A survey of 2 869 business executives in Group of Twenty (G20) countries, including 110 in South Africa, showed that 38% of South African companies are under pressure in the next 12 months to integrate technology, compared with 41% globally.
Twenty-nine per cent of South African respondents said they are under pressure to improve environmental, social and governance (ESG) and sustainability practices, compared with 34% globally, and 26% of local companies are under pressure to improve corporate culture compared with 29% of companies globally.
Business advisory multinational FTI Consulting's '2021 Resilience Barometer' report also found that 77% of South African organisations, compared with 83% globally, either are being or expect to be investigated in the next 12 months.
Further, for C-suite executives in South Africa, rising unemployment was the most common concern highlighted by 62% of participants, ahead of increasing corruption at 55% and unsustainable government debt at 46%. The emergence of new Covid-19 variants was the fourth most common concern cited by 45% of companies.
“At the dawning of the post-pandemic era, facing unprecedented technological disruptions, rapidly outdating business models and the exposure of socioeconomic fault lines of which there will be far-reaching repercussions, C-suites confront a concoction of risk,” said FTI Consulting in South Africa senior MD and head of South African practice Petrus Marais.
“Looming over this mix, exacerbated by rising unemployment, ongoing corruption and financial criminality abetted by cybersecurity threats, is the concern of new vaccine-resistant Covid-19 variants. How companies emerge into the light of day will depend on their resilience, which is their ability to successfully mitigate the risks and threats through informed insights and solid preparation.”
Further, 78% of South African companies believe their business model needs to fundamentally change to maintain or restore competitiveness. Additionally, 98% of companies are actively investing in preparation for future crises, including the use of tools such as artificial intelligence and analytics to mitigate risks.
The Resilience Barometer identifies the nature, severity and potential trajectory of these threats, which are forcing companies to embed resilience on more fronts, including to combat growing cybersecurity threats.
In South Africa, 74% of the companies surveyed, compared with 78% of companies globally, suffered a cyberattack in the past 12 months, with a rise in phishing attacks among the most prevalent type at 36%, compared with 34% in global companies.
Further, breaches are increasingly damaging, with 29% of South African companies, compared with 32% of companies globally, experiencing a loss of customer or patient data, while a further 25% of companies, compared with 30% of companies globally, reporting a loss of third-party information, FTI Consulting said.
Additional risks companies face include class actions and mass consumer claims, with 10% of South African companies, compared with 13% globally, experiencing these in the past 12 months, and 15% locally, compared with 13% of companies globally, expect this to continue in the next 12 months.
“A third of companies, locally and globally, said class actions or mass claims are becoming more costly for their business, with 15% locally, and 17% globally, stating that legal costs are expected to be spent on settlements from class actions and other disputes.”
Socioeconomic 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 behaviour, FTI Consulting said in the report.
“The ever-changing landscape will put the onus on companies to take a proactive stance regarding investigations. Leveraging new technologies and data and analytics can help companies efficiently manage an ongoing investigation and help mitigate the risk of future crises,” said FTI Consulting in South Africa senior MD and head of forensic & litigation segment Calvin Isaacs.
Investigation worries were highlighted by 21% of companies in South Africa, compared with 30% globally. Business conduct and the treatment of customers, sustainability and ESG practices were an area of concern for 20% of local companies and 30% of global companies, and the relationship with public bodies and government contracts is another area of investigation worries for 31% of local companies compared to 30% globally.
Additionally, 23% of companies in the services sector and financial sector were likely to report experiencing regulatory or political scrutiny over the past 12 months, FTI Consulting added.
Further, over the last 12 months, 28% of local companies and 30% of global companies surveyed have experienced a shortage of talent and skills, while 80% of local companies, compared with 68% globally, have reported increased mental health issues in their workforce since the start of the pandemic.
Of South African companies that participated in the survey, 26%, compared with 30% globally, are under extreme pressure to retain talent, and 26% locally, compared with 29% globally, are under extreme pressure to improve corporate culture in the next 12 months, the FTI Consulting survey found.