In October 2021, while presenting at BIBA’s annual Global Business Conference, I discussed the importance of being ready for the next crisis. With no access to a crystal ball, I listed a few areas for consideration.
- Effects from climate change – e.g. catastrophic natural disasters
- Further fallout from the Covid-19 Pandemic – e.g. supply chain disruptions including recruitment and retention of key employees
- Major cyber security breaches – Extended periods offline and loss of reputation
- Financial crisis – triggered by widespread bankruptcies, increased stock market volatility and possible closures in key sectors of the economy
According to the PwC Global Crisis Survey 2021, as many as 95% of business leaders reported that their crisis management capabilities required improvement. Here we are in March of 2022, and the war in Ukraine has already had far reaching effects, extending to those of us in the Caribbean. Therefore, we should all be keeping a close eye on these developments and considering the potential impact to our businesses, including but not limited to, daily operations and employee benefit schemes such as pension funds, which may include investments in external markets. Further consideration should also be given to consequences of extended supply chain issues, increased cyber-attacks to private and public entities, as well as disruptions of global economies and financial markets.
In its Global Risk Survey (March 2-11, 2022), Oxford Economics shared that supply chain disruptions continued to be of “great concern” and expected these challenges to extend into 2023. In fact, the Business Continuity Institute (BCI), has also suggested that things are predicted to worsen before improvements are seen in the supply chain issues. The Oxford Economics survey further indicated that business leaders “remained cautious” regarding the impact of the war in Ukraine on the global economy.
It is within this context, that I wish to emphasise to our regional business leaders and Heads of Government, the need to incorporate strategic risk management and business continuity management principles, into their endeavours. In both sectors – Government and Private, the effects of the supply chain crisis have been significant, impacting the ability to maintain inventories of key items, obtain critical inputs for manufacturing, and maintain customer satisfaction levels.
The move to digital platforms and remote working for executing business activities has been met with increased cyber-attacks, as hackers seek to target security vulnerabilities in commercial networks and applications. This is a global phenomenon. Cyber security experts indicate that the probability of companies and governments encountering ransomware attacks in 2022 is high! A few weeks ago, the Government of Barbados temporarily shut down its information technology platform due to such an attack.
From a risk surveillance and business continuity perspective, we need to also be thinking about risk exposure through our dependencies on key stakeholders. Rather than focusing solely on vulnerabilities of our IT platforms, consider the potential disruption to critical functions and processes if key vendors within our supply chains are affected and their systems are unavailable to us. Should the war in Ukraine extend into a cyber war with Russia targeting major public and private IT networks in Europe and the US, could your operations be potentially impacted? Think about it and start to plan for this eventuality to ensure continuity of your operations.
In considering the impact of the war on global economies we cannot ignore the rising rates of inflation and commodity prices. By extension, this will lead to increased operational costs at a time when businesses are just emerging from the pandemic, and customers are crying out for relief, exploring alternative options wherever possible. Consider the potential impact to your operations and what strategies can be employed to remain competitive without compromising on service. Additionally, the impact on global stock markets where many pension fund portfolios have exposure, cannot be discounted. At this time, we have no idea how prolonged the war will be or the gross economic fall-out. Consequently, Business Leaders and Investment Managers must remain vigilant to facilitate well-informed pro-active decision-making, in an effort to safeguard account balances.
In concluding, these thoughts have been shared out of a desire to stimulate thought and discussion on our readiness to handle the next crisis. While I chose to focus on supply chains, cyber security and financial/economic risk exposures arising from the war in Ukraine, a comprehensive risk management approach is recommended, as we should be preparing ourselves and our businesses for any eventuality.
A comprehensive risk management programme enables us to consider the impact of risks on our entire operations, affecting the probability and severity of occurrence. Successful risk management initiatives generally provide increased operational efficiency, as a result of better-informed strategic decision-making. Thorough, thoughtful, strategic planning based on a business continuity management framework, must also be embedded in our governments and businesses if we wish to enhance our resilience, and remain competitive in the long term.