Global risks could put firms into ‘perma-crisis’ mode – report

Worsening global risks have the potential to decrease productivity levels as the cost-of-living crisis and difficult security situation affect employees, according to the 2023 International SOS risk outlook report and global risk map.

Many of the findings from the report are based on a survey of 1,218 senior risk professionals across 108 countries and utilises data on the medical and security environment of countries around the world with rankings from ‘insignificant’ to ‘extreme’ levels of risk.

The report warns that the Russia/Ukraine conflict will continue to have an impact in 2023, adding that geopolitical volatility will also spread beyond the region in the next 12 months, as increasing fissures between Russia and the West will impact other conflicts and exacerbate longstanding geopolitical tensions. Beyond the highly visible Russia/West divide, US-China competition will increasingly dominate the geopolitical and economic landscape. International SOS says best practice for organisations is to consistently revisit the likelihood and possible impact to understand potential implications for their business and people.

Many crisis management teams are learning to deal with a state of ‘perma-crisis’. International SOS advises it will be beneficial for organisations in 2023 to provide the correct level of training, investment, and support for these teams, as experts have drawn attention to significantly high levels of crisis management fatigue. It adds that managing crisis management fatigue is key in moving from ‘perma-crisis’ to crisis resilience and organisations who effectively embedded learnings from the last two years will emerge with more robust capabilities to manage challenges.

The report findings also suggest that social unrest will additionally be a key driver of lost productivity in 2023. For instance, 48% predict that cost of living pressures will impact domestic employees and 33% see civil unrest impacting business travellers. Specifically, it warns that volatility in energy and agricultural markets will fuel unrest, particularly in unstable, fragile economies.

Lack of progress on resolving underlying economic or political issues will also likely provoke growing public dissatisfaction and cycles of unrest where the risk of violence grows over time, with high-risk locations including Pakistan, Sri Lanka, Ecuador, Peru, and Iraq. Polarisation at a global level will be reflected in further domestic polarisation inflaming pre-existing triggers for social unrest, potentially influencing more localised violence and criminal activity. The report says this could occur in the US or Western Europe.

Sally Llewellyn, global security director at International SOS, said: “The drivers for unrest will be numerous in 2023 and accounting for the impact of social unrest is going to be a key task for businesses in 2023.

“Mitigation starts with understanding the risk environments in which organisations operate, drivers of unrest and most likely impacts on employees and operations. This can also help businesses to ensure they have the right early warning systems in place, understand the potential triggers and what kind of organisational response is needed to counter any security issues. Education is also key. Employees and decision makers need to be knowledgeable about risks and steps their organisation is taking to mitigate them to keep the workforce safe.”

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