According to global risk consultancy Control Risks’ annual forecast of political and security risks to help businesses prepare for the challenges next year will bring, some of the most important ongoing threats into this year include COVID-19, U.S.-China relationship, geopolitics, digital acceleration and missed opportunities to plan for uncertainty.

1. A World with Long COVID

According to the 2021 RiskMap Report, 2021 will be a year of uneven vaccine rollouts and uneven recovery. In addition, the report says, if 2021 does not mark the end of the pandemic, it will be the year that determines what is left when the worst is over.

Jonathan Wood, Director of Global Risk Analysis at Control Risks based in Washington, D.C. tells Security that the most significant downside risk to businesses in 2021 is that vaccinations will disappoint. “Assumptions and forecasts of rapid economic recovery hinge on vaccine optimism,” he says. “Yet, although vaccine trial results continue to be very promising, the rollout of vaccine in many countries has been slow and fragmented. Only a handful of wealthy countries have so far procured or reserved enough doses to cover their populations.”

He adds that vaccine hesitancy and anti-vaccine sentiments are challenges in some countries. “Vaccine could remain more scarce than anticipated due to unanticipated production or logistics challenges, as well as geopolitical competition for doses. The COVAX initiative, wholly relied upon by many developing countries, has limited international support and – even if successful – will provide only limited coverage. It also remains somewhat unclear how long immunity lasts,” he says.

For businesses, Wood says, surviving COVID-19 in 2021 means two things: managing the continued threat of disruptive outbreaks and being prepared to take advantage of “new normal” opportunities as restrictions are relaxed and economic activity resumes. “We expect the recovery in 2021 to be highly fragmented: companies will need to understand and monitor why and when different places will reach and sustain a new normal, whether due to inoculation or effective public health interventions. They will need to map the impacts of a fragmented recovery on domestic and cross-border supply chains. They will need to plan protocols for returning employees to work and travel safely. All of this will occur under the twin microscopes of government oversight and activist scrutiny,” he says.

2. U.S.-China: stabilization without normalization

Another key risk that will affect organizations around the globe in 2021, is U.S.-China relations. While, the new U.S. Biden administration will see some of the bombast come out of the U.S.-China relationship, the report says that the two countries will keep clashing on current issues.

What organizations in the private sector could be most affected by relations going South? “Advanced technology sectors will continue to be most directly exposed to U.S.-China strategic competition, investment restrictions, and trade measures. These include information and communications technology (ICT) (including 5G, semiconductors, quantum computing, AI, and anything involving personal data), biotechnology and pharmaceuticals, defense and aerospace technologies, energy, and engineering materials,” Wood says. “Both the U.S. and China view these sectors as strategic and often national security sensitive and they are potentially exposed to a further deterioration in relations.”

Beyond technology, Wood says U.S. companies banking on an increased or restored market access in China, including oil and gas, agriculture and financial services, will continue to be potential targets of retaliation in the event that relations deteriorate.

Two other shifts are worth noting in this regard, according to Wood. “As a result of COVID-19, the U.S. in 2021 is likely to push to domesticate medical device and pharmaceutical supply chains to reduce dependence on China. President-elect Joe Biden also plans to incentivize ‘green technology’ investments and reshoring manufacturing, using a combination of trade and fiscal policy,” he says.

3. Go green or go bust

As the effects of climate change worsen, the geopolitics are changing as multiple nations line up behind carbon neutral and net zero pledges. Investment and trade policies are linking to climate change, according to the report and intransigence will erode competitiveness and shrink export markets.

Regarding climate change, Wood says, countries that fall behind the curve on policy, targets and incentives will lose out on green investment and innovation, face tensions and potentially tariffs with trade partners, and face an even sharper economic and energy transition in the future.

“Enterprises in these countries may lack clear policy and regulatory signals from government to support strategic investments (increasing risk of stranded assets) and face divergence between their domestic and international ethical, social and compliance obligations,” he says. “Many companies will take voluntary action to meet industry or global standards around performance targets and reporting, but those that do not are likely to face continued pressure from investors, activists, customers and suppliers. They may lose out on government procurement or supply contracts that increasingly have embedded environmental, social and governance (ESG) performance criteria.”

More broadly, in terms of geopolitics, Wood says, risk managers and organizations must consider geopolitical risks in their business strategies, risk assessments and compliance activities. “Geopolitical competition is likely to intensify in 2021 in several regions, playing out in terms of sanctions, trade measures, investment restrictions and security threats,” he says.

4. Digital acceleration hits emerging threats

Another risk that the 2021 RiskMap Report details is the effect of the quickening pace of tech adoption. While it brings great benefits to people and its organizations, the exposure that comes with connectivity is a risk.

This acceleration will pose two major threats in 2021, according to Control Risks: Digital nationalism will see regulatory risks soar and cyber threat actors will punish those who rush adoption at the expense of security and resilience.

5. Missing the rebound

The report says that organizations need to now shift from crisis response to embracing uncertainty, or risk making it through to a post-COVID-19 world. “Those businesses that refuse to embrace risk in 2021 are in danger of failing to capitalize on the post-COVID recovery,” the report states.