National Leader of Risk Consulting at KPMG in Canada
Business Unit Leader of Management Consulting at KPMG in Canada
What’s in store post-pandemic? No one knows for sure, but the KPMG CEO Outlook report offers a unique lens on evolving attitudes.
Canadian business leaders and decision-makers have faced myriad challenges throughout the pandemic, from building financial and operational resilience to digitizing their businesses and processes to managing employee engagement and customer interactions. Every industry has been impacted differently by the pandemic — for example, an airline’s challenges are vastly different from the challenges that a financial institution has faced over the past 15 months — but most Canadian companies have something in common: they’ve navigated business resilience, risk management, and unprecedented disruption in an entirely new way.
A fine balance: responding to uncertainty and unique risks
The COVID-19 pandemic has brought extraordinary unpredictability to the world’s business landscape. Business leaders have had to learn how to maintain agility while responding to uncertainty and unique risks across the enterprise.
In its 2021 CEO Outlook Pulse report, KPMG in Canada — a leader in delivering audit, tax, and business advisory services — found that according to global CEOs, the top five risks are climate/environmental risk, disruptive tech risk, supply chain risk, cyber risk, and regulatory risk.
The report also found that despite these challenges, Canadian leaders are moving forward with a sense of confidence and persistence.
“In our report, 84 percent of Canadian CEOs said they’re confident in the growth of their company over the next three years,” says Stephanie Terrill, Business Unit Leader of Management Consulting at KPMG in Canada. “This confidence is a sign of resilience and optimism. Wherever there’s disruption, there’s always opportunity. Having a growth mindset and an agile mindset is critical.”
Evaluating the future of work and embracing a hybrid model
Canadian business leaders’ resilience has also come to the forefront when evaluating the future of work.
Will knowledge workers return to the office? A KPMG poll released in March 2021 showed a trend of virtual fatigue and declining satisfaction with work-from-home scenarios, and its team expects to see more hybrid workplaces in the future. In fact, 77 percent of Canadians believe a hybrid workplace, or hybrid office, should be the standard model for all organizations.
“When it comes to remote working and virtual transactions,
flexibility is the number one benefit,” says Doron Telem, National Leader of Risk Consulting at KPMG in Canada. Access to specialists and talent from around the world is another benefit. But there are risks to virtual work environments, too.
“We see many employers working to foster greater resilience among their people: maintaining culture in a digital world, onboarding new talent, retention, and loyalty,” says Terrill. Cybersecurity is another key concern, with ransomware, identity theft, payment fraud, and other cyber incursions on the rise as a result of more employees working remotely. Employee mental health issues also need to be addressed. In the same March 2021 poll, 54 percent said their mental health has suffered during the pandemic. Leaders must consider their role in terms of helping their team deal with stress and burnout.
Supported by the right technology tools and digital processes, a hybrid work environment will allow teams to collaborate efficiently when needed, while also accommodating flexibility and independence.
Improving resilience and business continuity
Real-life scenario testing can go a long way toward improving operational resilience and business continuity — whether it’s a “what if” simulation around supply chain disruption or war-gaming for cybersecurity.
“Operational resilience scenario testing has become much more sophisticated now that organizations have seen a ‘black swan’ event,” says Telem. “Using stress testing and simulation technology, we run different scenarios and look at how they would affect a business’ various departments. Often, there’s a solution and a company can pivot.”
It’s important for organizations to define and adopt a risk appetite level, too. “Have a framework where you define the areas where you absolutely won’t accept risk,” advises Telem. “Then, you can focus more on protecting your most critical systems and information.”
The importance of optimizing costs and driving innovation
Despite their overall confidence and optimism, 43 percent of Canadian CEOs say the pandemic “forever changed” their business. It’s never been more vital for business leaders to optimize costs, stay agile, and innovate.
“Financial resilience is about keeping your eye on the balance sheet and your cash flow, and ensuring that you’re maintaining adequate liquidity,” says Terrill.
“It’s also about becoming hyper-flexible,” adds Telem. “Organizations with the ability to pivot and rapidly scale their expenses up or down as required can build stronger resilience.”
Operational and performance improvement, such as automating workflows to create efficiency, is also vital to optimize costs and efficiency. Encouragingly, KPMG’s study found that 84 percent of Canadian CEOs are placing more capital investment in buying new technology.
Investing in innovation and disruptive technologies
“We’ve seen organizations looking for new online revenue sources, so the disruption has also really driven a focus on innovation, which has been great to see,” says Terrill. “Our data indicates CEOs are planning to continue to invest in innovation and disruptive technologies such as artificial intelligence, digital communications platforms, and data and analytics. We’re hoping that this will remain post-pandemic, and put Canada in a good place on the global economic stage.”
With 91 percent of CEOs wanting corporate Canada to think bigger by making significant investments in technology and people, and with Canadian organizations embracing digitization and agile operating models, it’s clear that many business leaders are rising to the challenge of our new reality.