The Future of Risk, Omicron, The Great Resignation, Hybrid Work, ESG And More
As forward-looking leaders strive to create continuity and normalcy in 2022, their ability to adapt to uncertainty puts them in a stronger position in the marketplace and sets them apart from their peers. While 2020 has been a disruptive year on the downside, 2021 has generally been a disruptive year on the upside. Leaders seek to maintain the upward trajectory by acting on the following five trends:
1. The risk is here to stay: Visionary leaders recognize that risk has become a dominant part of business decisions and will remain so for 2022 and beyond. The frequency and simultaneous occurrence of high impact risks requires connecting and managing a ‘portfolio’ of risks at the enterprise level (e.g. climate, geopolitics, health, finance, supply chain, talent shortage , human capital, cyber, war). These risks are likely to continue to increase, requiring a culture of adaptability to incorporate new information that arrives daily or hourly, and forcing leaders to act decisively when events occur. The role of the Chief Risk Officer will continue to grow in importance at the board and senior management levels, striving to create flexibility and address risk volatility across the organization. organization in order to avoid downward spirals caused by cross-event events (e.g. concomitant peak in illness, extreme weather conditions, labor shortage, supply chain disruption, damage to reputation, financial crisis ).
2. Remote and hybrid work models will stabilize and normalize: Even as different countries tackle the Omicron variant of COVID-19, forward-looking leaders are working to restore and maintain in-person working arrangements when appropriate and necessary. They also offer remote and hybrid work models where they make sense. They know that various models are effective for some organizations, roles or employees, but not all, and that to research suggests that remote working will eventually stabilize for 25-40% of the global workforce. One challenge for 2022 is that many more employees want remote and hybrid working arrangements than companies are willing to commit to. Forward-looking leaders analyze remote and hybrid working arrangements and make decisions considering the impact of improved access to talent markets, as well as productivity, engagement, turnover, culture, health, innovation and risk outcomes. They balance the opportunities with the risks associated with working offsite, with the goal of achieving better results.
3. The “Great Resignation” will give way to permanent shortages of talent in certain fields: Over time, labor markets will stabilize after the job changes created by the pandemic, but more permanent demographic shifts will manifest in talent shortages for certain jobs, skill areas and geographies that could exist for years . Forward-looking leaders emphasize talent strategies that involve both offense and defense, and create places people want to be no matter what. They strive to be “net scavengers of talent”, hiring more employees than they lose and learning why people join and stay and why they leave. They differentiate culture and employee experiences instead of just raising wages and perpetuating wage inflation. They know that providing workers with flexible work, compensation, benefits and skills development programs translates into competitive advantage on less flexible peers. They use the goal as the glue of leadership to ensure the consistency of the company culture as business models and day-to-day operations are transformed.
4. ESG and sustainability will become commonplace: Investor debates about the validity of stakeholder capitalism continue to give way to a greater focus on long-term economic health. JP Morgan Reports growing evidence of a positive relationship between environmental, social and governance (ESG) factors and financial performance, citing a recent NYU Stern report analysis of 1000 ESG studies published between 2015 and 2020 comparing the performance of the ESG portfolio with conventional investments. These conclusions are accompanied by expectations in terms of ESG and sustainable development commitments from key stakeholders, including investors, customers and employees. Forward-looking leaders understand that people, risk and capital are interconnected through ESG factors. They act accordingly to strengthen their organizational goal, boost performance and take meaningful action around climate, ESG social factors (such as DCI, dignityand well-being) and effective governance practices.
5. The well-being of employees and the resilience of the organization will create a competitive advantage: Forward-looking leaders promote employee well-being, connecting the support of healthy, resilient employees with healthy, resilient organizations. They also adopt a broader vision of resilience by focusing on its financial, operational and human dimensions. For financial resilience, they experiment with various risk mitigation and investment opportunities to become more adaptable to unpredictable events and better match risk and capital. For operational resilience, they develop new ways to serve customers and protect employees during unforeseen events, as well as emergency response planning, crisis management, workforce flexibility and technologies that ensure that business can be conducted under any circumstance. For the workforce, they address the unique physical, emotional, financial and social well-being needs of employees and create a common goal as well as psychological safety that allow employees and organizations to thrive under the most difficult conditions.
Such forward-looking leadership actions position companies for success in 2022 and beyond, regardless of what the future holds.