Firms must prime for growth as 2021 offers opportunities and risks

WHILE many welcomed 2021 on the basis that it wasn't 2020, a rebound in activity is coming and businesses need to prepare or risk losing out. With Covid-19 infection rates at all time highs in many places and vaccine advances being matched with more contagious variants, optimism might seem misplaced. That is too short-term. Businesses that remain clear-eyed and healthy will find plenty to be excited about in the coming year.

2020 brought a disorientating mix of growth and catastrophe to business along with much thinking about the future of work. Despite much innovation and many advances, after almost a year of stop-start pandemic restrictions, many people's idea of a new normal is one that looks rather similar to how things used to be. The value of office attendance and business travel is pretty clear when neither is possible. Many international companies are still working through the emerging dynamics of real estate, global workforce distribution and changing client expectations, not to mention supply chains. As the physical and regulatory impacts of global warming rise ever higher up company agendas, it is likely that many of the innovations of 2020 will endure as useful ways to reduce carbon emissions.

For those corporates that had not yet been schooled in the value of business continuity and resilience plans, crisis management teams and investments in cloud computing, 2020 brought a reckoning. For us at Control Risks and many others, this was one of the few occasions where we were dealing with a crisis that was genuinely global but also intensely local. Most international organisations discovered the complexities of national employment legislation, the differing risk appetites of their people and the difficulties of consistent communication across multiple geographies. As the year played out, monitoring the pandemic's varying progression and impacts became essential and will continue to be so for all organisations.

Most businesses emerge in 2021 leaner, more focused and with a granular understanding of how their people collaborate or not. The challenge is to hold onto the benefits gained, sometimes painfully, and not to slip back into easy and comfortable habits as the pandemic recedes. The next 12 months look like being pregnant with both opportunity but also risk.

GEOPOLITICAL TRENDS

Covid-19 was the crisis that, at the political level, the world was not ready for. It brought few countries together and exposed the short-term, tactical thinking that characterises many of today's crop of world leaders. Cooperation has been sporadic and the slow end of the pandemic will see significant friction between states. Indeed, many of the geopolitical trends that were already in evidence at the end of 2019 were strengthened in 2020. Populism and nationalism were the defining arguments across all continents, and as the global economy recovers at an uneven pace, business can again expect to find itself in the crosshairs of political contest. Tensions between new and old powers, cyber conflicts and data nationalism were key risks for 2020 and all carry on into the year ahead.

Following successive years of political upheaval, the pandemic has upended many well-established beliefs around the role of government, both in terms of social and economic intervention. It has increased focus on the rights of the individual, sometimes set at odds with the broader community. Commercial power has always had political influence, but the trend of regulation and rule-making for the past few decades has, by and large, been to facilitate trade and the flow of capital. The extraordinary wealth and global reach of some companies see them looking to shape and influence national politics - and finding this frustrated by political leadership that is often relentlessly tactical and interested in immediate popularity. Tension between nation states and global business will only increase.

The relationship between business and society also came into sharp focus in 2020, with corporates often having to plot a difficult path among the concerns of employees, shareholders and politicians. As workforces return to office-based working, the memories of shared experiences that shaped 2020 will not disappear. Environmental, social and governance issues will define corporate investments and futures in a way that has not been seen before. Businesses are now pushed harder than ever not only to actively engage with issues, but also to make their stance public. Where societal issues intersect with politics, business can find itself in an uncomfortable position.

The political clashes over Covid-19 are the backdrop to a world order that has been changing for some time. The institutions that have provided structure and order for the past 50 years have a fragility to them that will mean their reliability is regularly called into question. What seemed like fragility in 2020 may turn out to be the point at which some of these institutions had their resilience tested and emerged stronger. For business, long-term planning in such circumstances becomes harder. Unity is hard to find in a world of shifting national interests and contested political and economic spaces.

CREATIVITY AND IMAGINATION

Amid such an uncertain outlook it can be easy to see the risks more clearly than the opportunities. However, the important lesson of other pandemics and global crises is that the years that follow usually see an outburst of creativity and imagination. The balance sheets of corporates and countries are stretched and strained by pandemic-induced necessity, but this cannot override the imperative to prepare for growth and opportunity. Uncertainty and change will accompany that for years to come, but this recession is also like no other as consumers and companies wait to do business unfettered.

What will define 2021 will not only be the slow end to the pandemic, but also the spark that will signal the start of a period of tumultuous growth. We need to be ready to manage the inherent risks of the times we are living in, but also be primed for success.

• The writer is chief executive officer of Control Risks. The firm's RiskMap 2021, a political and security risk forecast, is available at www.controlrisks.com/riskmap.