The top five risks for business in 2021, according to Control Risks
- Published: Monday, 18 January 2021 11:17
Control Risks has released its RiskMap 2021, which includes an assessment of the top five global risks facing organizations and how they may develop through 2021. These are:
A world with long COVID
2021 will be a year of uneven recovery as vaccine rollouts create a world of haves and have-nots, with pockets of forever COVID at the bottom of the pecking order. Competition will be fierce between nations and within them. State budgets will creak under the weight of their new debt, pushing some countries to the wall, or forcing others into prolonged austerity. The relationships between state and business and between society and business will be critical for companies. If 2021 does not mark the end of the pandemic, it will be the year that determines what is left when the worst is over.
US-China: stabilization without normalization
While 2021 should see superficial stabilisation in the US China relationship, the two countries will continue clashing across the current range of issues. Both are quietly keen to reset ties and focus on domestic problems and we can expect resumed cooperation on issues like climate change. China is in its own “critical historical moment” and its domestic challenges outweigh external ones. If a Biden administration focuses on issues like human rights and efforts to coordinate multilateral pressure on China, this will clash with Beijing’s core interests. Retaliation could follow and the cycle of escalation resume.
Go green or go bust
An inflection point is coming for the relationship between businesses and climate change in 2021. No organization can now afford not to take a stance. As the acute and chronic effects of climate change worsen, dozens of nations, and the EU, have made net zero pledges. All members of the G7 are likely to commit to a carbon neutrality timetable. The incoming Biden administration has pledged to re-join Paris “on day one”. First mover governments will link international investment and trade policy to action on climate change. Laggards will need to consider a future where intransigence erodes competitiveness and shrinks export markets. Where governments lag, businesses, investors and activists will set the pace.
Digital acceleration hits emerging threats
The rapid adoption of new technology will continue in 2021, bringing ever greater connectivity. With connectivity comes exposure and rushed procurement will heighten the risks. Regulatory risks, including sanctions and bans on procuring foreign tech, will rise in 2021. Ideological and practical blocks are emerging rapidly. The challenges for business will be opportunities for cyber threat actors. They will capitalise on increased connectivity and hasty solution adoption. In 2021, companies across the world will have to balance the drive for technological innovation with security, integrity and resilience challenges.
Missing the rebound
Now is the time to shift from crisis response to embracing uncertainty. With the arrival of COVID-19 vaccines turning forecasts more positive, those businesses that refuse to embrace risk in 2021 are in danger of failing to capitalise on the post-COVID recovery. Economies most heavily affected by COVID will rebound fastest, with European growth set to outstrip China for the first time in decades. To successfully ride the wave of post-COVID recovery, many businesses will need to transform their business models in even more significant ways than they already have. Companies’ competitiveness will be defined by their values, as much as by productivity and profits.