The uncertainty in the current global economy generates a wide range of possible risks that can abruptly alter a firm’s business model and strategy. Events developing in Eastern Europe, shifts in global government leadership, rising inflation, interest rates, constant cyberthreats, competition for talent and specialized skill sets, ongoing disruptions in global supply chains, and quickly advancing technologies are examples of the complex web of risk factors that could jeopardize an organisation’s ability to achieve its goals. Risk and uncertainty will always exist, and improving organizational resilience requires staying informed about new risk factors and market possibilities.
The energy sector is particularly susceptible to supply chain risk due to the importance of services, feedstocks, parts, and equipment in its value chain. Many businesses use lean inventories as a cost-balancing tactic. For energy organizations, supply chain fragility is partly due to growing globalization and reliance on third parties. Longer delivery durations and limited supplier capacity because of accumulated demand are other pandemic-related problems that impede supply chain operations for the energy and utility industries. On the front lines to combat inflationary pressures are supply networks. Furthermore, Europe is having persistent problems with its energy supply and finds it challenging to get crucial supplies, in part because of the conflict in Ukraine.
Energy and utility companies are still having trouble finding and training enough competent workers to replace the experienced workers who are leaving the profession in increasing numbers—and frequently earlier than anticipated. Many businesses struggle to persuade young people that they can provide a fulfilling career path. Another barrier to energy companies overcoming serious employment issues is requiring highly specialized technical skills for work in fields like renewables. Additionally, like many companies, they are learning that being dogmatic about working remotely can worsen recruiting and retention problems. Particularly in this sector, some roles cannot be performed remotely.
As energy companies want to expand their businesses or deepen their involvement in renewable energy, M&A activity is increasing. Traditional energy businesses looking to buy renewable energy startups will want to integrate with great care, prioritizing communication and employee engagement to avoid losing crucial human capital due to post-merger “culture shock.”
Energy businesses are under pressure to alter their business processes and use tools like artificial intelligence and natural language processing to make more quick and efficient decisions. Energy businesses will need to train their existing staff to realize their value proposition fully; not all staff will welcome or adapt to the change. This is because workers with these skills are in short supply in the labor market. Additionally, as businesses automate more tasks, some professions may become obsolete or undergo significant change. If these dynamics are not managed, they may affect corporate culture and impede businesses’ efforts to reform.
