Reading through the findings of the 2022 AlixPartners Disruption Index, it was interesting to see that only 3% of the 3,000+ business executives who responded to our study said that COVID-19 was their number one worry for 2022. Indeed, even a year ago, when the virus was proving itself to be an existential threat to so many businesses, COVID-19 only ranked in twelfth position in a table of top concerns.
By contrast, a recent study from global law firm Baker McKenzie reports that a third of companies are expecting dispute volumes to increase this year and, according to respondents, it is COVID-19 that presents the greatest potential threat in terms of increasing exposure to disputes (48%). This is significantly beyond changing technology / digital transformation (30%), cybersecurity / data privacy (25%), and supply chain issues (23%).
At this moment in time, there is positivity surrounding the prospect of so many businesses and global economies finally being able to gain some traction in accelerating out of the pandemic. However, from a disputes perspective, the Baker McKenzie findings are a timely reminder that the challenges of the previous two years cannot simply be left behind to disappear in the rear-view mirror. Businesses no longer preoccupied with the immediate challenges of survival and subsequent recovery may now find the time to fully explore and pursue claims borne out of the acute global disruption experienced during the height of the pandemic.
Disruption presents opportunity and risk in equal measure
Looking ahead, there is synergy between the respective studies regarding the disruptive forces on the horizon. Our Disruption Index points to a host of technologically-fuelled forces forming the highest priority on the executive agenda, including automation, AI, connective technology infrastructure, and data privacy and security-related issues.
Similarly, the Baker McKenzie report’s respondents suggest that cybersecurity, data protection and privacy are the type of dispute that will pose the biggest litigation risks to their organisations in 2022.
With all disruptive change, opportunity and risk often present themselves in equal measure, and this is perhaps no more sharply observed than in digital. While businesses quite rightly should be building strategies to harness the power of data, tech, and the world of Web 3.0 in order to remain at the cutting edge of this inevitable direction of travel, there’s a reciprocal requirement to ensure attention is paid to the mitigation of potential risks that emerge as a result.
A front-foot mentality is vital
Scanning the business horizon requires two different lenses, as the disruption of the future will be an indicator of the disputes of the future – for example, the changing shape of supply and demand, price challenges, and labour shortages.
In my experience, no organisation “likes” to plan for disputes, even though they know they will arise at some stage. That is why this must stay high on the C-Suite agenda – if you can effectively frame where (and potentially when) the biggest dispute risks may emerge, effective mitigation plans can be put in place – response procedures, data retention, e-discovery capabilities, and factoring in the right resource levels to help assess and manage these disputes effectively. Some disputes will, of course, be better dealt with collaboratively – your most trusted suppliers or most valuable customers, for example – guiding your rationale for which battles should be fought through litigation versus alternative resolution methods.
Baker McKenzie’s report states that only 35% of respondents are very or fully confident in their preparedness for litigation, meaning two thirds are not. Similarly, our Disruption Index tells us that 6 in 10 executives are worried that their company is not adapting fast enough to stay ahead of disruption.
Disputes are, by their very nature, a business disruption, which is why a front-foot mentality will be vital in navigating the challenges ahead.