Socio-economic fault lines exposed by COVID-19 are creating an unforgiving marketplace, with companies under scrutiny from governments and the public and little room to avoid disputes and investigations into business practices and behavior, according to a new report from FTI Consulting, Inc. (NYSE: FCN).
The FTI Consulting 2021 Resilience Barometer report claims UK companies under “extreme” pressure to integrate technology (34 percent v global: 41 percent), strengthen reputations (34 percent v. 37 percent), improve ESG/sustainability practices (27 percent v. 34 percent) and improve corporate culture (25 percent v. 29 percent) in the next 12 months. The survey of more than 2,800 executives from large public and private companies across G-20 nations claims that 79 percent of UK organisations (v. 83 percent) either are being or expect to be investigated in the next 12 months.
The top three investigation worries are: business conduct and the treatment of customers, sustainability and ESG practices, and the relationship with public bodies and government contracts. Around a quarter of UK respondents identified each of these areas as leading concerns. The services sector and financial sector were the most likely to report experiencing regulatory or political scrutiny over the past 12 months (23 percent each).
“The ability of businesses to handle crises has been a defining factor of their success during the pandemic”
“The ability of businesses to handle crises has been a defining factor of their success during the pandemic,” said Caroline Das-Monfrais, a Senior Managing Director and Global Resilience Lead at FTI Consulting. “However, COVID-19 has exposed and exacerbated economic and social fault lines — employee wellbeing, talent shortages, treatment of customers, financial crime and cybersecurity all have risen up the corporate agenda, and businesses are responding to protect value and build resilience as they look towards future growth.”
The Resilience Barometer identifies the nature, severity and potential trajectory of these threats, which are forcing companies to embed resilience on more fronts:
Growing cybersecurity threats: 75 percent (v. 78 percent) of companies surveyed suffered a cyber attack in the past 12 months, with a rise in phishing attacks among the most prevalent type 31 percent (v. 34 percent). Breaches are increasingly damaging, with 25 percent (v. 32 percent) experiencing a loss of customer/patient data, and a further 23 percent (v. 30 percent) reporting a loss of third-party information.
Class actions and mass consumer claims: 13 percent (v.13 percent) of respondents experienced these in the past 12 months, and 12 percent (v.13 percent) expect this to continue in the next 12 months. Twenty seven cent (v. one-third) strongly agreed that class actions or mass claims are becoming more costly for their business, with 17 percent (v.17 percent) of legal costs expected to be spent on settlements from class actions and other disputes.
The “Great Resignation”: Over the last 12 months, 28 percent (v. 30 percent) of companies surveyed have experienced a shortage of talent and skills, and 72 percent (v. 68 percent) have reported increased mental health issues in their workforce since the start of the pandemic. Unsurprisingly, 31 percent (v. 30 percent) are under “extreme” pressure to retain talent, and 25 percent (v. 29 percent) are under “extreme” pressure to improve corporate culture in the next 12 months.
“The ever-changing landscape will put the onus on companies to take a proactive stance regarding investigations,” said Edward Westerman, Global Investigations Initiative Leader at FTI Consulting. “Leveraging new technologies and data and analytics can help companies efficiently manage an ongoing investigation and help mitigate the risk of future crises.”
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Source: Work Place Insight