Energy and utilities

How would you describe the impact of COVID-19 on your business?

Survey highlights

Sixty-six percent of respondents in the energy and utilities industry were from North America or EMEA, and 27% were from LATAM. Overall, this industry had a smaller proportion of respondents in the reshape phase (12% compared with the average of 30%) and a higher proportion in the recovery phase (60% compared with the average of 51%). Eighty-two percent of respondents did not consider a pandemic to be a key risk prior to the COVID-19 outbreak, and just 30% of respondents had a pandemic plan in place. Half of respondents said the pandemic had impacted their businesses but that they remained resilient. Only 12% of respondents considered the impact to be significant and challenging to recover from. In line with the overall industry benchmark, respondents in this industry felt the pandemic would have a medium-term impact, with 80% of participants expecting the impact to last between six months and two years. Overall, respondents were positive about their risk management response efforts. Only 2% of respondents said their response was insufficient, which was slightly higher than the benchmark.

Industry insights

Energy and utility is a demand-led industry, and the pandemic has resulted in sudden downshifts in demand globally. In addition, energy and petrochemical industries have been impacted by the continued low price of oil, increasing the need for liquidity planning. Employee wellbeing has been a specific challenge in the industry, particularly for offshore operations. Employees in this industry work in close proximity over prolonged periods of time, which heightened the risk of COVID-19 transmission in the early phase of the pandemic. Fatalities resulted, leading organizations to invest in controls to make their operations safer and to ensure the use of testing and other controls to reduce transmission risk. Asset investment has become more of a focus for energy companies as they plan for divestment of assets. Across the industry we see evidence of asset sales that are strongly linked to shifting business strategies toward sustainable products and green energy. This is an area where capital investment planning is on the rise as organizations reshape to meet the future challenges of the global economy. This shift is driven by regulatory change as governments seek to introduce and meet climate change goals. It is also driven by future end-user demand and the ESG strategies of multinationals and investors.

Proportion of organizations facing supply chain issues

Continued economic disruption has the potential to elongate demand pressures within the industry. If manufacturing and other activity is reduced, there will be consequences for companies in the industry. Respondents in this industry ranked climate change much higher than the overall benchmark as an area of future risk. Many organizations are already grappling with the complex challenges associated with climate change, including increased risk from more frequent and more extreme weather events, rising sea levels and an accelerated change in demand toward alternative and sustainable sources of energy.

Future shocks

  1. Economic disruption
  2. Geopolitical tension
  3. Climate change
  4. Another health crisis/pandemic
  5. A major cyber event