1. Supply Chains will be local rather than Global
2. Shop, Work, and play online
3. Digital divide will become a chasm
4. Home-bias will increase dramatically
5. Healthcare for all becomes a more standard view
6. Unemployment benefit is not just for the lazy
7. Insurance will take centre stage
1. Supply Chains will be local rather than Global
The tariff and trade wars had stretched global supply chains to breaking point. The virus pandemic broke those chains. Companies will be loathe to trust all the supply from one foreign country or even from outside United States Companies will look to diversify their suppliers and to favour local suppliers, even at higher costs.
2. Shop, Work, and play online
Retailers with physical stores were already struggling to compete with online shopping. The shelter-in-place rules forced everyone to shop, work, or play online. As the last online laggards adjusted to online commerce, they will likely not go back. So in-store shopping and commercial real estate will take a hit long-term.
3. Digital divide will become a chasm
Everyone shifted to working and learning online. Those with connectivity and technology jobs and skills could continue working remotely fairly unaffected during the shelter in place order. Access and ability to work online will become even more important and those who are unable to connect online, will fall further behind economically.
4. Home-bias will increase dramatically
Economists have long known that we perceive higher risk the further away the threat is from us. It’s the fear of the unknown. Put in another way, we have a favourable bias and a perception of lower risk for what’s closer to home. Investors pulled back from investing overseas or out-of-state as travel was difficult during this crisis which prohibited proper due diligence. Investors are likely to revert to more investing close to home.
5. Unemployment benefit is not just for the lazy
With unemployment sitting at 30.1%, it is hard to get anyone to support unemployment benefits or minimum wage. The perception was that only the lazy were unemployed or couldn’t support themselves financially with 7.1 million people applying for unemployment, it now becomes clear that there are economic gyrations that impact large swathes of people, regardless of their skills, abilities or work ethic.
Not providing unemployment benefit for these who are caught in the wrong place at the wrong time, could crater the whole economy for all.
6. Loss of trust will take time to recover
How long will it take before people are comfortable going on a cruise again? Or when will homeowners feel comfortable letting a stranger into their house to rent it for a weekend? How long before countries with high infection rate will be deemed clear so their citizens can come visiting as tourists again? It will take some time. My guess is 2 years or more.
7. Insurance takes center stage
In the past, businesses often viewed risk mitigation and insurance as boring areas that reflected overly pessimistic views. This incredible unimaginable crisis is unfolding and causing tremendous damage to every sector everywhere in the world. Those who had contingency plans and robust risk planning are finally benefiting. Risk management will become a core activity in the new world. Companies will actively develop and test contingency plans and look for insurance services to protect themselves. Hedging will not be viewed as an unpleasant cost but a wise necessity. Of course, insurance companies will also look to protect themselves and tighten their exposure.
So what does this all mean from an systems perspective?
If you have systems in place:
1. You need the correct People, Process and Technologies to be put in place - re-evaluate
2. Risk identification and management controls assessed and re-assessed
3. Information Security becomes critical (encryption, secure VPN, e-mail, 3rd Parties)
4. IT Governance must be enforced
5. Capacity management must be evaluated
6. Management of Staff (ability to manage & monitor staff outputs) – different processes are required
If you dont have any systems place:
1. Implement correct People, Processes and Technologies
2. Establish Risk Management practices
3. Establish Governance practices
4. Implement fit for purpose IT Controls