Businesses that welcome risk coped better during the COVID-19 pandemic than risk-averse organisations, according to the sixth annual Global Risk Landscape report, The Art of the Unknown, from accountancy and business advisory firm BDO LLP.
A survey of 500 C-suite executives across Europe, the Middle East, Africa, Asia-Pacific and the Americas shows that nearly half (48%) of companies found the pandemic to have been worse or much worse than expected.
Among businesses that welcome risk, this percentage falls to a quarter (25%), while double the number (52%) of risk-averse firms said they had experienced worse impacts than anticipated.
BDO’s survey also reveals differing experiences across sectors. The professional services sector was affected less than others, with just 3% describing the impact of the pandemic as much worse than expected. Manufacturers also coped relatively well, with many adjusting their business models to make essential products such as personal protective equipment (PPE) or ventilators.
Regardless of sector, people pressures came to the fore. When asked which risks caused the greatest pressure during the pandemic, 45% of executives cited low employee satisfaction and wellbeing, ahead of employee productivity. Many individuals faced new challenges, including a sudden switch to remote working, requiring employers to develop new ways to keep teams engaged, motivated and feeling supported.
The environment of prolonged uncertainty and rapid change created by the pandemic also challenged existing risk management practices: 90% of executives say the events of 2020 have triggered their organisation to re-evaluate its risk framework entirely.
Nigel Burbidge, Global Chair, Risk Advisory Services at BDO, says:
“The global pandemic has reinforced the need for companies to future-proof themselves in order to mitigate disruption in times of crisis. Businesses must be ready to react and adapt to uncertainty, and those which manage this most effectively are those which are more receptive to risk-taking. More than simply protecting against the negative impacts of a crisis, effective risk management also enables companies to identify new opportunities.
“The effectiveness of formal risk management practices can be enhanced by technology. Only 11% of companies we surveyed currently use technology to forecast future potential risk. However, we have seen increased investment in technology during the pandemic, including digital transformation initiatives and data analytics. Linking these investments with risk management could help businesses cope better, or even thrive, when the next crisis comes.”
Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world. Our clients are Britain’s economic engine – ambitious, entrepreneurially-spirited and high-growth businesses that fuel the economy. We share our clients’ ambitions and their entrepreneurial mind-set. We have the right combination of global reach, integrity and expertise to help them succeed.
BDO LLP operates in 18 offices across the UK, employing 6,000 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.
BDO’s global network
The BDO global network provides business advisory services in 167 countries, with 91,000 people working out of 1,658 offices worldwide. It has revenues of $10.3bn.