Geographic insights

As the pandemic continues to spread at different speeds across the globe and waves of restrictions on communities and businesses impact the global economy, organizations in different regions find themselves in different stages of crisis management. North America had the lowest percentage of respondents still in the react phase (10%, which was 9% below the all-region average). The remaining regions were broadly equal, with around 25% of respondents in each region reporting that they are still in this initial phase. The ongoing nature of the pandemic may be the reason LATAM and EMEA showed consistent responses in line with the react-and-reshape benchmark.

Countries in these regions typically have multiple land borders, and the complex interrelationship of commercial activity across these borders may have introduced additional levels of complexity navigating through the pandemic. This may have produced greater uncertainty in these regions, slowing the progression of the recovery cycle. This is supported by the fact that 9% of organizations in LATAM and EMEA reported significant impact with significant time to recover (which was higher than the benchmark). By contrast, only 5% of Asia Pacific (APAC) organizations said impact was at this level of severity. Other regions showed different trends that reflect the geographic nuances of the pandemic, risk maturity, level of resilience and pandemic approach.

Companies indicating they have thrived during COVID-19

Companies with a pandemic plan in place prior to COVID-19

APAC respondents reported significantly higher numbers of businesses thriving during the pandemic than other regions (11% compared with 7% overall). All other regions only reported 6% as thriving. This suggests that these organizations were more resilient and better able to pursue the opportunities created by the pandemic. It may also suggest that these organizations have come through the pandemic’s cycles and are able to move forward while other regions still deal with specific localized issues, or that the demand for the products, materials and commodities they produce was less impacted by COVID-19. This response is also likely to be linked to their risk maturity. More than half (52%) of APAC respondents had a pandemic plan in place prior to the event, which is significantly higher than the benchmark (30%). Many of these organizations learned from earlier threats (SARS, avian flu and swine flu), so they introduced robust plans and had state-run track-and-trace technology already in place. Even so, 35% reported that they have accelerated the review of ERM (benchmark 29%), with 78% intending to review business continuity strategies (benchmark 57%). This appears to demonstrate a much higher level of risk maturity in these organizations, which has improved their preparedness and their ability not only to be resilient but to thrive. Very high numbers of respondents in EMEA (73%) and LATAM (79%) reported that they did not have a pandemic plan in place (compared with the benchmark of 69%), meaning that between one-fifth and one-quarter of these organizations were prepared. EMEA respondents nonetheless felt their risk management was sufficient (71%), which was higher than the benchmark. A proportion of EMEA (36%) and LATAM (21%) respondents did not think the pandemic would accelerate a review of ERM process, although 31% of EMEA respondents reported that they would review it. North America had the lowest number of respondents indicating that they would review ERM process (25%), but a higher proportion had not decided. The results suggest that organizations in EMEA and LATAM may not have fully appreciated the link between enterprise risk management and resiliency. The results suggest that these organizations could do more to learn lessons from the pandemic response and apply them to future plans, with the experience of APAC organizations demonstrating the value of adopting such approaches. The fact that these organizations still identified improvement as a priority demonstrates a level of maturity in enterprise-based decision-making.

Companies with risk registers containing pandemic/other major health crisis as a top 10 risk prior to COVID-19

Preparedness by industry

A very high number (82%) of respondents did not include a pandemic among the top 10 risks in their organizations’ risk registers prior to COVID-19, with some industry nuances. Respondents in the agrifood and construction and real estate industries were least likely to identify a pandemic as a risk (9% and 10% respectively), while health and pharma, public services, and financial services had much higher numbers responding that the pandemic or major health crisis was in fact on their risk register. Accordingly, two of those industries had the highest percentages of respondents with a pandemic plan prior to COVID-19: financial services (51%) and health and pharma (45%). This suggests these organizations had a more robust enterprise-risk-identification process in place. This is often linked with higher risk maturity, which is common in sectors that have complex regulatory requirements.

Business impact

Overall, 48% of respondents recognized the impact of COVID-19 but stated their businesses remained resilient. Smaller numbers of respondents said their organizations had thrived (7%), and on the other end of the spectrum, 8% reported they were severely affected and would take time to recover. Around 17% of organizations were still uncertain about the long-term impact on their businesses, reflecting the continued uncertainty caused by the progression of the pandemic globally at different stages. From an industry perspective, technology and communications (13%) and industrials and manufacturing (10%) had the highest percentages of businesses that have thrived because of COVID-19, likely due to the rapid adoption and acceleration of technology in those industries. In the hospitality industry, on the other hand, 67% of respondents stated their business was severely impacted and would take time to recover. Despite the global nature of the pandemic, supply chains were resilient: 41% of respondents reported that they did not see an impact on their supply chains. Interestingly, the largest percentage of disruption in the supply chain was because of a drop in consumer demand (36%), which affected hospitality and energy, sectors that are heavily led by demand. Hospitality organizations faced the biggest issues because of a drop in consumer demand due to COVID-19 restrictions (53%), and that demand decline could continue. The pandemic had less of an impact on supply; the agrifood and industrials sectors showed resilience without stress on the supply chain. The construction and real estate (28%) and pharma and health (27%) industries, however, had the highest percentage of supply chain issues, resulting from limited material sourcing. Regionally, APAC respondents showed a higher percentage of acceleration (12%) on the supply chain due to forced improvements throughout crisis management, which aligns with the fact that respondents from this region reported faring better than other parts of the world in their pandemic response.

How was your company's supply chain disrupted?

Risk management response

Many organizations turned to a coordinated, enterprise-wide strategy for their crisis response: 89% of respondents said their companies had established an internal COVID-19 Task Force to help manage their response to COVID-19. The key functions of the task forces were identified as business operations (87%) and HR (95%). It is evident that a large part of the response across all regions and sectors has been focused on people. Because people were a priority for response strategies, HR teams had to work closely with business operations to maintain resilience.

The agrifood (87%) and hospitality (80%) industries show a below-average percentage of companies that have established an internal COVID-19 task force. This suggests a more direct reliance on operations to manage activities. For agrifood, this may be because the need to maintain food security and safety meant that the response required less strategic planning but more emphasis on compliance with health regulations. In the hospitality sector this may be a consequence of these businesses being significantly impacted and a larger proportion of employees at risk of furlough and other short-term measures.

There was overwhelming agreement that the key lesson to take away from this event was the need to have an enterprise-wide approach to risk (81%).

My company established an internal COVID-19 Task Force to help us manage our firm’s response to COVID-19

My company's risk management response efforts around COVID-19 have been:

Has your business made a claim on its insurance program or through its captive, which was triggered by COVID-19? Yes

If you have filed a claim, reflecting on the process to date, are you:

While the immediate impacts were people-focused, organizations had to solve complex issues to maintain operational resiliency. The acceleration of technology deployment to enable remote working, the adaptation of premises to make them COVID-19 secure, and decision-making on key priorities resulted in an enterprise-wide approach that ensured organizations could keep employees, customers and third parties safe while minimizing disruption. The overall sentiment on companies’ risk responses suggests that the pandemic took many organizations by surprise. More than two-thirds (67%) of respondents said their companies’ risk management responses to COVID-19 were sufficient, but 32% recognized that additional planning would have been beneficial. There were some sector-specific differences. Sectors reporting insufficient response were the hospitality (7%) and agrifood (4%) industries, which were higher than the average (1%). These are likely to be the businesses that were least prepared and have suffered the most long-term impact from the pandemic. Public-sector respondents had a higher percentage (66%) that thought that, although their companies’ risk management response was sufficient, additional planning would have been beneficial. The construction and real estate sector (38%) also reported that better planning would have been beneficial. The telecommunications and financial services sectors appeared most satisfied with their risk management response. This may be because these sectors are more likely to have been able to adapt digitally to the pandemic and is probably linked to their higher risk maturity. These organizations tend to have more embedded systems to scan for emerging risks, and it is likely that the maturity of these systems has enabled these organizations to minimize impact and, in some cases, thrive. Another area of risk management response is insurance. In a crisis, part of the risk response typically involves filing insurance claims, but this was not the case during the pandemic. Overall, 88% of total respondents have not made COVID-19-related claims on their insurance programs. This suggests that organizations do not believe that insurance is an appropriate strategy and believe themselves to have limited coverage due to the nature of the loss or the limits/ exclusions that could impact potential coverage. Of the 12% of respondents that have made a claim, 61% agree that the likelihood of renewing the program with their lead/insurer is unchanged. In the global insurance market, which is seeing hardening conditions in key classes such as property, professional indemnity and Directors & Officers, it is not surprising to see organizations seeking to maintain insurer relationships. This helps to provide some certainty in a volatile trading period. The hospitality industry has the highest percentage of respondents (40%) that have made a claim on their insurance, which may not be surprising given the extent to which the sector has been affected by the pandemic.

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