Laxman Maharjan, Director of WLB Member ERM Plus, offers insights into managing risk in a COVID-19 business world.
The Covid-19 pandemic has caught everyone by surprise. No one had imagined that a global pandemic was ever likely, let alone the impacts to the economy and society it has caused. Despite the lockdown being lifted and businesses open to trade – with the global economy in a recession, rising geo political tensions, increasing cyber risk, and a risk of second wave – businesses are not yet completely out of the woods. It is given that the post Covid-19 world is going to be anything but its former self. While this will bring lots of opportunities, there will be risks and uncertainties that businesses need to be aware of.
Evolving Risk Landscape
The digital economy is on the rise following a sharp increase in remote working, online shopping and e-learning. While this is a welcome development, it also means that businesses are at the mercy of technology more than ever. Consequently increasing the level of exposures to data security, IT interruptions and cyber risks.
Working from home will become a norm in the new world. Business leaders have already seen staff can be as productive if not more when they work from home. And they can achieve big savings through reduced office rents and facility management costs. However, this phenomena will amplify risks surrounding data security and staff welfares. There have been many incidents where the spouses have overheard conversations or come across documents with sensitive and commercial information. Since there are strict regulations surrounding data security and privacy, businesses could be fined heavily if they failed to take necessary steps to protect personal and sensitive data.
There is an increased geo political risk from the ongoing trade war between China and the US, which has been worsened by the UK’s decision to ban Huawei’s equipment on its 5G network. If the trade spat continued, they could impose trade restrictions on one another. Following from that businesses could experience severe bottlenecks within their supply chain, soaring material cost, and even lose customers.
A labour shortage following the Brexit is another big concern for businesses, especially for small and medium ones, who are dependent on workers from Europe. A lack of skilled and flexible workforce will create a shortage of skilled workers and inflate wages.
So what should businesses do?
As we enter in to an era of many unknown unknowns, risk management is paramount. More than ever risk management is critical to all businesses, and even more so for small and medium ones.
By understanding the types of risks and level of exposures businesses face, they can redefine business model, develop risk based business strategy and invest in technology to reduce inefficiencies and gain a competitive advantage.
Understandably businesses are reluctant to invest in risk management at this juncture, but not doing will prove more costly in the long term.
WLB Member ERM PLUS provide cost effective and tailored risk management solutions based on your business needs. Contact us at Laxman@ERM-PLUS.com to discuss your concerns and how we can help.