Organisations worldwide are set to encounter significant risks in 2023 and experts predict a variety of challenges may decrease productivity levels.
These include health risks from climate change, mental health issues, the cost-of-living crisis, difficult security situations and more. According to the International SOS Risk Outlook 2023 report and global risk map organisations in Malaysia and worldwide need to be prepared for an ever-shifting ‘perma-crisis’ environment by utilising accurate, trusted and timely sources of information to support their employees, particularly business travellers in 2023.
Many of the findings from the Risk Outlook 2023 report are based on a survey of 1,218 senior risk professionals across 108 countries, including Malaysia. This provides a detailed view of some of the major risks which international and Malaysian organisations must address in 2023.
According to Jing Tan, Regional General Manager and Director of South East Asia, International SOS, “Malaysian businesses need to ensure they have the right early warning systems in place to understand potential issues and what kind of response is needed. Education is also key.
Employees and decision makers need to be knowledgeable about risks and steps their organisation is taking to mitigate them to keep the workforce safe.”
Risk Outlook – Five predictions for 2023
Drawing on the findings of the Risk Outlook 2023 survey, the Workforce Resilience Council and the organisation’s proprietary data, International SOS’ top five trends that organisations need to be aware of in 2023 are:
1. Timely, accurate, trusted, actionable: the power of intelligence in decision making.
2. Adjusting to ‘perma-crisis’: geopolitical shifts, socio-economic challenges and increasing polarisation.
3. Plan for the unplannable: travellers want more support.
4. Climate change and other forces are increasing health risks with wide ranging impacts. A comprehensive approach to Health Security is required.
5. The happy at work equation (A+B+C)-D. A new era for mental health at work.
Accounting for the Impact of Geopolitical Shifts
The Russia/Ukraine conflict was the defining security issue of 2022, highlighting how geopolitics and the threat of interstate conflict are back on the corporate risk agenda. The conflict will certainly still have an impact in 2023, so it is beneficial for organisations to learn how to efectively handle the shifting global risk environment. Geopolitical volatility will also spread beyond Russia/Ukraine in the next 12 months, as increasing fissures between Russia and the West will impact other conflicts and exacerbate longstanding geopolitical tensions.
Best practice for organisations is to consistently revisit the likelihood and possible impact to understand potential implications for their business and people.
Many crisis management teams are learning to deal with a state of ‘perma-crisis’. It will be beneficial for organisations in 2023 to provide the correct level of training, investment, and support for these teams, as experts have drawn attention to significantly high levels of crisis management fatigue. Managing crisis management fatigue is key in moving from ‘perma-crisis’ to crisis resilience and organisations who effectively embedded learnings from the last two years will emerge with more robust capabilities to manage challenges.
This is going to be a major issue, as many surveyed experts predict that these geopolitical trends will negatively impact productivity levels in the next year.
A New Era for Mental Health at Work
The COVID-19 pandemic was an accelerant for mental ill health globally, with levels of mental health conditions such as anxiety and depression increasing by more than 25% during the pandemic. 3 According to the report, organisations are recognising the increased need to focus on mental ill health, with 90% of respondents stating that their mental health support offerings had either increased or stayed the same in the last year, and 92% expecting that in the next year, this support will continue to either increase or stabilise.
Elaborating on the happy at work equation (A+B+C)-D and its implications for Malaysian businesses, Dr Chan Yanjun, Medical Director, Singapore & Malaysia, International SOS, shared, “Mental health issues have been identified as one of the biggest employee productivity disruptors in 2023. With over 2.3 million people in the country affected by mental illness at some point in their lives, 4 as well as the rising inflation and cost-of-living pressures likely to have an even bigger negative effect on mental health. It is vital that organisations invest in the right support and interventions which will have the greatest impact on employee outcomes and mental health moving forward.”
While the research shows that business have improved their response to mental health, there are barriers to being able to provide the necessary support to employees, with over half respondents citing limited time (56%) and money (51%). This, given rising levels of mental ill health, represents a real risk to organisations. A workplace culture which focuses on preventing mental ill-health and promotes self-care is invaluable for employees.
Rising Levels of Social Unrest
The findings highlighted in the report also demonstrate how many experts predict that social unrest will additionally be a key driver of lost productivity in 2023. For instance, 48% predict that cost of living pressures will impact domestic employees and 33% see civil unrest impacting business travellers.
While social unrest may not directly impact Malaysian companies locally, they do have the potential to disrupt international supply chains and business in general. This is clearly going to be a major item on the C-suite agenda in 2023, as the problem is truly multifaceted, affecting organisations and employees in a number of ways. Some themes and key points for 2023 include:
Volatility in energy and agricultural markets will fuel unrest, particularly in unstable, fragile economies. Most likely locations: Sub-Saharan Africa, Egypt, Lebanon;
Lack of progress on resolving underlying economic or political issues will provoke growing public dissatisfaction and cycles of unrest where the risk of violence grows over time. Most likely locations: Pakistan, Sri Lanka, Ecuador, Peru, Iraq;
Polarisation at a global level will be reflected in further domestic polarisation inflaming pre- existing triggers for social unrest and, in extremis, influencing more localised violence and criminal activity. High risk locations: US, Western Europe.
Jing commented, “The drivers for unrest will be numerous in 2023 and accounting for the impact of social unrest is going to be a key task for businesses in 2023. Mitigation starts with understanding the risk environments in which organisations operate, drivers of unrest and most likely impacts on employees and operations. Organisations are grappling with an increasingly complex risk landscape and must identify internal and external crisis management blind spots and act now to make effective decisions and strengthen their resilience.”
The Growing Impact of Climate Change
In 2023 the impact of climate change needs to be considered at multiple levels, beyond the immediate effects of extreme weather events. It is foreseeable that health risks associated with climate change may increase. Experts advise that climate change is contributing to an acceleration in emergence of new and re-emerging of old infectious diseases, illustrated by the multiple “unusual” outbreaks of the 21 st century, including SARS, Ebola, COVID-19 and Mpox.
A briefing published in Nature Climate Change in August 2022 estimates “Over half of known human pathogenic diseases can be aggravated by climate change.”
Climate change is expected to increase mosquito-borne diseases as temperatures and standing water levels increase. This situation could potentially cause outbreaks of Malaria, Dengue Fever and Zika in places where they have never been present before, and more frequent outbreaks in areas where they already exist.
This all comes when only 25% of respondents said their organisation is actively planning for future pandemics and COVID-19 variants. Best practice includes undertaking risk assessments of existing and potential health threats and incorporating forecasts for potential geographic extension of hazards due to climate change and other forces.
Dr Chan added, “Organisations are well-versed in how to respond to the ongoing COVID-19 pandemic. However, they should be building on this existing knowledge and broaden crises and business continuity plans to include known health risks as well as potential health threats. In Malaysia for example, extreme weather events such as floods, which has caused more than RM6.1 billion nationwide from 2019 – 2022, 6 can be a contributing factor in accelerating the emergence of infectious diseases. Potential increases in the number of Dengue Fever cases are also something Malaysians need to be aware of due to climate change.”
She concluded, “It can be useful to run exercises encompassing likely, as well as unlikely worst- case scenarios to ensure teams are prepared. Forward planning to ensure organisational resilience is critical as climate change is contributing to multiple crises occurring simultaneously, and another pandemic is inevitable”.
Travellers Set For Much Needed Support in 2023
The Risk Outlook research report also highlights that most organisations (86%) are keeping travel risk management budgets the same or increasing, so it is likely that travel will continue to grow and return to pre-pandemic levels.
This is a trend well supported by the International SOS case data, our traveller tracking data, which shows international travel now at 83% of pre-COVID volumes, but travellers are twice as likely to call for advice or assistance.
Business travel is clearly going to be complex in 2023 and mitigation of many issues is important. It is, however, encouraging that despite rising costs, experts predict that travel management budgets will increase or stay the same in 2023. This kind of investment will be key to keep business travellers safe in the year ahead.
For more details on the Risk Outlook report, go to https://www.internationalsos.com/risk-outlook
