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New thinking on corporate risk and resilience in the global economy.

Quick Takes

How to Determine When It’s Safe to Fly and What to Expect

Source: Oliver Wyman

Net bookings are down 99.5% year over year, and booked revenue is 103% lower in the U.S. airline industry, according to Forbes. The government and airline industry will need to reassure travelers with transparency about how they are measuring and responding to the risk caused by coronavirus.

Establishing a threat-level assessment, as well as enforcing a safety roadmap for airlines to follow, is a starting point in building the confidence for travelers during the pandemic. Oliver Wyman has proposed a five-level color-coded threat assessment, like the one above, as a potential framework for governments and the aviation industry to code the pandemic threat level. With insight into how the industry is classifying risk, travelers can make informed decisions about when to travel and prepare for any new airport processes in place to detect and contain COVID-19.

Long-term impacts to the industry are expected: An analysis by IATA in May states that it doesn’t expect worldwide passenger demand to surpass 2019 levels until 2023. “Making the public feel safe is also important for the broader economy,” the Forbes article notes, as “a revival in air travel, most likely accompanied by a return of business travel, tourism, and hotel stays, would mean the economy is coming back.”

2020 Was a Record-Breaking Year for Electric Car Sales

Source: International Energy Agency (IEA)

Last year, electric car sales in Europe more than doubled over 2019 levels — increasing 135% year-over-year. Europe and China — the drivers of the electric car market in 2020 — accounted for about 1.3 million sales last year, according to IEA. Japan and Australia were the only large markets that saw a higher drop in electric car sales than overall car sales.

Although pandemic-related lockdowns impacted electric car sales at first, early indicators showed market resilience — such as policy support, increased purchase incentives, lower battery costs, newer technology and interest from electric car buyers. IEA estimates show that 2020 was “a record-breaking year for electric mobility,” surpassing three million sales worldwide.

Multiple countries announced plans to phase out internal combustion vehicles to align with net-zero emissions by 2050. To do so, the share of electric vehicles in global sales must climb to around 50% by 2030. Major vehicle companies are getting on board. For instance, Ford announced its plan to target an “all-electric” offering for vehicles in Europe by 2030. 

 

Public in Rich Nations Feel Optimistic About Future Crisis Responses

Source: Pew Research Center

The majority of respondents in Germany, the United Kingdom, the United States and France feel optimistic about future public health emergency strategies from their government, according to Pew Research Center. 

Nearly eight-in-10 respondents said Germany has handled the coronavirus pandemic successfully. Despite their optimism, the American public reported a 6% drop in approval rating for their country’s response to COVID-19 from June to November. Ideology and the current status of the economy played a major role in how respondents rated their country’s response to the coronavirus.

As countries around the world ponder how to ramp up the distribution of COVID-19 vaccines, few respondents found it acceptable for their government to implement mandatory vaccination measures. The U.K., which had the third-highest vaccination rate worldwide, was the only exception, with 60% of respondents stating they would accept a vaccination program. Pew found that trust in national government is associated with more acceptance of a government-required program.

Trust in Businesses Rose During COVID-19 Crisis

Source: Edelman Trust Barometer

Trust in businesses grew during the COVID-19 pandemic, and business remains one of the public’s most trusted institutions, according to the 2021 Edelman Trust Barometer. However, public trust declined in most industries — with technology, fashion, professional services and automotive seeing the most significant reversals. 

Since business is more trusted than the government and media, 86% of the public now expect CEOs to take the lead in addressing societal issues — such as the pandemic’s impact, job automation and local community challenges. 

COVID-19 has added to the public’s personal and societal fears, with many worried about the future of the workforce. For example, the majority of Trust Barometer respondents are alarmed by the rate at which companies could replace human talent with artificial intelligence.

ESG Issues Are Getting More Attention From Directors

Source: Global Network of Director Institutes (GNDI), 2020-2021

Over 60% of global business directors surveyed said that COVID-19 accelerated their focus on ESG, sustainability and stakeholder value issues. Out of 2,000 respondents, the majority agreed that risk-scenario planning and decision-making needs to involve outside experts, according to the latest GNDI survey.

This increased interest in ESG values correlated with other highly ranked trends throughout the survey. For instance, 63% of directors expect COVID-19 to increase the competition for talent. Past surveys showed how companies with better ESG performance are likely to have both better employee engagement and greater attractiveness to prospective talent. Over half of respondents also believe there will be a growing emphasis on corporate purpose and board diversity. 

Just 17% of directors surveyed were satisfied with their response and ability to provide oversight during the pandemic. Although directors can learn from their response, they can also work with their management teams to prepare for future workforce changes — social and economic. By doing this, companies will be more equipped to absorb the shocks from these risks.

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