At the start of 2022, the mood in the boardroom was cautiously positive. It was seen as a time for companies to reposition for the future. The broad themes for 2022, enough to challenge even those boards at the top of their game, were:
- Pivoting to “remote”
- Focus on workforce well-being
- Deepening digital engagement with customers
- Recalibration of supply chains
- Crisis management
- Managing through a cautious economic outlook
- Navigating a fast-changing regulatory landscape
- Meeting the demands for action on ESG performance
- Balancing business vis-à-vis factors impacting the global risk environment
Midway 2022 and the outlook is more challenged.
Still reeling from inflationary pressures due to the COVID pandemic, Russia’s invasion of Ukraine, China’s ‘Zero-COVID’ policy, these mounting headwinds are feeding into worries of a recession and paint a worsening outlook for earnings in the 2nd half.
“The outlook has darkened significantly since April,” says Pierre-Olivier Gourinchas, IMF Economic Counsellor and Director of Research. “The world may soon be teetering on the edge of a global recession, only two years after the last one”.
Primary contributors to this gloomy outlook are:
- The war in Ukraine that could end European gas supply from Russia altogether
- Rising prices that could cause widespread food insecurity and social unrest
- Geopolitical fragmentation which could impede global trade and cooperation
- Inflation could remain stubbornly high due to the impact of cost pressures from disrupted supply chains and historically tight labor markets
- Renewed COVID-19 outbreaks and lockdowns that threaten to further suppress China’s growth.
The prediction is that global growth could decelerate to about 2.6% this year and 2% next year, according to IMF.
Managing through geo-political risk will be a focus in the 2nd half. While keeping in mind that the ramifications of the war in Ukraine could be disruptive over many years and across sectors, including agriculture and energy. Indeed, the need of the hour would be a push for energy independence.
Drawing on EZDynamic’s research, insights, and interactions with business leaders, we highlight eight issues here for boards to keep in mind as they carry out their 2022 agendas and set themselves up in 2023
- Deepen the board’s engagement in strategy and envisioning the future.
- Embed ESG, including climate risk and Diversity, Equity and Inclusion (DEI), into risk and strategy discussions.
- Engage proactively with shareholders, activists, and other stakeholders.
- Lobby at a government level for energy independence and a consequent green transition.
- Make talent, human capital management, and CEO succession a priority.
- Reassess the company’s crisis prevention and readiness efforts.
- Help set the tone and closely monitor the mood of the organization.
- Closely monitor and manage supply chain – innovate and think creatively.
it is increasingly clear that resilience – of strategy, the organization, and operating muscle – would prove to be the great differentiator. Boardrooms will have to “Reimagine, Rethink, and Reset”.
According to IMF, at a global level, amid great challenge and strife, strengthening cooperation between countries, remains the best way to improve economic prospects and mitigate the risk of Geo-Economic fragmentation. We, at EZDynamic, second that.
EZDynamic is a boutique management consulting firm that caters exclusively to the Financial Services sector. We provide client-centric solutions for Financial Services firms, helping them achieve their business, strategic, and technology goals. EZDynamic works in the areas of Business Strategy, Regulatory Implementation, Technology, Change Management and Staff Augmentation.
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