Strategic Resilience; The path to a sustainable growth
The global economy is experiencing a level of disruption with business and societies risk not seen in generations. Some companies have the ability to innovate, advance and thrive, while others freeze, stalled and failed.
The global economy is experiencing a level of disruption with business and societies risk not seen in generations. Some companies have the ability to innovate, advance and thrive, while others freeze, stalled and failed. Since 2020, global economies and societies are enduring several crises from climate change to COVID-19 pandemic, cybercrimes, record inflation, supply disruptions, monetary tightening and the increased geopolitical risk, where all has a humanitarian and societal impact. Hence, this poses a critical question on its organizational resilience which cannot be addressed in isolation.
Business environment has always been a subject to constant disruption, and financial institutions are no exception, with exposure to market dynamics, climate change and cybercrime accelerating.
Climate change, a complex phenomenon, is one of the top three risks which is expected to grow in importance. Climate change has had a profound impact on real estate in recent years, as rising temperatures and extreme weather patterns have caused major changes in land use, regional dynamics, and the physical structure of buildings. Higher temperatures have increased the risk of flooding, extreme weather events, and sea-level rise, all of which can drastically increase property damage, insurance costs, and legal liabilities.
The International Renewable Energy Agency has estimated that USD7.5 trillion worth of real estate could be ‘stranded” due to climate associated risks and economic transition.
Climate change also impacts the cost of energy and the availability of renewable sources, which can have an effect on the cost of purchasing, developing, and maintaining real estate in certain areas. Additionally, climate change has caused a shift in demand for certain types of real estate, with higher demand for properties in more temperate climates and a decrease in demand for properties in more extreme climates.
Climate change has also reduced global agriculture productivity by 21%, disrupting food supply, reducing crop yields and its nutritional quality, and would likely contribute to food insecurity in the near future.
Cybercrime has dominated the top risks and poses the largest threat to organizations as criminals continue to exploit vulnerabilities of company’s infrastructure.
The growth of the digital economy and the rise of digital platforms and e-commerce, has made our lives more accessible to information, data and has also change consumer’s shopping habits. From digital applications to e-commerce, online platforms, the digital economy has enable us to navigate, shop and invest digitally without having to leave our doorsteps. This is indeed a good transformation as it helps to reduce carbon footprints and allows us to access information anytime and anywhere. However, this come with a price. The growth of digital platforms has also opened door to myriad of fraud, scams and hacks.
The global cybercrime costs is expected to grow by 15% per year over the next five years, averaging USD10.5 trillion annually by 2025, with a victim of cybercrime every 37 seconds. Phishing scams, website spoofing, ransomware, malware and IOT hacking are some top cybercrimes affecting businesses and individuals in 2022.
THE EVOLUTION OF 4IR TECHNOLOGIES
Innovation is one of the critical component to the future well-being of society and to drive economic growth. Digital transformation is the most consequential initiative with a market size expected to reach USD1,548.9 billion by 2027. Drivers and adoption includes the Internet of Things (IoT), artificial intelligence, automation, Cloud computing, blockchain, big data and analytics, mobility & social media, cybersecurity and quantum computing.
The rise of 4IR technologies, processes and systems has essentially improved productivity and efficiency, better flexibility and agility, improve customer experience and hence, improved profitability. These converging technologies will help to create a more inclusive and human centred future, but it does bear significant operational and execution risks.
STRATEGIC RESILIENCE; THE KEY TO THE FUTURE
Many leaders have undervalued resilience, believing it to be only valuable in a limited and non-recurring set of circumstances. Given the complexity and uncertainty in our environment, the relationship between “cause” and “effect” becomes less clear and changes continuously. What has worked in one situation is no longer a guarantee of success in another – hence the use of ‘best practice’ is no longer a success formula in this environment.
Strategic resilience is more than just ‘bouncing back”, but the capacity to turn threats into opportunities and the ability to take advantage of opportunities in a timely, non-crisis-like manner. The ability to thrive through and beyond, turning adversity into a catalyst for growth.
About the authors
Dr Christina is the group managing director, lead growth for business transformation & turnaround, ESG & Sustainability practice. Marek is a senior partner for technology & cyber security practice
The global cybercrime costs is expected to grow by 15% per year over the next five years, averaging USD10.5 trillion annually by 2025, with a victim of cybercrime every 37 seconds.