Aon Insights:
Protecting people and assets was consistently ranked the top priority across all industries.
Three specific areas were identified as critical:
1. Well-being of our people
2. Retaining key employees
3. Operational resilience
87.2%
*Data collected July – October 2020 by Aon’s proprietary Readiness Assessment from over 50 Work Travel Convene Coalition participants from the U.S., Europe, and Asia. Respondents span over 15 industries and represent multinational organizations with global footprint.
Business leaders have been confronted with a number of decisions as they steer their workforce, operating models, customers, portfolios and finances through massive uncertainty. Some of the changes they’ve made are likely to last—and some are poised to completely reshape parts of their business. Take supply chains—now, companies are determining whether they can discard their long and complex supply chains with regional suppliers, short distances, and better inventory management. Indeed, during the pandemic, respondents said fluctuating demand was a more significant risk exposure than supply; and certain customer behaviors are likely to stick. That means companies must also reshape their business approach accordingly.
The main business priorities companies have for the reshape phase are protecting people and assets, maintaining or increasing revenue and balance sheet protection, which were consistent for organizations around the world. Many leaders recognized that focusing on their people and their well-being was critical in the initial response phase of the pandemic, and that has carried through to their long-term planning as they seek to build a more resilient workforce.
Maintaining or increasing revenue was the second-highest priority for survey respondents, with many turning to the accelerated use of technology to advance that agenda, as well as focusing on asset investment opportunities and risks. As working environments become more virtual and hiring models change, being able to adapt through the use of technology will be pivotal to maintaining or improving productivity. From an office setting to the shop floor, automation and digitization—for both getting work done and expanding product and service portfolios—will play a large role in revenues. The growing dependence on more sophisticated and connected tools and platforms makes organizations more vulnerable to adverse cyber events, which will require them to refresh their cyber risk strategy, investments and risk coverage.
At the regional level, companies have different plans for maintaining and increasing revenue. New product development is the main priority in EMEA, APAC and LATAM, reflecting a need to innovate to not only survive but thrive in these markets. In North America, companies are focused on workforce planning, likely in line with higher employee numbers, wage considerations, and workers’ compensation regulations.
Cost management and balance sheet protection are also critical for the reshape phase as companies seek to offset volatility in their revenue lines while optimizing their cash flow. To that end, companies are likely to use expense rationalization, liquidity planning, and credit protection as the three primary levers for repositioning their balance sheets. Some of the working model changes from the pandemic—such as remote work or increased use of automation—will result in long-term savings. Organizations will need to integrate their investment and digitization plans with their people strategy to produce more agile and adaptable human capital models, with significant strategic planning from HR teams. As with using technology to maintain or increase revenue, automation and remote work will change companies’ exposure cyber risk, so risk managers will need to look at their cyber profile through a new lens. In addition, redeploying resources was a priority in all regions other than APAC, which is most focused on business process reengineering, perhaps representing the higher percentage of manufacturing and trade sectors operating in this economy.
Organizations are also focused on future planning. They have identified future major shocks, which many are looking at with a new perspective as they take lessons from COVID-19's impact on their organization. Each of these has potential to challenge organizational resiliency and stability. The most prevalent major shocks expected by respondents are economic disruption, a major health crisis, and geopolitical tension. Economic disruption and health crises dominate across all four regions while geopolitical tension ranks higher in the US, reflecting ongoing trade disputes with China as well as domestic political unrest. Across each region, the higher-ranking expected shocks reflect geographic nuances. For instance, US companies rank major cyber events higher up on the list, with a higher volume of breaches and related costs than in other regions. APAC and LATAM, both large exporters, put business model disruption in their top shocks, as major supply chain disruption has a severe economic impact. Climate change is top of mind for countries in EMEA, especially as aggressive and ambitious targets for decarbonization are rolled out in the
European Union.
Reshaping for the future and planning for future shocks will require an enterprise-level approach. Fortunately, more than 80% of survey respondents reported that the pandemic taught them to take an enterprise-wide approach to incident management, collaborating across functional units including risk, HR, IT, and finance. This will put risk managers in a better position to mitigate both short- and long-term risks—and prepare their organization for impact when certain incidents can’t be avoided.
Unlike preparedness plans for large-scale disasters such as hurricanes, the pandemic’s global impact was far more complex. Laura Schlicting, Accenture’s North America Geographic Services Lead, recalls the lessons learned from teams in China – the country first imposing lockdowns due to COVID-19: “We were able to learn from the approach that China took – how our teams were able to get ready and respond.” As the pandemic’s scope and scale grew, Accenture’s teams were able to build from the approach that was taken in China and continuously iterate and improve, all the while taking into account local variances – from government regulations in specific countries or in the case of the U.S., a patchwork of local laws.
Continuously Adapting, Adjusting and Improving Frameworks
A structure that supported integrated decision-making helped Accenture put strategic action plans in place. Leadership set strategic direction while various subgroups — procurement, human resources, employee relations, technology — brought their own targeted solutions and executed. “Across our most senior leadership, there was a group that met routinely, regularly, daily, as they set the strategic direction,” Schlicting says, and that “all-in” approach was replicated throughout geographies. “We pulled together a configuration of people who wouldn’t typically work together, at least in such a collective way,” says Keil. “That constant communication helped all of our teams prepare for rapid shifts in direction. Everybody had a 360° view on the totality of the situation on an ongoing daily basis. We were able to continuously manage the situation because of really close coordination and collaboration.”
Making the Best Decisions During Rapidly Evolving Situations
Business Priorities and Future Planning
Reshape