Faced with a sharp downturn in global economic growth, continued disruption to global supply chains from the pandemic and the conflict in Ukraine, and continued labour market instability, businesses will have their hands full in 2023.

However, for leaders navigating the turbulent waters ahead, it helps to keep an eye on some of the main risks lying in wait.

While there is no blueprint for how to successfully deal with the following three issues, I believe greater awareness of the task ahead may help leaders develop suitable strategies to ensure businesses and their employees can stay the course in the coming months.

In 2023, the number one task for businesses is learning to adapt to three significant forces shaping the landscape, namely:

1 Dealing with uncertainty and disruption

The challenging economic climate and ongoing uncertainty is calling for greater efficiency across markets and industries.

According to , world output growth is expected to slow to 1.9% in 2023, down from an estimated 3% in 2022. And no economy is immune: GDP growth in the US is expected to be a paltry 0.4% and only 0.2% in the EU. The outlook for developing countries is no better.

For leaders, this instability will force greater focus on keeping the business in balance. Constraints on the global supply chain will require greater investment into technologies that can increase end-to-end visibility, greater predictability and efficiency.

Leaders also need to acknowledge that there is no return to pre-pandemic conditions. Consumer habits have fundamentally changed. The way people purchase products, seek information, and engage with brands will continue to evolve. To meet these challenges, leaders need to improve their ability to deal with uncertainty and disruption.

2 Finding the perfect balance in leadership

The past few years have been especially tough on leaders. Coming to grips with the ‘new normal’ has meant a complete realignment of how to deal with customers, how to manage employees, how to enable remote and hybrid work environments, and how to deal with unprecedented change.

These challenges have taken their toll on leaders, as can be evidenced by the recent resignation of New Zealand prime minister, Jacinda Ardern. Leaders, exhausted after several years of disruption and non-stop crisis management, may experience burnout, reducing their leadership capacity and putting additional pressure on organisations trying to navigate turbulent waters.

This year, leaders will need to dig deep, balancing empathy toward employees with the increasingly pressurised requirements of running a business.

This will demand higher levels of collaboration and co-creation, with the optimal leadership approach bringing in different perspectives to build policies and processes that can ride the waves of change while driving the business forward.

However, leaders will need to extend that same empathy to themselves. Leading organisations through turbulent times requires superb fitness and high degrees of physical and mental wellbeing. Much like the pilot of an airliner needs to put on their own oxygen mask before helping passengers during an emergency, so too must leaders take care of themselves to ensure they can stay the course and lead the business through adversity.

3 Helping employees find sure footing in the new world of work

Nowhere has the disruptive effect of the past few years become more visible than in the way we work. Since 2020, nearly every business on the planet has had to radically change their workplace models to accommodate remote and hybrid work.

As pandemic pressures ease, there are growing calls for a return to full office work among businesses. Companies that have seen their cultures diluted, their teams scattered, and their office buildings standing empty will be hungry for a return to the office.

However, employees are unlikely to sacrifice the gains achieved over the past few years. Employees have seen during the lockdown periods that they can remain productive and achieve the desired outcomes outside the confines of corporate headquarters. Why sit in rush-hour traffic for hours only to get to an office to perform tasks that could just as easily be done from home?

This year, leaders will need to embrace a consultative approach and co-create the new world of work with regular input from employees. An openness to shorter workdays, a reduced work week, hybrid and remote work models will give leaders the flexibility to meet employee demands, which must to be balanced with the business’ own interests.

There is no handbook for leaders to follow in 2023 that will allow them to successfully navigate the looming challenges. Instead, successful leaders will need an approach that provides opportunities for co-creating the ideal work environment, one that can withstand the disruptive forces of change while mobilising employees behind common goals that drive the business toward success.

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The uncertainty caused by the coronavirus is compounded by the subsequent economic damage from lockdown measures imposed to safeguard vulnerable communities from the worst of the pandemic. Companies of all sizes are in a race against time to adapt to a new, as-yet undefined normal.

The crisis is causing companies to accelerate their adoption of new workforce engagement models to ensure business continuity and productivity in a time of heightened disruption.

No industry spared from disruption

There are also distinct challenges unique to certain industries that are trying to adapt to difficult – in some cases impossible – trading conditions. The hospitality and tourism sector, possibly the hardest hit by the pandemic and resultant lockdown efforts, is on life support.

According to the International Air Travel Association, there was a 20% decline in international bookings and a 15% drop in domestic travel in Africa between March and April this year.

Global demand for commodities has shrunk, leading to a $420-million loss in revenue for sub-Saharan Africa exports to China. Supply chains have been disrupted and healthcare systems are under immense pressure from the increase in demand for treatment and screening for the virus.

The retail sector is under pressure to not only sustain services to consumers during lockdown but enhance employee safety measures and scale up e-commerce and delivery capabilities to meet a rise in demand.

New models of work

It is fair to assume that employers will look to leverage new models of work which enable a win-win for the business, its employees and other stakeholders. The external workforce – those workers who engage with the business on a contract or temporary basis – can help address short-term growth in demand without turning into a longer-term liability for the business when demand subsides.

According to a study conducted by Oxford Economics in 2018, 44% of organisational workforce spend is on the external workforce. It may be too soon to accurately assess how this figure has changed in recent months due to the pandemic; however, there will inevitably be significant shortcomings in how organisations mobilise and manage their remote workers.

Despite 65% of organisations claiming that external workers are critical to the organisation operating at full capacity and meeting market demands, three out of every four organisations lack a holistic view over their external workers. This can range from limited to no visibility about who their external workers are, what skills or experience they have, and what they are being paid.

Organisations preparing for the post-pandemic world of remote work need to focus on overcoming four distinct challenges, namely:

1. Managing unprecedented growth in certain industries – Employers need to enhance their ability to identify the right talent and reduce time-to-hire. This can be achieved partly through finding the best channels to source candidates and services, and partly through the use of digital tools that ease the process of managing external workers, suppliers and services.
2. Improving margins while working remotely – Margins will remain under pressure even with more widespread adoption of remote workers. Organisations need to leverage benchmark pricing to ensure they source talent at the right price. Benchmarks need to be both internal, based on a view of what the organisation has paid similar talent in previous years, and external, based on what other organisations within the same industry are paying.
3. Maintaining business continuity – Now, more than ever, organisations need full visibility over their total workforce. This allows for real-time planning and work reallocation that takes into account available resources and internal capacity.
4. Ensuring worker safety and health – Maintaining and managing a pool of healthcare resources is crucial during the pandemic. Organisations need to enhance their worker safety and health protocols to ensure the well-being of internal and external workers.

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For CFOs and public sector financial leaders, the new dynamic is creating risks to private and government institutions at a time when financial integrity is paramount.

Disruption challenging public, private sectors

For the private sector, the disruption from closing offices and suddenly relying on a mostly remote workforce has created new challenges. Employees are now working outside the boundaries of corporate firewalls and, in some cases, on unsecured devices. Enhanced cybersecurity is critical; the World Economic Forum has warned that cybercriminals have escalated their efforts to capitalise on the unfolding tragedy of Covid-19, putting companies, consumers and public sector organisations at immense risk.

In the public sector, government departments at national, provincial and municipal level are facing their own challenges. The response to Covid-19 has required a reprioritisation within various government functions to support the unprecedented large-scale coordinated effort at all levels of government to limit the impact of the disease.

For example, Treasury has announced it is centralising the sourcing of all personal protective equipment from suppliers. In the heavily regulated public sector, this centralising of sourcing can add additional complexity to procurement and public finance management practices to ensure finance teams functions within the bounds of good governance.

Add to this the disrupting effects of major budgetary constraints and poorly-performing state-owned enterprises and public sector finance teams are in for a challenging period.

Private sector companies, already dealing with a struggling economy and low consumer and business confidence and now battling with a major world event will similarly have to enhance their governance, risk and compliance efforts to ensure business integrity is upheld.

Three priorities for improved risk management

So what are public and private sector finance leaders to do to manage risk in such an uncertain and disruptive environment? Three immediate priorities stand out: protecting the business through better risk management, process control and audit planning; improved access control; and putting comprehensive security measures in place to protect critical data.

Protecting the business starts first and foremost with visibility. Managing risk during times of great uncertainty or disruption requires that finance leaders have a holistic view of risk. This requires them to have a single financial source of truth – an accurate, integrated source of data that can inform financial decision-making within all company or government functions.

Having a clear view of all risk elements gives finance leaders additional agility to adapt to changes in the operating environment and business model. Many organisations will need to reassess their business strategy to take into account the impact of the lockdown and continued disruption from the pandemic.

Using risk scenarios and modelling to understand the organisation’s exposure to risk gives organisations a clear view over the impact of emerging opportunities on the company’s risk profile. In addition, it helps finance leaders make better decisions by linking current and future risks to business value drivers.

With a single financial source of truth, companies should also seek a single platform for managing policies and compliance procedures. This enables streamlined processes that align controls and policies with business goals and risks.

Audit planning will also require a second look: tools for better managing scoping, risk assessment and project management of internal audits can save precious time and resources. Real-time analytics can play a hugely important supporting role by enabling companies to scan large volumes of data with increased accuracy in detecting and preventing fraud and errors.

However, with business models changing rapidly – most noticeably the rise of remote workforces as people are confined to their homes – effective access control is becoming even more important than before. Sudden changes in an organisation’s workforce as a result of the pandemic could lead to conflicts with segregation of duties and hamper access to critical authorisations. Without full visibility over user functions and permissions, companies will struggle to remediate issues or introduce mitigating controls.

CFOs and finance leaders should enforce a segregation of duties framework that avoids having a single user create, approve and monitor transactions. Where segregation of duties is not possible, management should be able to monitor users’ transactions and ensure users have appropriate authorisations to maintain accountability.

Organisations should strive to provide secure access to applications and data across cloud and on-premise solutions, and use predictive detection of fraud and errors in transactions to maintain business integrity. Interpol has warned that cybercriminals are taking advantage of the pandemic by attacking computer networks and systems while most of the world’s attention is on dealing with the coronavirus. The FBI has found that reports of cybercrime have quadrupled since the start of the pandemic.

Here, enterprise threat detection and other security measures play a vital role in identifying, analysing and neutralising the rising tide of opportunistic cyberattacks plaguing public and private sector organisations. CFOs and finance leaders need real-time intelligence into system vulnerabilities to ensure cybersecurity threats are mitigated before systems are compromised.

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