1. A world with long COVID | Top Five Risks | RiskMap 2021

Top Five Risks



A world with long COVID

Claudine Fry and Charles Hecker

A fragmented and competitive exit from the pandemic will test relations between business, governments and society

For 2021, we fervently wanted to return to the normal fare of geopolitical risk: trade wars, regional conflicts, political stability, the trajectory of international institutions. All these will be present in the coming year. But COVID-19 will remain a – perhaps even the – dominant factor shaping the global outlook in 2021.  

If we are fortunate, the narrative will shift from resurgent spread and rising mortality to vaccine distribution and the start of an uneven recovery. Most likely, the story of 2021 will fall somewhere in between. We will experience a year of stuttering and patchy vaccine rollouts and pockets of “forever COVID”. A highly fragmented exit from the pandemic will create tensions among – and within – an emerging group of “have” and “have not” countries. All this will disrupt how nations work with each other, how companies work with nations, and how companies and nations interact. 2021 will not work without strong global leadership, in national capitals and in company headquarters. Both have room for improvement on 2020.  

If 2021 does not mark the end of the pandemic, it will be the year that determines what is left when the worst is over.  

Pockets of forever COVID will endure around the world, like flu, or measles. These will not constitute a pandemic, defined by rapid growth of a disease simultaneously across the world. But they will trouble the world for as long as they threaten to spread. Countries with lingering COVID-19 outbreaks may be cut off from international events and travel for prolonged periods. Supply chains may be disrupted, and global businesses fragmented. 

All our hopes are pinned on vaccines, and on overcoming the many complexities involved in manufacturing and distributing them on a vast scale. From this springs the question of who gets what. Competition will be fierce. The have states have gobbled up vaccine supplies before they even exist. But they will have to fight it out to catch the first doses that fly off the production line. Alliances will be tested. As for the have nots, the COVAX scheme offers hope that successful vaccines will be available to those countries with fewer resources and less diplomatic might. They will also have access to vaccines made available by big powers, but these may be unpredictable or come with strings attached.   

Internationalist-minded visionary leaders have never been more in demand. They are in short supply. US President Joe Biden has a large constituency to win over domestically who did not vote for him or his internationalist and pandemic-battling agenda. And he looks out at a fractured world that remains mistrustful and suspicious of the US, even with a new leader. His presidency raises considerably the prospects of the coordinated international response COVID-19 demands. But the chances remain slim. National priorities will be the top priorities.  

And this all assumes people want to be vaccinated and that the vaccines work in the long term. If significant numbers refuse vaccination, efficacy suffers. Possible shocks to immunisation campaigns include security breaches or distribution failures that affect supply. Regulatory disagreements or even counterfeit vaccines would undermine public confidence.  

Where does this leave businesses? With some notable exceptions, 2020 was, for many, more about survival than growth. In 2021, the balance of priorities will shift to seeking growth and opportunity – which form the essence of survival even in normal times. To do this, companies will need to be alert to flare-ups, not only of infections, but of the pandemic’s related ills of regulatory, reputational and operational risk. Internally, they will need to manage the transformation of the workplace. Externally, they will have to lead, join or be trampled by the changing marketplace. 

The vaccine’s supply chain and logistics trail will dictate the shape of the coming year. The countries and target groups that absorb the vaccine most easily will be those that return to meaningful economic activity first and fastest. But a great number of countries, and an even larger number of people, will have to wait their turn.  

This foretells of a deeply fragmented exit from the pandemic, one that will generate considerable tension between countries that return to robust economic activity relatively rapidly, and those that remain mired in the pandemic.  

Companies have already asked us whether they should buy vaccines and inoculate their employees. If we look deeply enough into 2021, we can just about envision a scenario where vaccine supply exceeds demand, leaving doses available to the private sector. For now, though, this is best seen as an outlier scenario.  

The vaccine will always grab the headlines, but there are lower profile issues that are equally important. More than anything else, the new relationship between the company and the state will feature heavily in 2021. COVID-19 has lodged itself in the nexus of the public and private sectors.  

The bailouts and income support that created rivers of cash at the outset of the pandemic will dwindle. Those bailouts came with terms and conditions, but they also came with strings. Companies that took government money will be indebted – directly or indirectly – to their public sponsors. Taking public money means accepting public scrutiny – your circle of stakeholders will widen as a result.  

State budgets will creak under the weight of their new debt, pushing some countries to the wall, or forcing others into prolonged austerity. Entering the post-COVID-19 world with sovereign risk concerns are a motley crew of countries ranging from the UK to Ukraine, from Angola to Zambia, from Bangladesh to Iraq and Ecuador. Know where fiscal fault lines overlap with your exposure, monitor them and familiarise yourself with the triggers for potential crisis.  

In some countries, your company and your colleagues will continue to be left to fend for yourselves. This will pile pressure on companies’ capacity to spot opportunity before anyone else does, and certainly before the moment passes. If this sounds like a normal day at the office – sorry, the “office” – it is. Those that strike the right balance between tactical crisis management and strategic opportunity-spotting will better manage a series of delicate looming trade-offs. 

In every country, the state is playing a more prominent role in regulating international commerce – a trend the pandemic has substantially accelerated. Even the most devoted trading nations now understand that their healthcare sector is part of an increasingly wide variety of strategic sectors and essential assets that must not be left to the appetites of global M&A scouts. Since the start of the pandemic, the EU and more than half of the OECD group of wealthy nations have tightened the rules governing inbound investment. Many of these rules are designed to protect domestic healthcare sectors. Beyond that, though, countries are ever more jealously guarding their domestic tech sectors, a priority equal to defending national security and sovereignty. For companies, expansion plans, investment plans and any number of cross-border transactions will need to identify every stakeholder – supporters as well as detractors, people as well as institutions – to manage the obstacle course of foreign investment. 

The second relationship that needs attention, if not repair and rebuilding, is that between the company and society. The global public health crisis has thrust companies into a position and role that not all yet wear comfortably – that of public steward of a new way of living and working. 

Activists will hold a mirror to your company and the successes and failures of its pandemic management. Customers will want to do business with companies that reflect and even promote their values. As illustrated by controversy over conditions for retail factory workers in the UK who continued operating during COVID-19 in 2020, a perceived or actual failure to manage the impact of COVID compassionately, proportionately and diligently will have reputational and commercial consequences. Shareholders and the market will punish companies that transgress against a new list of public priorities – care for the environment, care for workers and lower-paid employees, and promoting a diverse workplace, to name just a few. The challenge applies to companies with a deep and wide sense of duty of care obligations as well as those that do not, as they wrestle with how to redesign pre-COVID office-based perks and manage any restructuring post-COVID sensitively. 

These issues are not all new, but their severity and centrality to a functional relationship between a company and the marketplace are. We have been telling clients for some time now that they need to prepare for an unprecedented level of public scrutiny – not just the kind that comes from government agencies, but the kind that comes from a public with a new sense of agency in steering the place and role of companies in society. 

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