Companies Must Consider These Four Risk Areas at the Beginning of 2021

What to consider to protect your business from cybersecurity threats, social and political unrest, and a surge in coronavirus cases worldwide

2020 was a lesson in risk. In early February, who of us was familiar with the nuances of business interruption insurance, employee health certificates, or planning for ongoing business continuity? Towards the end of this destabilizing year 2020, which is full of uncertainties, we have to reckon with an increased risk for several weeks (if not longer).

Economic instability and coronavirus pandemic has rocked global markets for many months. At the end of 2020, investors also expected significantly more volatility in the financial markets due to the historically unique US presidential elections. The U.S. stock market saw its biggest one-day decline in a month when coronavirus cases hit a 7-day record. The growing autumn wave of coronavirus cases across the northern hemisphere is sure to have an impact on a business as some countries including Italy, Germany, France, and the UK have returned to varying forms of lockdown.

At the same time, business leaders are realizing that their businesses are being disrupted by social unrest and an increase in cyber attacks. Phishing schemes and ransom attacks affect stressed employees and threaten electronic voting, business, and hospital systems. The long-term effects of climate change as well as the intensity and frequency of storms, fires, and floods and their impact on infrastructure have not disappeared.

This coincidence of events could undoubtedly shape the global corporate landscape for the foreseeable future. SAI Global has identified four risk areas for all business leaders to keep an eye on over the coming weeks and months. Here they are - along with options for action to reduce your company's exposure to these risks.

Digital Risks

The pandemic has accelerated digital change in many companies and brought new risks with it - and led to additional complexity, for example, due to the increased use of mobile workstations. This confluence of events has opened the door for cybercriminals to take advantage of the instability and misinformation that lead to cybersecurity attacks: from VPN attacks to phishing to ransom demands, in which the threat actors pose as corporate executives to break the defense mechanisms of an employee with teleworking. Phishing emails from a “rich uncle in Nigeria” over the past few years have turned into fraudulent WhatsApp inquiries from the CEO allegedly trying to authorize a money transfer.

This fundamental question of who to trust in the age of stolen or faked digital identities has far-reaching implications: US state governments are blocking cyberattacks against voting systems, and both hospital systems and businesses are investing heavily in defense against ransom and phishing attacks occurring amid a global wave of coronavirus cases.

Global spending on digital transformation projects is expected to grow 10.4% this year despite the challenges posed by the pandemic. What does this mean for companies that are increasingly relying on technology-centric processes?

With the acceleration of digital transformation and the proliferation of new technologies, companies are faced with rapidly evolving cybersecurity threats. A comprehensive and timely approach to identifying and assessing all risks, including those emanating from third parties, is critical.

In order to achieve their goals, cybercriminals use current topics in the news to attract the attention of employees and impersonate authentic brands and people. Your victims will be distracted by a flood of media, both true and false. If this information comes from a known, trusted source, it is more likely to be believed.

Prepare your workforce for a wave of phishing emails and malware attacks related to current events and their impact on your organization.

Two-factor authentication is not only important for access to password-protected systems. Companies are also now urging their workforce to find additional ways to verify the identity of their work contacts when they hear from them on unexpected channels. And this at a time when private and professional life are increasingly interwoven via the various social media and communication platforms and devices.

The effectiveness of the ransom defense is also changing rapidly. What is your strategy? Would you pay to regain access? Refuse to pay? Hire a third party to negotiate? Hire a third party to try to defuse the situation? How do you even make such decisions? All of this should be discussed and clarified before an attack occurs. Once you've been attacked, the clock is ticking.

Risks of Civil Unrest

The global financial systems were preparing for the possibility that the US elections would not be called on election night, which would set the stage for weeks or even months of market volatility. But there was also the possibility of street riots as responses to political instability, unresolved social issues, and the pandemic peaked. Large European cities saw a new wave of protests and arrests in response to a new round of restrictions on public life.

Is your property near a government building or the city center? Do your employees live near these places when they work from home? All of them could be targeted by protesters. Are you prepared if important employees cannot come to the office for a long period of time? Will you be able to remotely work for these groups as needed and continue operations? What if employees cannot access systems or perform tasks from their teleworking workstations? Business interruptions could result from protests and marches - or simply from concern and distraction.

Public Health Risks

Rhetoric and response to global handling of the coronavirus pandemic have escalated in recent weeks with the number of cases. And while the extent and duration of the next wave of the disease are not yet clear, the reactions of governments to the recent outbreak of the disease will almost certainly have an impact on the business landscape.

According to the World Health Organization, countries worldwide reported more than 2 million new cases of Covid-19 in a period of seven days through October 25. There were 1.3 million cases in Europe alone - a total of 46% of the worldwide cases. In the US, the numbers are sounding the alarm: in mid-November, the country was reporting more than 100,000 new cases per day. It is the duty of all companies to prepare for the pandemic to escalate and affect employees, business processes, and supply chains before it subsides.

From the beginning of the pandemic to the beginning of October, according to Covid Coverage Litigation Tracker, nearly 1,300 business interruption lawsuits have been filed against insurers. The tracker, created by a University of Pennsylvania law professor to analyze data on cases of insurance coverage related to the Covid-19 pandemic, found that nearly 75% of cases resulted in the rejection of policyholder claims.

The typical large hurricane results in up to a hundred business interruption cases being filed within the first year after the disaster. Even the superstorm Sandy in 2012 resulted in around 150 such requests. According to the National Law Review, Covid-19 creates "the equivalent of number of hurricane striking land every month" based on the number of litigation.

How Well Is Your Company Prepared?

How do you reduce the risk to your workforce and supply chains when local authorities, state or federal governments pave the way for a return to normal, even though epidemiological data demand stricter restrictions? What if officials order tightening restrictions and withdrawing to shutdown other than essential work? Is your company prepared for a second closure? Are your suppliers and partners ready?

Liquidity Risk

Companies in need of money face a perfect storm of market instability and pandemic unknowns. This will increase the pressure on companies to manage their cash effectively. In an environment where we can be certain that liquidity risk will arise, it is imperative that the highest levels of management take an active role in assessing their company's cash and liquidity position and developing contingency plans for funding.

In contrast to the 2008 economic crisis, access to credit doesn't seem to be that big of a problem during the pandemic.

But how is your cash flow developing this quarter? What about the next quarter? Find steps you can take to improve cash flow if needed. Renegotiate your liabilities. Consider postponing executive bonus payouts. Get creative.

Knowledge and Preparation Are the Keys to Risk-taking.

To survive and thrive in this uncertain environment, a flexible and adaptable risk management plan is required. Unexpected challenges are part of the business. If 2020 has taught us anything, it is prepared for every possible scenario. Adaptable companies are better able to cope with change because they have holistically assessed the risks in their organizations in the run-up to the disasters and planned well-thought-out strategies for risk reduction. To face cyber threat consequences the organization should adopt advanced feature security software like total security software.

You know what to expect in the next few months. How do you intend to adapt and prepare? Your adaptability is key to your company's resilience.