Looking for a strong link: How businesses are preparing for 2023

9 January, 04:02 PM

Understanding geopolitical risks is becoming a new imperative for all areas and types of business.

All over the world, from the owner of a small local business to the CEO of an international corporation in 2022, people are realizing that geopolitical risks are an integral part of an overall business strategy. This is a test that all business leaders, regardless of region, are having to go through now and will have to pass in the future. Just like the years of the pandemic, 2022 has been the most challenging for businesses and has changed the leadership agenda across all industries.

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The full-scale war in Ukraine affecting the global agenda, supply chain problems, food and energy crises, and inflationary pressures have wreaked havoc on long-term business strategies.

KPMG research has shown that 86% of CEOs in the world and 81% of CEOs in Ukraine are confident that we will enter a period of economic recession caused by geopolitics within the next 12 months.

But despite this, more than half of Ukrainian business leaders remain optimistic – 65% say they are confident in the growth prospects of their companies and industries over the next three years. 71% of executives believe that the global economy will grow in the coming three years.

The war in Ukraine has affected global supply chains. As of August 2022, 47% of business leaders planned to diversify their supply chains in the next six months in response to geopolitical challenges, and 32% said they had already done so. One strategy these leaders have chosen is to double their investment in technology, including in-depth real-time analytics, to help increase control across the value chain. Understanding geopolitical risks is becoming a new imperative for all areas and types of businesses.

Of course, Ukrainian business is now going through hard times, but remains optimistic. Ukrainian CEOs will continue to focus on restructuring or revising their strategies, stabilizing operations, retaining their people, and ensuring normal working conditions, digital transformation, technology and ESG (environmental, social, and governance) factors. This is also evidenced by the data of the KPMG study in Ukraine: 2022 Business Leaders Perspective.

I would note the following key conclusions.

Business is focused on growth — 63% of leaders in Ukraine believe that the most important strategy for development over the next three years will be organic growth through innovation, capital investment, new products, and talent recruitment.

Investments in digital transformation are continuing – 72% of business leaders said they have no plans to pause or scale back digital transformation strategies over the next six months as part of adjusting their strategies.

Hybrid work format — 88% of Ukrainian leaders continue to work in a hybrid format.

The focus of attention on ESG is shifting due to the war, but not disappearing — against the backdrop of a long crisis after the pandemic and during the full-scale war in Ukraine, 19% of Ukrainian leaders note a lack of budget for investment in ESG transformation. 28% say other economic issues are causing them to shift their focus away from ESG.

Progress in IDE (Inclusion, Diversity, and Equity) is also set to continue, as 65% of leaders in Ukraine believe that attention to diversity will increase over the next three years.

It seems that every year challenges become more difficult, and every year will bring more and more reasons to feel insecure. However, when we see how in Ukraine, despite the war, business is holding down the economic front, and is recovering, is helping the Armed Forces, and is continuing to work towards victory, we believe that there is light at the end of this dark tunnel.

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