Twenty-twenty is now in our rearview mirror. “It’s not being called the ‘year from hell’ for nothing,” write Mathew J. Burrows and Robert A. Manning, analysts from the Atlantic Council.[1] They add, “It’s tempting to say that in 2021, there’s nowhere to go but up. But there will be further unanticipated shocks and no shortage of risks.” Knowing there will be “further unanticipated shocks,” trying to predict what risks businesses should expect in 2021 requires a bit of courage. Nevertheless, there are brave souls who have risen to the challenge. In addition to Burrows and Manning, one such prognosticator is Tony Ewing (@mauriceewing), CEO of Conquer Risk. He writes, “Whether you’re a solopreneur, a small business, or the head of a massive corporate enterprise, you probably pivoted in 2020. … COVID-19 is still around and deadly. Political risk overtures are also there, as are challenges with technology and the general difficulties many businesses continue to find in pivoting (i.e., adjusting their business models to suit market changes).”[1] Below, along with other prognosticators’ views, you will find some of their predictions about risks businesses will face in the coming year.
2021 Business Risks
Deloitte analysts Nancy Albinson (@albinson_nancy), Andrew Blau, and Yang Chu note, “The risk landscape is changing fast. Every day’s headlines bring new reminders that the future is on its way, and sometimes it feels like new risks and response strategies are around every corner. The outlines of new opportunities and new challenges for risk leaders — indeed, all organizational leaders — are already visible.”[3]
The Pandemic.
Although vaccines are being approved and inoculations have begun, the COVID-19 pandemic is not going away anytime soon. Burrows and Manning explain, “International travel restrictions will remain in place for much of 2021 since distribution of the vaccine overseas, particularly in developing nations, will likely be spotty. The virus also continues to spread and mutate, potentially limiting vaccine effectiveness.” Ian Bremmer (@ianbremmer) and Cliff Kupchan, from the Eurasia Group, add, “Neither the coronavirus nor its wide-ranging impacts will disappear once widespread vaccination begins. Countries will struggle to meet vaccination timelines, and the pandemic will leave a legacy of high public debt, displaced workers, and lost trust. Evolution of the virus could meaningfully change the goalposts on population immunity and vaccine effectiveness over time. Sharply different rates of recovery, both within and among countries, will stoke anti-incumbent anger and public unrest. In addition, emerging markets could face a financial crisis.”[4] For businesses, this means protocols they put in place last year must remain in place for the foreseeable future.
Information Technology (IT) Security Risks.
Repercussions from the SolarWinds fiasco continue to reverberate. Ewing notes, “The only possibility for managing this type of risk seems to be an (expensive) diversification across infrastructure providers and an increase in security protocols at your own, business’s level. You could also cherry-pick which data is shared with whom and on which platform. As always, the cost of doing all this could come in functionality and/or ease of use by staff and customers.” Analysts from ARIA Cybersecurity Solutions believe some help is on the way. They write, “On the horizon are threat detection and response solutions that automate the monitoring, collection and correlation of data gathered from multiple IT security tools — this will not only improve, but also automate, threat detection performance while adding and accelerating incident-response capability. For example, if an attack triggers alerts on email, endpoint device, or within the network, one of a new breed of threat detection and response solutions gathers better analytics, and combines that with additional logs and alerts from across the environment and uses that to produce validated threat alerts — improving detection accuracy and making overall security operations more efficient and productive.”[5] Protection of personal data will remain an issue. Bremmer and Kupchan write, “In 2021, a slowdown or halt to the flow of sensitive data across borders will disrupt business models that rely on free flows. … Authorities around the world have become increasingly preoccupied that their citizens’ personal data could fall into the hands of adversaries who could use it to improve their AI algorithms, influence public opinion, or commit blackmail. When the world’s biggest economy and its most populous democracy try to ban apps over these concerns, it encourages other countries to do the same.”
Data breaches, especially those involving personal consumer data, can ruin a company’s reputation. Reputational risks can be as fatal as any other risk. Albinson and her colleagues note, “In today’s hyper-connected world dominated by mobile devices, social media, and evolving expectations from society, information can spread like wildfire. This convergence of mobile and social media is intensifying the impact of reputation risks for organizations and is driving them to fundamentally rethink their approaches to risk management and proactively address these accelerated, amplified risks.” Bremmer and Kupchan conclude, “There’s no one factor that raises the risk of a cyber tipping point. The digital realm, where any computer or smartphone can be an entry point for malicious hackers and nation states and criminals act with near impunity, is too unpredictable for that. Instead, a combination of low-probability, high-impact risks and inexorable technology trends make 2021 the year that cyber conflict will create unprecedented technological and geopolitical risk.”
Geopolitics.
Trump’s burn-the-house-down strategy after losing the presidential election means politics presents a greater risk in the future than it has in the past. Bremmer and Kupchan explain, “Joe Biden’s term opens the era of the asterisk presidency, when the occupant of the Oval Office is seen as illegitimate by roughly half the country … and by the lawmakers these election skeptics send to Congress. … President Donald Trump’s refusal to accept the outcome of an election he declares was stolen is unique in American history, underscoring how divided the country has become — and will remain. … Add Trump’s success in creating a decisively conservative Supreme Court, most recently with Justice Amy Coney Barrett replacing the late Ruth Bader Ginsburg, and Biden will emerge with the weakest mandate since Jimmy Carter in 1976.”
They go to note that a China/US rivalry will take center stage on the international scene. They explain, “Following Trump’s exit, the US-China relationship will not be as overtly confrontational. … [Nevertheless,] on balance, this year will see a bilateral rivalry as intense as that of last year, and that’s dangerous.” Ewing believes the US/Russia relationship will also prove risky. He explains, “Mr. Biden must manage Russian relations without coming to an all-out war, as security analysts in both countries are predicting. Such conflict could be especially damaging to the EU NATO countries, since they are increasingly reliant upon Russian exports of gas and oil by-products. Any disruption could greatly hamper business on all sides of the globe.” Burrows and Manning suggest we shouldn’t forget North Korea. They write, “The pattern in the past has been for new American presidents to be greeted with a North Korean provocation in the form of either a missile or nuclear test. Expect one in the first quarter of Biden’s presidency. Such a demonstration will lead to pressure on Biden in the media and in Congress to do something, raising tensions and likely leading to a pseudo-crisis that could spin out of control.”
Climate Change.
Last, but certainly not least, is the risk climate change poses to business. In the short term, little will change because global cooperation is lagging. The good news, according to Bremmer and Kupchan, is that the chances of global cooperation improved with the new U.S. administration. They write, “China, the European Union, the United Kingdom, Japan, South Korea, and Canada all committed to meeting economy-wide net-zero emissions targets by mid-century, while global firms and financial institutions set their own similarly ambitious goals. Most importantly, the United States is now in the game. Biden has said he’s ready to rejoin the Paris Agreement on day one and to commit the world’s largest economy to net-zero emissions by mid-century or sooner. That’s not just a reversal of Trump’s climate neglect, but a step toward a new era of global cooperation.”
Concluding thoughts
Where there are risks there are also opportunities. Organizations that can take advantage of those opportunities will do well in the years ahead. Companies that didn’t do well in 2020, yet survived, will undoubtedly have learned lessons from that experience. Bremmer and Kupchan conclude, “Our world failed us in ways that were terribly plain to see, and that failure stirred anger, hurt, and blame. We’ve never been so saddened by the failings of our political leaders and institutions as we have been this past year, but also never so aware of the hope in the possibilities before us. And as we have sometimes learned from the worst of our mistakes in history, keeping the pain of 2020 alive also offers promise for the future.”
Footnotes
[1] Mathew J. Burrows and Robert A. Manning, “The top ten risks and opportunities for 2021,” Atlantic Council, 16 December 2020.
[2] Tony Ewing, “Top 10 Risks Of 2021 And How You Can Manage Them,” Forbes, 20 December 2020.
[3] Nancy Albinson, Andrew Blau, and Yang Chu, “The future of risk,” Deloitte, 2020.
[4] Ian Bremmer and Cliff Kupchan, “Top Risks 2021,” Eurasia Group, 4 January 2021.
[5] ARIA Cybersecurity Solutions, “Top Security Trends for 2021 (and What They Mean for You),” Security Boulevard, 11 December 2020.
