Businesses around the world face different risks. Some because of the nature of their business, others due to external factors beyond their control. The pandemic was a surprise for many firms. How the pandemic happened meant there was little time to prepare for such a risk, leading to the closure of many companies. Companies that didn’t close had to adapt quickly to the new stay-at-home orders.
Now, in 2021, in the post-pandemic era, various businesses and economies seek to recover from one of the most devastating pandemics in modern history. We will look at the risks they should watch out for as countries open up their doors again.
The number one concern for many businesses is the pandemic. Most of the issues going on in the world right now are related to COVID-19, and this is something most business leaders agree with.
The Virus Still Exist
While the COVID-19 cases reduced in late 2021 and countries rolled out the vaccines, new COVID-19 cases are still detected worldwide. The recent cases are because of the delta variant, first noticed in India. Scientists believe if we do not give the vaccination quickly enough, we will see more harmful variants of the virus in the future.
Another reason the pandemic is a primary concern is the slow vaccine rollout. In developing countries, vaccines are not readily available, and the vaccination is too slow or non-existent. Some African nations have rejected help from other countries, while others are not mandating it. There is also the problem of different vaccinations not being accepted by other countries. The U.K released a list of countries permitted entry without quarantine, and some nations where U. K government didn’t recognize their vaccines were not on the list, even though they had been vaccinated.
How Does it Affect Businesses?
So, how does this affect businesses? It affects them in different ways. The obvious one is companies in the travel and tourism industry, and an example is airline companies. During the pandemic in 2020, planes couldn’t fly since most countries were on lockdown. But in 2021, they have another problem, and that is vaccination rules of various nations. These rules mean travelers aren’t in a rush to go to other countries, except it is official or urgent business. Most people don’t like the idea of sitting for 14 days before they can enter a country.
The pandemic affects aviation companies because travel destinations, especially tourist spots, are not open to other countries. These Limit the people that are applying for tickets. Because of the effect of Covid-19 on the aviation industry, the tourism industry is automatically affected. Hotels and resorts have suffered from the pandemic but will see a slow increase in the coming months. The problem is, if any new variant springs up, then there will be stricter measures or, worse, another lockdown.
The oil industry has also taken a dip because of the lack of movement. Oil organizations suffered losses during the pandemic, and although they are recovering, any signs of a future lockdown will surely put them in a vulnerable spot. In a situation like this, companies will have to employ risk management to mitigate the potential loss.
Cyber incidents have been a risk ever since technology became a core part of business activity. Cybercrime and data breaches are some of the most common incidents associated with cyber incidents. Last year saw a lot of companies move towards taking their work online, primarily to the cloud. It also saw an increase in cyber breaches into company servers. The famous ransomware has become so popular. You can get yourself a copy on the dark web for some dollars. That is how rampant ransomware has become.
Hackers have forced businesses to pay out hundreds of thousands to millions to recover their data. A famous incident of the ransomware attack that made the news was the hack of Colonial Pipeline’s billing system, which meant employees couldn’t bill customers. Colonial had to shut down their operations which caused customers to panic buy causing artificial scarcity.
The company later revealed there was enough gas for everyone if people did not panic. Unfortunately, that’s what happens when news like this comes out – people panic, the primary reason firms prefer not to report cyber hacks like ransomware most times to the public.
So they rather pay off the ransom and let it go away quietly. Cyber incidents are estimated to have cost companies trillions of dollars in the last two years alone.
Looking at Cyber incidents from an internal angle will be to look at the Tech giant Facebook. Facebook has been accused several times of cyber-related incidents – starting from selling users’ information to a third party to the recent website crash. Facebook services, including; WhatsApp and Instagram, were out for hours, costing the tech giant billions of dollars.
These may not seem like an obvious choice at first, but the deeper you look into it, the clearer it becomes that climate change is a business risk in the short and long run. We will look at some ways climate change affects a business:
Climate change means we have more extreme weather. The summer is getting hotter and the winter colder. Some of these have led to more floods, hurricanes, and barren lands. For companies in the agricultural sector, this will affect their business dramatically. Less rain means fewer crops and, that means they will sell little, supplying smaller quantities down the supply chain. This scarcity will cause the price of crops to increase, which will affect pricing for the final consumer.
Another scenario is areas hit with floods or hurricanes often. It can cause displacement of workers and quickly increase unemployment. Insurance is another industry affected by the change in the climate. Insurance companies know the probability of floods and hurricanes happening in certain areas is high. So they will charge a higher premium for their service.
There is an active clampdown on emissions in most countries. The Paris Agreement is an example of one. This means that products or production methods that encourage gas emissions are likely to fade out with time, and nature-friendly techniques are looked at more favorably. Oli and gas-based products and manufacturing plants that emit carbon are already coming under severe scrutiny from the public.
Companies have to continue to score good points with the public, especially stakeholders. Sustainability is the new buzzword for businesses. If they want customers to be satisfied, they must show how they give back to the environment. Companies in the oil and gas business or any other business that produces waste contributing to climate change must show how they reduce the damage they are causing. While also showing how they intend to move away from the harmful products into more sustainable ones.
Activist groups, government, and global trade groups have put pressure on these businesses to do their part. So climate is directly or indirectly affecting businesses.
In conclusion, these are some risks that businesses will be exposed to this year. They can be managed to a certain degree but not eradicated. Covid-19 has caused a lot of ripple effects for businesses affecting other risks businesses already face. Hopefully, this article has helped in answering your question.