Pandemic recovery is strewn with risks, corporate leaders say

Pandemic recovery is strewn with risks, corporate leaders say

Corporate leaders are increasingly optimistic that the economic outlook will brighten over the course of 2021, despite the myriad risks they continue to worry about as the next pandemic chapter unfolds, research suggests.

The emergence of coronavirus variants, delays in vaccine rollouts, and a rise in cybercrime are among risks troubling corporate leaders, according to international finance professionals and a PwC survey. Maintaining a robust cash position, holding back on investments, and diversifying supply chains are among the priorities for some companies as they shift out of survival mode and start to get back on track.

“We’re quite optimistic and upbeat that it’s going to be a better year, especially for the oil and gas industry, stemming from the fact that oil prices have risen significantly,” said Japheth Jev, ACMA, CGMA, CFO of Triumph Power and Gas Systems in Lagos, Nigeria.

But the company, which provides asset management and exploration support to international oil majors, is not in the clear yet, Jev said. Its recovery plans depend heavily on its clients loosening the strings on their capital expenditure budgets once again.

About three-fourths (76%) of corporate leaders expect the global economy to pick up this year after global GDP shrank 3.5% in 2020, according to PwC’s 2021 Global CEO Survey, which collected responses from more than 5,000 executives. More than one-third (36%) of respondents were confident about their organisation’s revenue growth this year, and 47% said they were confident about the next three years.

But executives remained anxious about how the recovery will play out, because the pandemic laid bare fundamental deficiencies in the global system, weaknesses in business operating models, and challenges that will shape our world moving forward.

Ranking threats

Corporate leaders in hard-hit sectors such as hospitality, leisure, and logistics showed the lowest levels of confidence, while tech firms were largely more buoyant.

Top worries amongst respondents were:

  • Pandemics and other health crises (52%)
  • Cyberthreats (47%, up from 33% in 2020)
  • Over-regulation (42%, up from 36%)
  • Policy uncertainty (38%, up from 33%)
  • Uncertain economic growth (35%, up from 34%)

Concerns about tax policy and tax obligations moved into the top ten in 2021, as did worries about climate change and misinformation.

Also, companies around the world face industry- and country-specific risks that threaten their paths to recovery, said Francisco Silva, FCMA, CGMA, a management consultant in Melbourne, Australia.

While Australia’s strict border controls and rigorous policies have largely helped insulate it from the pandemic’s impact, consumer confidence is still expected to prove slow to recover despite stimulus measures, Silva said.

“I do believe we’re moving in the right direction. It’s gradually building up, but my guesstimate is that it will be 2022 or 2023 by the time we’re back to pre-pandemic confidence,” he said. Silva previously worked for Toll Group, Manpower, and GlaxoSmithKline.

The pandemic has exposed potential supply chain risks for companies in Australia, many of which are heavily dependent on China, said Silva, who suggested they consider diversifying to include manufacturers in South Korea, Vietnam, or Malaysia.

“Those are the supply chain solutions that Australia will have to make to mitigate its risk,” he said.


For Nigeria’s Triumph, whose “just-in-time” purchases of specialised equipment from the US and Europe were hit hard by global pandemic restrictions, stocking up on frequently ordered, cheaper components could help buffer against future disruptions, Jev said.

He explained how Triumph was forced into “survival mode” last year as its revenue streams dwindled when international oil companies slashed their capital expenditures and, in some cases, delayed payments.

Despite more optimism about the future, its investment plans are now largely on ice, and Triumph is focused on maintaining a healthy cash position to ensure it can get through even its worst-case scenarios.

“Our focus and our energy are almost 100% on cash flow, cash flow, and cash flow,” he said. “We’re not really bothered too much with profitability at this stage, given the uncertain year and uncertain business environment globally.”

Aside from political and sovereign risk, the exchange rate is a major factor for the company after a series of devaluations over the past year in Nigeria, Jev said.

While Triumph has some forward currency hedging in place, he said the company is pushing back on contracts to ensure clients pay a bigger chunk in US dollars.

Prepare for the next crisis

The current outlook is positive for many, but since there may be any number of challenges that litter the path to recovery, quickly assessing and responding to risks will be critical for companies if they are to capitalise on opportunities and recover.

In a separate survey of about 2,800 business leaders worldwide, PwC found that more than 70% of respondents said their businesses were negatively affected by the pandemic. About 20% of respondents said their businesses were positively affected.

The better-off respondents were more likely to have given substantial attention to discussing organisational resilience, according to PwC’s 2021 global crisis survey. They were also more likely to have taken action on gaps or inconsistencies the crisis uncovered in their response to the pandemic disruptions.

To prepare for the next crisis, PwC suggested that businesses:

  • Designate a crisis response team that can be mobilised to execute a tested plan and keep critical operations going.
  • Designate a crisis response plan aligned to organisational strategy, goals, and purpose.
  • Build an integrated resilience programme that incorporates insights and lessons learned from the pandemic.

Sophie Hares is a freelance writer based in Mexico. To comment on this article or to suggest an idea for another article, contact Sabine Vollmer, an FM magazine senior editor, at