manage the vaccination process. For businesses, this represents a new enigma. Majority of the organizations are still in the process of figuring out the best possible working conditions for their employees while abiding by the SOPs and having to constantly consider the possibility of another major lockdown situation which tends to be always looming in the background. Majority of businesses are still resorting to remote working or work from home scenarios whereas others such as manufacturing organizations or banking sector have found ways to effectively manage the remote and on-site working to keep the businesses running. Things, however, are still not yet smooth as they were before the outbreak.
The dust around the direction in which Covid-19 and the efforts to battle it has already started to settle down with vaccination process initiating across the globe. In the coming few months, more clarity about the variants and their likely effects will be available. Until the situation is much clearer, organizations must try and avoid unnecessary investments and/or expenditure without having absolute clarity on the results of such investments or expenditures. Maintaining a healthy cashflow situation is of vital importance as in case another crisis situation was bound to happen, only the organizations with a strong and healthy “cash in hand” would be able to survive.
Post pandemic employee turnover
The Forbes reports that a recent survey shows more employees are inclined towards remote working option and will continue to demand the same even if the pandemic situation is over. What this means is that organizations that are using remote working measures as a stop gap will now be faced with a situation where employees might still seek to work remotely when the pandemic situation is over. Consequences of not being able to meet the employees’ demands might result in an exodus where the best employees might choose to jump the ship. Therefore, organizations now find themselves in a tricky situation to keep hold of their employees while being able to operate effectively and efficiently in a remote working scenario. For service sector organizations, where employees are the prized assets, this situation is not negotiable. Imagine a situation where after surviving months of lockdown, when an organization finally returns to its full working capacity, its key employees decide to leave because they would still want to work remotely. Such a situation could be devastating for any organization.
Managing such a situation requires acceptance that remote working should remain an option at least for 2021. Organizations need to work out ways to make remote working more effective and convenient to the employees to allow them to perform to the best of their abilities. For the foreseeable future, employees’ satisfaction needs to be given priority over traditional onsite working so that businesses are able to keep hold of their prized assets. In some cases, remote working also contributes towards saving operational costs such as utilities, consumables as well as rent which can be viewed as a benefit to the organization. In situations, where onsite work is an absolute must, organizations can try to incentivize employees to traditional working environment in order to keep them satisfied. The same survey as quoted above also states that at least 11% of employees wanted to return to the office so all is not doom and gloom after all. The reason being an organization is not just a work place but also a place for social interaction which people have been deprived of for more than a year now.
U.S – China relationship
Whether we choose to believe it or not but the fact remains that a strain in the U.S – China relationship can have long lasting effects on businesses across the globe. Since the start of the Covid-19 pandemic, tensions have been flaring between both the countries. Allegations and accusations from both sides have been incessant. From the Ex U.S President Mr. Donald Trump publically referring the coronavirus as the “Chinese Virus” to China’s Foreign Minister Mr. Wang Yi accusing the U.S of spreading “conspiracies and lies”, both the countries continued to trade barbs until finally recognizing the need to deal with their respective domestic issues in the first place. With the recent change in U.S administration where President Joe Biden has now taken charge, the future, however, looks optimistic.
While organizations can do little about such a risk, what is necessary is to keep oneself updated about the global political situation. A proactive approach over such an issue might be impractical but a contingency plan or a reactive approach needs to be prepared should the hostilities continue between the two nuclear powers. Since the tension between the countries have boiled over for years now i.e. even before the outbreak of the coronavirus, it is safe to assume that the period of cooling down will not be any shorter.
Syed Ahsan Iqbal