Changing business landscapes and the new normal The COVID-19 pandemic has taken a terrible toll on human lives. It has severely impacted the working of many organisations – big and small – and significantly impacted the way we think, work, and operate. While the road to recovery has slowly started, the pandemic has fuelled continued evolution in economic and social areas as technological change accelerates and new behavioural patterns emerge. New business models, redefined customer playbooks, social trends and rapidly evolving technology are transforming the competitive and industry landscape. This impacts companies’ strategic plans and their vision for sustainable and long-term value creation. In this context, the following business trends will define how organisations will operate in the future:
- Rethinking supply chains even before the onset of the pandemic, there were a variety of factors – including rising unemployment, falling income, economic disparity and concentration of supply chains in a few countries – that were fuelling concerns about the negative effects of globalisation and a move towards localisation. These factors have been further highlighted during the COVID-19 crisis as supply chains were interrupted and we witnessed increasing security concerns and rising protectionism. This led nations and companies to start relooking at their supply chains and focus on improving their operational resilience. Globalisation may not go away in a hurry, but the way companies will operate in the future, including developing their supply chains, will be very different from how they operate today
- Acceleration of digitisation Digitisation and automation were already listed as top strategic objectives for most organisations. The global pandemic further accelerated this phenomenon. Some of these changes have led organisations to establish more resilient operating models that better serve their customers – and whose behavioural patterns have changed drastically over the last couple of years
- Increased focus on environmental and societal factors In recent times, there has been increased awareness by corporates and other stakeholders around ESG factors. While organisations are taking a very active interest in topics of climate change, and natural and man-made disasters, investors and stakeholders have also been pushing for more meaningful and transparent disclosure of ESG factors.
- Changing workplace and workforce of the future While a majority of the workforce in IT and financial services sectors and big organisations are still ‘working from home, organisations have also started to think and invest heavily in the workplace of the future. New norms are being reimagined, including the use of technology to enhance collaboration, teamwork, and productivity and to encourage innovation. There will also be a shift towards ‘workforce on demand’, with organisations tapping into vast and diverse pools of talent available across various parts of the globe – and at a short notice
Changing Risk Landscape
The fluctuating business environment over the last few years – due to economic, geopolitical, and other changes like disruptive technologies and rapid digitisation – has exposed organisations to a variety of new risks. It has also accelerated some of the existing risks like cyber-attacks, data privacy, data protection, increased operational errors and human resource risks. These include the psychological impact of working from home for extended periods.
While most organisations are still grappling with the effects of the pandemic and addressing the situation at a tactical level, few organisations have started to think ahead. They are recognising these new business realities and proactively addressing the risks that accompany these changes.
- Integrating risk management framework with business strategy Organisations where boards and senior management ensure that risk management process is fully integrated into the business strategy of the organisation (whether it is automation, digitisation, transformation, or building flexible and resilient supply chains) are more likely to be successful in navigating these changes seamlessly and coming out of crises stronger.
- Enhanced focus on information security The pace of innovation, digitisation and automation is increasing. A major proportion of employees continue to work from home. Organisations that are making a significant investment in creating enhanced information security frameworks (including securing customer data and complying with data privacy requirements) are more likely to create positive brand impact, seize on future opportunities and manage their risks more proactively.
- Using technology for monitoring, detection, and reporting Another area where companies are making a significant investment is in having an integrated Enterprise Risk Management solution. They are leveraging the use of technology like artificial intelligence, machine learning and Big Data to ensure that there is an aggregated and timely view of not only current risks – but also to predict emerging risks and forward-looking indicators.
- Creating flexible organisation Companies that are making significant efforts to create a workplace of the future that offers a higher degree of flexibility to their workforce while attracting, retaining and developing critical employees, can proactively manage the risk of employee stress, burnout and mental fatigue. Many organisations are going forward in developing the right policies and infrastructure to tap into ‘on-demand’ talent.
We are living in unprecedented times. The business landscape – and consequently the risk landscape – has evolved considerably over the last few years. These changes and corresponding risks have been further accelerated by the pandemic. After responding to the events triggered by COVID-19, many businesses are now beginning to reshape the way they do things, from rewriting the customer playbook and reassessing their supply chain models to adopting new technology and thinking about the future workplace. Risk managers have a big role to play in working with the board, senior management and business leaders. Not just in terms of helping them manage turbulent times but also ensuring that they are partnering proactively to create a more resilient organisation and build a strong foundation to be successful in future.
Contributed by Jitender Arora, CFIRM (IRM Level 5), Head of India Business Risk Management of a Fortune 500 Company
Download the IRM-AICTE Report on Enterprise Risk Management and the Indian Higher Education System.