In the business world, few of us were in a position to experience the irrevocable change brought on by COVID-19, and even fewer expected the cascading effects created by the war between Russia and Ukraine. But in a world of risk and resilience, the hallmark of Leadership is the ability to adapt to the unforeseen and accept it as true with a well-oiled culture of preparedness, even when the crystal ball is slightly blurry.
Over the past three years, efforts to fight COVID-19 have severely disrupted the free movement of goods. In the Global Risk and Resilience Trends and Forecasts Report, DRI International surveyed about 500 resilience professionals across industries and sectors. Two themes emerged when asked about the top difficult situations of 2022. One of them was expected: the existing supply chain crisis. lack of trust that much of the world now faces.
While source chain disruption is not the biggest resilience issue, in many ways it is the most interconnected. While the sector most affected by these demanding situations is the manufacturing industry – with other industry organizations like the National Association of Manufacturers issuing quarterly warnings – healthcare, education and generation see it too as a significant concern. There are no significant differences between regions, confirming that this is a completely global problem.
Among the known disruptions are disruption of key supplies, supplier failures, low inventories, reliance on sole or exclusive suppliers, global shortages of commodities and raw materials, disruptions to transportation at docks and warehouses, and, of course, a shortage of hard work. Complexity continues to grow in the global economy and the resources to compensate for it are decreasing, resulting in a world where organizations will have to do much more with much less.
The human cost of the war in Ukraine is a tragedy that unfolds every day before our eyes. The effects will be felt far beyond the battlefield. The war has led to additional shortages of some staple foods, fertilizers, chemicals, metals and other minerals. as well as oil and gas from Russia. What started as a necessarily European factor is already having an impact around the world.
According to the Federal Reserve, the war is expected to have an additional impact not only on the supply chain, but also on the entire global economy, as inflation and peak interest rates fuel a conceivable recession, according to the latest detail from the annual forecast report. Europe is a challenging region, due to its heavy dependence on fuel and oil imports, especially from Russia, and food inflation remains a factor in Europe (especially the UK).
This leads us to predict an intensified search for alternative energy resources. Media outlets such as Al Jazeera report that the war in Ukraine has also increased the need to find alternative, renewable and diversified energy resources. Traditional oil and gas resources, such as the Middle East and Russia, are too volatile to ensure secure supply, so countries will expand their own industries or partner only with reliable allies.
While events in Europe will take time to expand and shape the year ahead, one prediction has already come true. It had not been predicted faster that “a primary city in the evolved world would experience unprecedented flooding following a storm-related event” than severe storms in California inundated several areas, including parts of Los Angeles, with catastrophic flooding, mudslides, land and strength. cuts. Although this is the first primary flood of 2023, I am sure it will not be the last.
As the frequency and severity of those occasions increase, it is vital to avoid associating flooding with “living in a floodplain. “As heavy rainfall becomes more frequent, flash floods can occur without caution in virtually any region, especially those where built surroundings were not designed with resilience in mind. Businesses, communities, and families want to be well-informed and prepared before a crisis begins, when panic sets in and they are forced to make hasty decisions in the midst of a disaster.
These extreme weather events are disastrous in themselves, but nothing exists in a vacuum, and what might seem like a regional fear can have national, or even global, effects on (yes, you guessed it) the supply chain. Columbia University Water Center has studied the difficulties of unloading goods and food from docks to blockades on primary roads and railroads, and how the effects of flooding on one coast can create other disorders across the country and beyond.
As we head into 2023, our purpose is to prepare for the year ahead and make sense of the unexpected reports of the year ahead. In the meantime, while I hope for your sake that this new year goes as planned, it’s probably wiser to recommend that you expect the unexpected.
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