”The World Is in Big Trouble.“

Our CEO Georg Winter shares his views on why geopolitical transformation is our focus this year and why it exacerbates existing risks and causes new risks to emerge.

Secretary-General António Guterres made this statement at the General Assembly of the United Nations on 20th September 2022 in New York.

We are undergoing times of permanent change, which many refer to as systemic transformation or multiple crises strung together. This change takes place in different fields and segments. They, in turn, are interlinked at various levels. HORIZON’s risk-oriented approach aims to define and outline the key areas of change affecting your company. In doing so, we take a close look at the systemic influences of ecological, geopolitical, technological and social transformation on your company’s risk landscape.

The 4 Risk Changers

The 4 Risk Changers

These transformation processes are very dynamic, they are often interdependent and thus characterised as complex processes. They also result in systemic risks. Managing them requires much more than traditional methods of risk management.

In terms of risk management, we refer to these systemic risks as “risk changers” that directly affect companies and categorise them as follows:

  • “Environment in danger” for ecological,
  • “Beyond globalisation” for geopolitical,
  • “Digital transition” for technological and
  • “Social disruption” for social transformation.

HORIZON – “Risk Thought » Fast Forward” is our platform for so-called risk thought leadership. It is based on our vision to detect the impact of these risk changers at an early stage and introduce risk management solutions that boost our clients’ resilience.

How do the 4 Risk Changers affect companies?

Companies are exposed to various kinds of risks. At the same time, systemic transformation exacerbates existing risks and causes new risks to emerge. These primary risks have a direct bearing on companies.

 How do the 4 Risk Changers affect companies?

Primary risks – Transformation leads to direct exposure

Ecological risks
When we look at climate change, we refer to climate risks. They are apparent in form of a changed or an increased exposure to natural disasters, such as floods, storms, hail as well as heat, drought or a rising sea level. As far as companies are concerned, these risks can cause anything from material damages to disruptions of transport routes, in energy, or raw material supplies.
 
Geopolitical risks
Geopolitical change, characterised by an economic bloc having been established between the USA and China, has put free world trade to the test. It also shows, by looking at Russia’s invasion of Ukraine, just how quickly a system conflict, which we thought had been settled between the democratic and autocratic world, can be reignited. All that, exacerbated by global events, like the Covid-19 pandemic, puts pressure on the availability of energy resources, disrupts supply chains and leads to a global wave of price hikes that challenge governments, businesses, and the civilian population alike.
 
Technological risks
Technological change has resulted in an over-dependence on data, software and IT infrastructure. All are targets of a rapid increase of cyber threats all over the world and are thus one of the biggest threats of the 21st century.
 
Social risks
The growing divide between rich and poor, the lack of equal opportunities regarding age, ethnic background and nationality, gender and gender identity, physical and mental abilities, religion and ideology, sexual orientation and identity as well as social backgrounds increases social tensions. The Club of Rome deems equality and justice as part of the ideal solution for a liveable future.

Companies cannot shirk their responsibility in this regard. For instance, social issues are becoming more and more important as we are facing an inevitable demographic change that has already resulted in a systemic shortages on the job market.
 
Correlation
The interdependency of these systemic risks is best demonstrated by the war in Ukraine: From a geopolitical point of view, it has led to an energy crisis. In terms of technology, it has led to an increasing number of cyber threats. On top of that, well-targeted campaigns are aimed at splitting society and disturbing social peace in our Western world. From an ecological perspective, however, there is hope that our efforts to reduce carbon dioxide emissions can finally be carried through.
 
Systemic change – Primary and secondary risks

Systemic change - Primary and secondary risks

Secondary risks – Adaption creates new chances and challenges

Besides these primary transformation risks, which affect companies as “pure risks” from the outside, systemic change leads to secondary transformation risks that are “speculative”. They derive from companies’ adapted business models that were developed in response to the systemic change and comprise both risks and opportunities.
 
Ecological adaption
In the fight against climate change, many companies have decarbonised their processes or have developed sustainable products. Saving resources and taking advantage of new opportunities are key focal points. However, new products and processes lead to new risks that must be identified at an early stage.
 
Geopolitical adaption
As a result of the geopolitical change, companies had to explore new markets and new sources for raw materials and find new ways of attracting both customers and suppliers, while keeping a watchful eye on possible dangers. Although the currently rising energy prices still paint a different picture, supply chains can be shortened through nearshoring. This could very well result in a wave of reindustrialisation in Europe.  
 
Technological adaption
Technological change enables us to pursue totally new paths. While the automation and digitisation of value chains is gaining importance, the full potential of mergers, transparency, big data, and metadata remains to be exploited. Manufacturers of previously traditional products and services are becoming system providers, goods are being replaced by data, and machines by platforms.
 
Social adaption
In the past, humans used to be regarded as resources. Now, humans with all their resources take centre stage. The concept of Industry 5.0. does exactly that. It places the human being at the centre to promote and foster diversity, different talents, and activities. Many companies have already initiated a transformation process because employees nowadays attach more importance on meaningful work. They believe that they can make a difference when it comes to resilience and sustainability.

Beyond globalisation – Geopolitical transformation in the spotlight

The upcoming release of HORIZON will concentrate on the geopolitical transformation and therefore looks at all its challenges from various angles.
 
New political world order
Does the war in Ukraine show us the dramatic face of a new political world order and how does this conflict at the very centre of Eastern Europe disrupt our economic basis?
How will the global trend of bloc formation between democratic and autocratic countries influence companies’ global business activities in the future?
What is the risk of technology being abused as an instrument of power and how could this affect companies?
How will the increasing conflict between the USA and China influence global economic relations?

Energy crisis
Blackout and a cold winter – how can we prepare for a total outage?
Will the current shortage of natural resources ruin Europe’s industry or will an ambitious energy transition turn Europe into a role model for a green global economy?

Supply chain dilemma
Will the geopolitical transformation result in a new era of offshoring, or will regional supply chains and increasing investments in circular economy boost independence and resilience?
How will China´s rise continue – considering its growing regional influence along the new silk road – and what will be the effect of its strategy of isolation as a result of its zero-tolerance pandemic policy?
Is the conflict over Taiwan’s independence a ticking time bomb for the global economy?

Loss of wealth
Will double-digit price increases lead to a decreased standard of living over the long term?
Does high inflation increase the risk of social riots in Europe?
How do these circumstances influence people’s work-life balance and their work attitude?
What does a new wave of migration mean for European companies and their DE&I (Diversity, Equity, and Inclusion) agenda?
 
It is indeed a difficult and challenging situation that raises many most pressing questions. We need to discuss them, their impact on the transformation of the risk landscape as well as possible solution scenarios.
 
Stay tuned!

Georg Winter

CEO

T +43 664 962 39 06

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Do Health & Benefits Really Matter to Employees?

Employers need to go back to basics and look at the structure of the benefits they offer and determine if it must be changed or stepped up. Now is the time to do it.

Steps employers can take to future-proof benefits

Employers need to go back to basics and look at the structure of the benefits they offer and determine if it must be changed or stepped up. Now is the time to do it.
 
For employers with international offices or mobile employees, the wider benefits strategy must match the wider HR and Benefits strategy, corporate objectives as well as workforce demographics. Any required local changes must be assessed as well.
 
The Health & Benefits being offered must ideally reflect changing working patterns, age differences in the workforce, as well as individual country requirements affecting mobile employees, expatriates, and teams in international offices.

Do Health & Benefits really matter to an employee?

Absolutely yes, but with different emphasis. A recent report by edays showed that 75% of employees are more likely to stay with their employers because of a great Health & Benefits programme. Considering a new political world order, employee cross-border migration and decreased standards of living, employers need to recognise that their Health & Benefits, together with corporate culture, are ways to differentiate themselves, to compete for talent, retain staff and better engage their workforce.
 
At the same time, employers need to keep in mind that the success of any benefits programme largely depends on benefits being tailored to the needs of a diverse workforce.
 
As no workforce is the same, benefits that matter to one group of employees may not matter to another. Millennials for instance may be most concerned about the debt they have to pay; older employees will focus more on whether they have enough for their pension. TeamStage reported that millennials will represent 75% of the global workforce by 2025.
 
Employers are challenged to find new and innovative ways to engage this group of employees, while making sure the Health & Benefits they offer cater for the needs of the entire workforce – a huge challenge for HR. A sustainable Health & Benefits programme that is fit for purpose will be an asset for the success of the business.

Is remote and flexible working here to stay?

Yes, and no. I am rarely one to sit on the fence but in this case, it is not a simple answer. Adding more flexibility to the way we work will enable employees to create the work-life harmony that works best for them.
 
Nevertheless, we cannot work remotely in every sector. Remote and flexible working models thus need to be well-managed. No doubt, the move towards remote working has presented employers with a new opportunity to address the needs of a multi-generational workforce, but it has also created a huge challenge and in some sectors a move away from “tradition” where employees came to the office every day and were “present” to a new way of working, sometimes not just from their home, the coffee shop, library, or on a beach.
 
We are faced with up to five different generations of employees in the workforce: from those in their 20s to those who are still working into their 70s and beyond. As a result, HR teams have been reviewing their long-term approach to flexible working and related policies. Talking with many HR leaders, it has become clear more flexible Health & Benefits strategies could help employers retain their ageing workforce and attract new talents.

What role can an adviser play?

The first step is for employers to better understand their working environment, culture and people. Culture plays a key role. It provides employees with a solid foundation, helps build trust and a safe working environment. Besides that, employers have started to recognise that the value of an effective Health & Benefits offering goes far beyond the traditional objective of recruitment and retention. It also goes far beyond traditional insured benefits, rather it focuses on wellbeing, flexible leave policies as well as wider fringe or lifestyle benefits.
 
The right benefits strategy, a clear direction as well as practical solutions, will help employers attract the best people and look after the needs of their workforce. Health & Benefits will become more employee-led. More and more employees are wanting to select the benefits that suit them, meaning employers need a multilevel benefit system where people can pick and choose – hence the need for the right technology and digital solutions.
 
Globally, we are all feeling the financial squeeze on our income. Now, more than ever, employers need both support and sophisticated solutions, coupled with expert and professional advice to ensure they have the right benefits, strategy, and direction in place to meet the changing needs of their employees and business.
 
Employers are already looking beyond insured benefits at other factors which are fast becoming part of the wider HR and organisational strategy. Factors that impact decisions concerning benefits design and strategy, such as: ESG (climate, DE&I and Governance), alignment of benefits with corporate objectives, employee value proposition and achieving work-life harmony across their domestic and international workforce.
 
The time is now for employers to invest their benefit budgets wisely and in areas where the impact will be felt most! A one-size-fits-all Health & Benefits package is no longer appropriate, presenting HR with one of their biggest challenges!

Adam Riley, Cert PFS 

Group Practice Leader Health & Benefits

T +44 (0) 7507 788 144

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The World Is Changing, Enter a New World Order!

The world is changing, enter a new world order!

Nowadays, employees expect more from their employer than ever before. Meeting these expectations will involve more personalisation of the health and benefits offering.

The world has had its fair share of upheavals, but when Covid became part of our daily conversations, irrespective of where one lived, we were all looking for the magic light at the end of the tunnel! It took a long time to come, never have we had to live with so much uncertainty, and this new state of uncertainty will become part of life, certainly for the foreseeable future.
 
Employers reacted quickly when another lockdown was announced. Working from home became the norm, and a new way of living was forced upon us. I remember when the first lockdown was announced; I thought it would soon be over, but days turned into weeks, then months. Schools closed, infrastructure suffered, travel became a distant memory, as did freely going on holiday.
 
The financial impact on the global economy was severe, and the true extent of the impact on people’s mental wellbeing is still largely unknown.
 
Then the unthinkable happened: a war in Europe! Further significant disruptions aggravated the already fragile and near-breaking healthcare and financial systems across the globe. Energy supplies, production lines, supply chains, distribution channels, and more, were equally hard hit. Many believe these disruptions have permanently altered the world order. While we all feel the direct and indirect impact of the war, managers and business owners have made it their top priority to protect the health and safety of their employees. 

A new world order …

History tells us that Woodrow Wilson and Winston Churchill introduced a term “new world order” to global politics, describing a new era of history marked by a profound shift in world political philosophy and the worldwide balance of power. Over the years, it became a factor in domestic and international relations and in legislation. It also sent out a clear message that change to the status quo was on the cards. As a result of the global consequences to the war in Europe, “a new political world order” has come about, again.
 
Rapid change and shifting trends have also found their way into companies. In response to the economic crisis – caused by the world bouncing back from Covid, changing weather systems, spending patterns and the conflict in Europe – employers are taking steps to support their staff, arguably much more than we have seen in recent memory, but this can only go so far as it is not just individuals who are affected. Employers also need to address their short, medium, and long-term strategies simply to remain in business.
 
The cost of living has risen significantly. Levels of inflation across the globe have spiked. Talks of recession and warnings of energy price-increases have become reality. The war in Europe, which many thought would be over quickly, still rages on, with terrible human loss. Unstable Governments resulting in profound market and economic shifts resulting in significant changes to financial ratings.
 
The news presents a gloomy outlook – yet, still, employers continue to uphold both health and benefits in their companies, whilst at the same time employers are facing increasing insurance premiums and crippling energy bills. Why? Their employees are important, as are the families. With this, we are seeing a shift in how employers are looking at their future benefit programmes – a steady wise in employers ripping up the “benefits blueprint” and looking at how to restructure their benefits to be more sustainable; more fit for purpose to assess how the wider package could better support their employees.
 
Whilst some level of financial support is welcomed by all, this is only one part of the solution. Employers with voluntary-style benefits, discount schemes etc can also signpost employees to these as they can offer real-time savings for every-day-expenditure.  In view of the current economic backdrop where pressure on salaries has started to impact, we are seeing more employers incorporating this into the wider offering, and anecdotal evidence shows this has been well-received by employees.
 
We learnt valuable lessons through lockdowns when innovative digital solutions were introduced because we could not access face-to-face services. Solutions such as online yoga and personal trainer lessons, telemedicine and virtual appointments to access General Practitioners, wearable technology being used to track fitness levels, our sleep, diet, etc. have been widely adopted.  Many of us have become used to doing things via handheld devices.
 

We need to better listen to our people

People typically don’t like to admit it they are struggling or ask for help! The same applies to financial difficulties, where many people struggle silently when faced with the next household bill, rising energy bills, dental costs, etc. Hence, employer attractiveness has long since ceased to be defined by just the daily fruit basket or a water cooler. Corporate culture and wider wellbeing must therefore be place permanently on the leadership agenda to enable employers to better support employees and promote financial, mental, physical and social Wellbeing.
 
Everyone knows and understands the arguments as to why Wellbeing needs to be taken seriously. When it comes to Wellbeing, it is a complex dynamic between the culture of the company, the work environment, external factors, and the physical, social, psychological & mental health of employees – it also perfectly dovetails into the wider ESG conversation and the key sustainable development goals!
 
As the Human Sustainability Index, a new way to track Wellbeing and performance, gains momentum, we’re seeing more and more organisations wake up to how they can decrease burnout and build performance and Wellbeing at the same time.
 
Employers also need to focus more on the individual; however, they first need to listen to what their employees are saying, and not simply push forward an employee “benefit” just because it may be a good idea for the company. Over the years, I have seen many employee “benefits” introduced (sometimes at significant cost to the company) only to hear the end recipients, the employees, say that it isn’t something which is needed or wanted.
 
Nowadays, employees expect more from their employer than ever before. Meeting these expectations will involve more personalisation of the benefits offering: employers reviewing what benefits are offered, restructuring leave, and working policies, bringing forward salary reviews to help those who need it most, and perhaps even shaping a position to suit the skills, experience, and ambitions of the individual they want to recruit. Ultimately, employees are expecting employers to work hard(er) to attract and retain them. Those that do can expect to gain the very best talent. Those that don’t will face an uphill struggle in getting the right people, achieving employee loyalty, and of course engaging their people!

Adam Riley, Cert PFS 

Group Practice Leader Health & Benefits

T +44 (0) 7507 788 144

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