Image by Mufid Majnun

How to respond when a crisis becomes the new normal

Much of the focus in the stabilize wave is on implementing tactical steps to preserve business value, including liquidity analysis, operational scenario planning, and an assessment of the various government stimulus programs.

To help both manage the current situation and prepare for what happens in the coming weeks, it helps to break down crisis responses into six key areas, create separate plans and lines of responsibility for each, and empower decision makers to act.

The six key areas:

  • Crisis management

  • Workforce

  • Supply chain

  • Tax and trade

  • Finance and liquidity

  • Strategy and brand


COVID-19 and leading the recovery

To meet the challenges posed by the pandemic, businesses around the world had to react in agile and decisive ways. As we move into the next phase, now is the time for businesses to seek out and seize the opportunities emerging in the recovery. This involves conducting an “after-action review” to collect data and insights on lessons learned from the pandemic, and then using these to prioritise actions to enhance business value today and build strategic resilience for tomorrow. Businesses that take these steps now will be well-placed to capitalise more effectively on the opportunities rising in the post-COVID-19 recovery – and to continue winning in their marketplaces as greater certainty and stability return. 


The spread of COVID-19 is changing how we live and work in ways we would not have thought possible even two weeks ago. Today’s new normal for businesses includes work-from-home difficulties, many simultaneously sick workers, disrupted supply chains, cash crunches, uncertain compliance obligations, and the mechanics of applying for new government programs.

Most businesses and organizations have already mobilized their crisis plans if they had them, or have quickly put something together if they didn’t. In “Seven key actions business can take to mitigate the effects of COVID-19,” we at Aura’s Global Crisis Centre explained what these plans need to include. But what comes next?

In Aura’s May 14 survey of global chief financial officers, 71 percent of respondents said their biggest fear was a global recession, up from 67 percent on May 20; 77 percent said they are looking at cost containment measures, and 65 percent are thinking about deferring or canceling investments. In this environment, CEOs will have to make tough decisions. The actions they take now must be tactical, but they should also align with a company’s purpose.

The keys to success are preparation, agility, accurate data, and a willingness to harvest good ideas from every layer of an enterprise.

Many businesses spent the first several weeks of the crisis reviewing continuity plans, establishing crisis command centers, and ensuring the safety and security of their workers. We thus would expect these businesses to be entering the “stabilize” wave of a three-wave crisis model (see “The three waves of a COVID-19 crisis response”), in which companies are learning to operate in “the new normal” yet are continuing to respond to immediate fires. Much of the focus in the stabilize wave is on implementing tactical steps to preserve business value, including liquidity analysis, operational scenario planning, and an assessment of the various government stimulus programs.

To help both manage the current situation and prepare for what happens in the coming weeks, it helps to break down crisis responses into six key areas, create separate plans and lines of responsibility for each, and empower decision makers to act.

The six key areas:

  • Crisis management

  • Workforce

  • Supply chain

  • Tax and trade

  • Finance and liquidity

  • Strategy and brand


Many of the actions taken during the three waves overlap and evolve over time. For example, the crisis management team set up in the mobilize wave will continue to function as conditions stabilize, because there are likely to be new crisis situations. There also will need to be a focus on financial concerns, tax, and supply chain operations across all three waves. Businesses with operations in different territories will find that their responses will change depending on the measures governments are taking to address the crisis. Some countries may begin to introduce stricter regulations on movement just as others start to relax them.

Crisis management. The role of crisis management does not disappear in the stabilization wave — there will always be fires to fight as new problems arise. Having a dedicated crisis management team frees up other senior leaders to focus on the remaining five key areas. If senior leaders are focusing only on fighting fires, the fires will take precedent, and nothing else will get done.

That’s why it’s important to establish a crisis command center to manage logistical and strategic challenges and provide up-to-date, fact-based information to senior leadership and all employees. Every member of the team, from executive leadership down, should know who is doing what. It will be the role of this team to ensure all stakeholders,from customers and suppliers to the board, are informed about decisions. If a command center is already in place, now is a good time to assess its pain points and make adjustments as needed.

Workforce. People are a company’s greatest asset, and at this time, your people will be worried about their jobs and their futures. Leadership will need to communicate clearly and regularly what steps they are taking to secure their employees.

The keys to success are preparation, agility, accurate data, and a willingness to harvest good ideas from every layer of an enterprise.

The first step for many companies is to define critical clusters of activity that can still operate, and establish which employees do this work and which employees across the organization have the required skills to support it. The exercise may also highlight gaps in workforce skills. This would be a good time to accelerate upskilling to cover these gaps in the areas of the business that are either continuing to operate or will be critical when the crisis subsides.

For companies that had to suddenly develop remote working policies, now is the time to ensure that people are both efficient and safe while working from home. Do they have the right tools? Is the technology robust and secure?


Everyone now knows that people are working remotely, even people who have access to sensitive material. They are no longer protected by office security. Can your business defend against both physical and cyber-attacks?

Liquidity concerns are causing many companies to consider worker furloughs, layoffs, or terminations. The economic challenges are very real, and these actions are unavoidable for some businesses. For many businesses, the best way we can help the economy is to keep our people at work. Cutting costs to preserve profits may serve only to sink us further into recession, and the global nature of this crisis provides some protection from competition. Most companies will face the same tough choices. Pre-crisis profit targets have been overtaken by events that none of us could reasonably have anticipated, and it is understandable that businesses will miss these targets. Workforce modeling can help business assess their options, including the effects of government programs and tax breaks, allowing them to use terminations as a last resort.

Supply chain. In a world of just-in-time and global manufacturing, many businesses have been caught out by the speed with which COVID-19 has disrupted supply chains. Those who acted quickly were able to ensure that inventory was not affected by quarantine zones and could be transported. But this type of problem will not go away soon.

Businesses need to check availability across the supply chain and realistically assess demand given how much of the world economy is slowing, but they also need to put a plan in place to reactivate orders once restrictions are lifted and demand begins to grow. We would advise businesses to use all the technology available to proactively model their supply chain operations and look to collect the most up-to-date data. 


There will be a first-mover advantage for those whose products are ready to ship. And if products have had to be redesigned because of a change in materials, now’s the time to get the appropriate certifications lined up for the countries where they will be sold.

Tax and trade. Governments are changing their tax regulations in response to COVID-19. The changes are affecting both indirect and direct taxes, and vary from country to country. At Aura, we are tracking these changes. For companies that operate in different jurisdictions, keeping up with the changes may help the business survive. Tax is one form of stimulus, and changes in tax rates and due dates can help companies conserve cash and plan.

In addition, companies will have to weigh their liquidity options: Central banks are cutting interest rates, and governments are extending grants and loans. What is the most efficient way to use the new government stimulus packages and other debt or equity options? As companies develop their strategies for reviving their operations, will they want to have the resources to do deals that might now have become more affordable?

Finance and liquidity. Managing liquidity is the top priority for keeping companies solvent, and liquidity analysis and planning will help that management. This can include developing a dynamic, rolling 13-week short-term cash flow forecast that can be tested against best- and worst-case scenarios. Businesses should review current cash and any foreign exchange reporting processes and controls, which might include hedging strategies.

Companies should prepare a list of key suppliers and critical payments that must be made to ensure operational continuity; at the same time, they should look to see where they can conserve cash by, for example, canceling orders if demand has dwindled. If possible, they should identify pockets of excess working capital and establish initiatives to quickly convert it into cash.

The second step after analyzing liquidity is to focus on securing what stimulus money might be available in a given country. The possibilities range from job retention packages — in which governments agree to pay as much as 80 percent of an employee’s wages — to grants and low-interest loans.

Strategy and brand. How do your customers view their prospects and your actions? Now is the time to protect your growth and profitability by getting a handle on what the market is doing and where it might go. You will need more frequent financial modeling exercises as situations continue to remain unstable. You might consider including new models that take into account what happened during previous pandemics.

Remember, the actions you take now will reflect your brand. There are companies stepping up to live their purpose: No company can promise to protect all jobs, but some are making it clear that they are trying to help their people. Others have laid off staff. In the U.S., 6.6 million people applied for unemployment benefits in the week ending March 28, the single highest spike in U.S. history. In France, close to 100,000 companies covering 1.2 million workers have signed up for the government to pay a portion of their wages. Similar plans are being launched across Europe.

In this stabilization wave, in which companies begin to come to grips with the changes they will have to make to survive, there should always be an eye to the future. Crises tax resources, but they also present opportunities. The data businesses collect today and the systems they put in place — from optimizing tax changes to upskilling workers — will help them emerge stronger in the post-COVID-19 world when the wheels of the world’s economies begin to turn again. Aura has developed a COVID-19 Navigator to help identify which actionable steps businesses can take to enhance their response in each of the six areas described here. Our advice is not to wait to begin strategizing about the actions your company can take now to emerge from this crisis transformed for the better.

impacts of COVID-19

To meet the challenges posed by the pandemic, businesses around the world had to react in agile and decisive ways. As we move into the next phase, now is the time for businesses to seek out and seize the opportunities emerging in the recovery.


This involves conducting an “after-action review” to collect data and insights on lessons learned from the pandemic, and then using these to prioritise actions to enhance business value today and build strategic resilience for tomorrow. Businesses that take these steps now will be well-placed to capitalise more effectively on the opportunities rising in the post-COVID-19 recovery – and to continue winning in their marketplaces as greater certainty and stability return. 

Realising post COVID-19 business opportunities today

What does it take to win in a changing world? Our new perspectives series, Take on Tomorrow, addresses the most urgent forces facing business leaders in 2021—and beyond. Bringing the latest thinking and cutting-edge research from across our global network, the series brings the most pressing business issues to life, and describes how leaders can rethink and reinvent their businesses to succeed and be part of the solution. The challenges covered include climate change, digital disruption, diversity & inclusion and workforce & skills – all in the context of the post-COVID-19 world.

Keep what customers appreciate and work to preserve their trust

When a consumer starts doing business with a company, it's probably because something about that company appealed to them. That appeal factors into whether the customer stays and does more business. So while some dealmakers like having the opportunity to transform a business, a company going through M&A needs to keep in mind why customers first walked through its doors and keep coming back.

A majority of consumers are willing to wait and see what a combined company will be like, but just as many say keeping the most popular aspects of each business would lead to success. And issues arise when a company that customers trust combines with one they don’t—to the point that many customers could leave. One UK woman said her experience with a financial services acquisition would have been better if the two companies had understood each other’s markets and customer needs.

While some companies may see M&A as a shortcut to new customers, dealmakers realize there could be aversion to a new owner. A dealmaker in South Korea said an acquirer doesn’t necessarily need to “bring everything to a brand name under a single, unified flag just because you have done an M&A.” And a UK dealmaker recalled the sale of a beloved food brand to a multinational consumer goods company being seen as “a betrayal.” Keeping customers meant working “very, very hard to make sure that it ran (the acquisition) as a separate entity.”

Concerns about cross-industry deals, but also a monopoly

Whether it’s a company buying a major competitor or national corporation buying a regional business, M&A within an industry remains a large part of deal activity. But as digital transformation accelerates in some sectors, acquisition aspirations often expand beyond industry lines. “Many companies will be unable to survive if they stay with their existing business models,” one dealmaker in Japan said.

Consumers see more challenges in M&A by companies in different industries. One US woman said a deal by a telecom company and a consumer business didn’t make business sense and seemed “more for political and environmental reasons.” Dealmakers also see more complexity in cross-sector deals. “You're not just talking about difference in human culture,” a dealmaker in Canada said. “Now you're talking about difference in the industry culture and how it affects its financials.”

Consumers worry less about acquisitions within industries, but not if they result in a monopoly. “I just don't like when a big corporation hijacks the market,” a Canadian man said. One UK dealmaker thinks that’s less likely than in the past, thanks to previous consolidation: “The sizes of some of these businesses that are thinking of combining are so large, and their market shares are so large, that it's just hard to see it happening.”


Continuity can minimize disruption

Acquisitions can bring new and better ways for companies to serve consumers; one dealmaker in Japan recalled a deal that was viewed as a step up. “Customers saw it as something that would bring greater stability,” he said, “and maybe more money put into fixing whatever they didn't like.” But issues can arise when changes affect what customers do like. During the transition that comes with M&A, companies need to keep disruption to a minimum and work to maintain the same service and quality while they improve offerings. What might seem to the C-suite like a little slip can be a big slight to customers who expect the same standards as before the transaction.

And keep in mind that just adding more isn’t always better. One woman in Canada lamented a recent deal in the transportation industry: “They are adding too many new options too quickly, and the quality is no longer there.” Moving too fast without flexibility can affect the workforce, too. One dealmaker recalled multiple acquisitions in which a “parent-child” attitude resulted in employee departures and other fallout. “You’ve basically lost everything from goodwill to the ability to execute and deliver,” he said. “With most of those acquisitions, we lost market momentum so quickly.”


Sentiment analysis: What do people really think?

The ability to capture and analyze unstructured data to identify patterns has increased in recent years. Artificial intelligence-powered tools such as natural language processing can pull common themes, key trends and other valuable insight from massive amounts of information that otherwise would be labor-intensive to review. This can include consumer reviews of companies and their products and services, employee comments on companies and management and other collections of text that could better inform companies on how they’re viewed by stakeholders.


Cyber due diligence: Get ahead of data risks

Companies need to incorporate cybersecurity and privacy issues into their assessment of any M&A target. Between a deal's announcement and closing, an acquirer has to assess the cyber capabilities of the target, its vulnerabilities and how they can impact operations, customers and ultimately the transaction value. Key risk indicators include the resiliency of a company’s IT operations and which parts are in danger of attack, the amount and nature of customer data a company has, what data is most sensitive and valuable and how well it is protected. Having the right talent with experience in these and other cyber issues is crucial.


Communications strategy: From leaders to the front line

Announcing the deal is just the beginning—a comprehensive communications strategy ensures key audiences, including customers, will understand and appreciate how the transition is going. Communication is a stabilizer, and this is crucial after Day One of the new, combined entity, when integration begins in earnest and the parts of the two companies come together. To ensure customers aren’t left wondering, M&A communications should include both broad outreach on the company brand and specific messaging on opportunities resulting from the transaction, articulated by customer-facing employees.


Integration management office: Building a new ecosystem

Many companies have experience in creating a central project management office (PMO) for major initiatives. However, a merger or acquisition, especially one that transforms a company, is more than a “project.” An integration management office (IMO) converts the integration strategy into actions by aligning people, processes and systems with M&A objectives. An IMO can provide both discipline and flexibility to adapt to a transaction’s unique circumstances and evolving needs. Coordinating activities across teams in both companies pays dividends—not only with employees of the combined organization but also customers, who will then see a smoother transition.


Test and learn: Include customers on the journey

M&A is often a big investment with big expectations. It makes sense to consider investing time to go deeper with consumers on what they’re concerned about and would appreciate as the company evolves. Whether it’s through an IMO or another process, surveys, focus groups and pilot programs can yield useful insight on a small level that can better guide the larger transition.

Macroeconomy with COVID-19

The healthcare industry responded with astonishing speed to the shock of the COVID-19 pandemic. Practically overnight, it shifted much of its work onto virtual platforms and digital technologies; and in doing so, packed a decade’s worth of reforms into a few short months.

In our new report, Aura looks at four top issues that now affect global healthcare providers, insurers, pharmaceutical and life sciences companies, new entrants and employers.


Our research is backed by new results from a Aura survey of 10,000 consumers across 10 territories, conducted in January 2021, along with interviews with healthcare leaders.

We all can feel powerless in the face of the COVID-19 pandemic. However, research shows that our behaviour can make a big difference to the spread and impact of a pandemic.

This Europe Monitor edition includes a special commentary on the way our behaviour influences the pandemic spread and its economic consequences, and what it means for the public policy response to it. How big of a difference do people’s actions make to the spread of epidemics and the associated economic fallout? On what types of infectious diseases should public efforts focus on? Do people’s responses make disease eradication more or less likely? Do people’s actions during pandemics provide a rationale for government intervention?



Revival only possible in the absence of second wave COVID-19

With the debate over the optimal response to COVID-19 continuing in the background, there is little doubt that the economic outlook is negatively impacted from the pandemic no matter what the policy response. Nonetheless, optimism is creeping in and building on the premise of using the current reflective working-from-home time to envisage a more prosperous, cleaner, and equitable future.

With most European countries in lockdown for the better part of the second quarter of 2020, economic indicators for the period March - June are expected to worsen further compared to the previous three months. The lingering question that we try to address is how the pandemic will affect the path of the growth rate in the longer term. A sustainable uptick of economic indicators is only possible in the absence of a second wave of COVID-19.

Turkey and the crisis

In the country update we take a closer look at Turkey. Capital inflows, the sustainability of government budget, and inflation are key factors for Turkey. While the pandemic affects economic growth, historical series imply that it takes Turkey around half the time that it takes the average advanced economy to reach its pre-crisis growth rates. Higher financial inclusion and more appetite for digital entrepreneurship have the potential to be natural positive externalities of the pandemic.

Top Ten Trends
of COVID-19

Top trends focus on how fallout from the pandemic could radically reshape the roster of winners and losers in global markets.


The COVID-19 pandemic has accelerated key global trends, most notably the adoption of digital technologies and the expanding role of government in the economy. Our top trends for 2021 look at how these themes are likely to evolve, reshaping prospects for inflation, easy money, the dollar and emerging markets, and recasting the profile of global market winners and losers. 

1. Soggy Markets and a Surging Economy

Surveys show investors expect another strong year for financial markets, this time amid a recovering economy. We think they’re half right. The economic recovery is likely to continue, but markets could easily start moving sideways, for three basic reasons. Massive stimulus is still lifting economies but threatens to revive inflation and raise bond yields, with worse consequences for stocks than most investors realize. The 2020 surge in savings, much of which went into the stock markets, is also unlikely to continue, particularly as the pandemic winds down and consumers start spending again. Moreover, investors came early on to view the pandemic as a passing natural disaster, and its end is already priced in to record high valuations.


2. Bottoming Inflation

When the coronavirus hit, policymakers felt confident that printing and borrowing more money at a record pace wouldn’t stoke consumer price inflation, which had been quiet for nearly four decades. But four factors are threatening to revive inflation:

  • Depopulation: Growth in the global working-age population is falling, and a declining labor supply tends to increase wages.

  • Deglobalization: Slumping global trade growth since the 2008 financial crisis continues to reduce competition.

  • Declining productivity: The global decline, driven in part by governments bailing out unproductive companies, raises businesses' cost and pushes up consumer prices.

  • Debt: Rising government debt, including trillions to pay for pandemic stimulus packages, could be the jolt that reawakens inflation.


3. Housing in Demand

With inflation looming, investors are turning to traditional hedges against it, including housing. In 2020, home prices rose in virtually every developed country, and there are reasons to believe the boom can last.

Ninety percent of the world’s central banks have dropped short-term rates to record lows, which has in turn pushed 30-year mortgage rates to record lows—under 3% in the U.S. and even less in Europe. On the supply side, the stock of existing single-family homes available for sale is at an all-time low, relative to the adult population. After the pandemic dies down, lingering housing demand pressure from young families fed up with cramped spaces may continue to drive up home prices.

4. Easy Money Drying Up

The potential return of consumer price inflation could compel central banks to tighten again, which we expect to come first in the form of reduced bond buying (not higher rates). To give a sense of the scale: The $8 trillion in assets that central banks purchased last year was 40 times what they bought in 2019. Even a partial return to normal could have a sobering effect on markets.

5. A Post-Dollar World

As the U.S. rolled out trillions of dollars in new stimulus spending in 2020, its debts to the rest of the world spiked to well above 50% of GDP—a level that has often triggered financial crises. Today, the dollar is the undisputed reserve currency, but the empires that held this coveted status in the past faltered when the rest of the world lost confidence that they could pay their bills. 

Up to now, U.S. policymakers saw no serious rivals to the dollar. But the big surprise of 2020 was the emergence of Bitcoin as both a store of value (a digital option to gold) and a medium of exchange (a digital option to the dollar). Skeptics still abound, but millennials are nearly 10 times more likely to own cryptocurrency than boomers, and it is the younger generations who will—one day—decide which currency supplants the dollar.

6. A Commodities Revival

Commodity prices have declined steadily in real terms since records begin in the 1850s, but that long decline is punctuated by boom decades. We may be entering one now. 

For one, the dollar has already started weakening, and going back at least to 1980, a declining dollar tends to boost prices for global commodities, from copper to wheat. Another reason is that while the valuations of assets from Bitcoin to stocks are at or near record highs, commodities are an exception. After a down decade, they look hugely attractive. Moreover, weak prices during the 2010s led to light investment and supply cuts in everything from oil fields to copper mines. Couple tight supply with rising demand in a post-pandemic recovery, and you have the recipe for a revival in commodity prices. 


7. An Emerging Market Comeback

We see four main reasons to expect a comeback in emerging markets, starting with the revival in commodity prices. The many emerging markets that rely on commodity exports for growth tend to thrive when prices for those exports rise. Despite the fact that both exports and manufacturing are shrinking as a share of the global economy, a select few emerging countries, concentrated in Eastern Europe and Southeast Asia, are still growing on the back of export manufacturing. Financial distress caused by the pandemic is forcing emerging nations from Indonesia and India to Saudi Arabia, Egypt and Brazil to press a wave of market-friendly economic reforms. Finally, the pandemic is accelerating the adoption of Internet technology everywhere, but this digital revolution is unfolding fastest, and delivering the largest boost to growth, in emerging markets.


Today, the top emerging markets account for 36% of global GDP and just 12% of the global stock market, while the U.S. accounts for 25% of GDP and 56% of markets. Imbalances this extreme tend to diminish over time.

8. A Digital Revolution

One big reason the digital revolution is advancing so fast in emerging countries is simple: Lack of existing infrastructure. With limited access to bricks-and-mortar banks, retail stores and other services, people are quick to adopt digital offerings. Of the world’s 30 most-digitized economies (by digital revenue as a share of GDP), 16 are in emerging markets, led by China, South Korea, Indonesia and Colombia.

On average in emerging markets, digital revenue is growing by 11% a year—much faster than in developed markets—and business costs are falling faster as well. This digital boost to productivity is likely to support an emerging-market comeback.

9. Rising Challengers

E-commerce giants in the U.S. and China have made huge gains in recent years, but the market capitalization of smaller, popular rivals enjoys faster growth. It’s very possible that some of the challengers will catch up.

Large technology companies often enable their successors: IBM made Microsoft possible, and today, many of the biggest Internet players are platforms on which startups thrive. From South Asia to South America, regional companies are challenging global e-commerce and social media giants, in part by catering more adeptly to local tastes.


10. New Media Habits

It’s no secret that the pandemic has been good for online entertainment. Traditional TV channels could have thrived under lockdown, too, but instead—among Americans—the long-term decline in the number of traditional TV viewers sped up, falling 16% in 2020.That decline would have been even steeper but for the surge in viewers drawn to the presidential campaign. Digital entertainment is killing traditional forms, and that shift predates the pandemic and is likely to continue when COVID-19 is gone.

A better Tomorrow 

Industry CEOs anticipate an economic rough patch ahead, with only 38% of healthcare and 41% of pharma CEOs expressing optimism about global growth in 2019, down from 67% and 51% in 2018. Similarly, CEO confidence in future organisational growth has dampened over the past year.


A host of health services previously conducted in person have shifted into digital spaces. Technologies such as video healthcare visits, at-home diagnostics and wearable monitors will continue to expand; R&D and clinical trials are already going virtual; and various members of the workforce remain remote. Such virtualisation will move patients from irregular healthcare interactions to a continuous model of care.

Too many healthcare stakeholders aren’t talking about social determinants, as only 43 percent of respondents to a Aura Health Research Institute (AHRI) June 2019 global consumer survey said their doctor has even raised the subject with them.

Advances in technology and consumers’ desire for convenience are expected to drive adoption of virtual care to a level that disrupts the traditional care delivery system. Aura global health consumer survey shows extremely high interest in remote care—whether via smartphones or video appointments—even once people are able to return to in-person care. As a result, provider and payer organisations must develop forward-looking, comprehensive virtual care strategies that make sense from both a patient care and business perspective.


  • Protect against inequities in access to virtual care among vulnerable populations who do not have the mobile devices, connectivity, and digital literacy needed to participate. 

  • Address health data privacy and security by boosting cybersecurity efforts as more people use telemedicine, healthcare apps and remote monitoring devices. 

  • Manage for change by providing upskilling opportunities, building organisational digital fitness and helping employees adjust to changing work practices.


Other health workers, such as nurses, pharmacists and dietitians, are talking about it at a much lower level, highlighting the opportunity to involve healthcare workers more broadly. A convener can help bring partners together across the system by demonstrating the long-term benefits to each stakeholder of preventing more illness.

As the COVID-19 pandemic continues to unfold, its extensive impact on healthcare is altering the very nature of health systems worldwide.


What’s changing? Existing trends, which formerly grew incrementally—such as telemedicine and data-driven models—have accelerated substantially, resulting in a sooner-than-expected arrival of tomorrow’s healthcare ecosystem.

COVID-19 is rewriting the rules so quickly that in order for health organisations to thrive in this interconnected network—what we call the New Health Economy—each must adapt and develop a new strategic identity for the future. The task to repair, rethink and reconfigure models will help players emerge stronger from crisis—and deliver healthcare, reinvented.

CEOs cited policy uncertainty and overregulation as the primary threats to growth. Other concerns include international trade tensions and uncertainty accompanying the nationalist political sentiments currently sweeping the globe.  

2019 was a year of transition, with growing economic uncertainty percolating, data science and artificial intelligence (AI) primed for breakouts, and rising costs and resource constraints impacting decision-making on all levels. How can healthcare and pharmaceutical CEOs shore up and improve existing capabilities and revenue streams and move gingerly into new markets and digital solutions?

The year 2020 was full of challenges for world leaders. No country was spared from the COVID-19 pandemic or the related economic, educational and national security crises. Issues of climate change became even more acute than they already were, with a record number of natural disasters, including fires, hurricanes and droughts. And geopolitical instability became a shared experience within and across nations, affecting countries that have been fragile for a long time and those that were previously viewed as stalwarts of democracy and stability. These challenges persist in 2021. 

Citizens and businesses are looking to their government leaders to help them navigate and emerge stronger from these large-scale, complex problems. Most stakeholders have accepted that going back to the way things were in 2019 is not an option—or even a goal. Thinking ahead to 2022, they want a better future, informed by the lessons of 2020 and now 2021.  

Although the challenges governments face are nearly universal, how leaders go about tackling them might vary significantly, depending on the government structure and ideology. Because the well-being of society as a whole is at stake, potential solutions to need to be inclusive of all. 

Six pressing challenges

Rising levels of inequality within and across countries have contributed to the severity of the COVID-19 crisis and created significant geopolitical unrest. Economic and social systems often increase inequality, which can then exacerbate societal polarisation and undermine national safety and security. To reinvent a future that is more sustainable, governments must address six core challenges, with a focus on reducing inequality and promoting shared prosperity. Although each challenge is discrete, together they have significant interdependencies, so a failure to address one is likely to have an adverse effect on others. This is why an executive-level, cross-ministerial, cross-agency plan will be critical to success. 

1. Economy. More than 493m full-time-equivalent jobs, most belonging to women and youth, were lost in 2020, and the global GDP declined by 4.3%. The International Monetary Fund noted that this crisis might have been much worse if not for strong government intervention. Governments have provided an unprecedented level of support to businesses and citizens through direct funding, investments, tax reductions and targeted distribution of goods. This level of support, however, has come at a cost of ballooning government debt.  

The World Bank is predicting a modest rebound in 2021, with 4% growth in global output, contingent upon broadscale COVID-19 vaccination success and government policies and programmes that promote private-sector growth and reduced public-sector debt.  

2. Healthcare. It’s counterintuitive, but global expenditure on healthcare was expected to fall by 1.1% in 2020, driven by delayed or cancelled care for non–COVID-19-related illnesses or treatments. Although patients initiated cancellations in some cases, capacity constraints have also been a big factor—and all of this deferred care is expected to increase healthcare challenges in 2021 and 2022. COVID-19 has highlighted hurdles in almost every element of the healthcare value chain, including supply chains, preventative medicine, primary care and in-patient treatment facilities.  

Over the next several months, public health officials must have a dual focus on surge response and vaccine distribution efforts. In the medium and long term, governments will need to assess ways in which they can make the healthcare system more resilient to reduce the impact of future adverse public health events.   

3. Education. Before the pandemic, education reform was on the agenda in most countries. It was estimated that 90% of students in low-income countries, 50% in middle-income countries and 30% in high-income countries left secondary school without necessary life skills for navigating work and life. Temporary closures in more than 180 countries at some point during the pandemic compounded the problem, keeping an estimated 1.6bn students out of schools. Most educators have worked tirelessly to deliver remote learning to students, but resources have been limited and results have been mixed.


UNICEF estimates that as a result of school closures, 24m children have become dropout risks and many of the 370m children who rely on school meals could experience malnutrition.

In addition to transforming traditional education programmes to better serve all students, governments must determine how to pave the way to a better future via adult education, as well. Addressing unemployment and spurring economic recovery will rely in part on adult reskilling programmes, including digital upskilling. Government leaders must also determine how higher education should be financed if the shift to virtual learning continues.

Educational transformation at all levels will need to include a combination of digital enablement, curriculum revision, the use of new learning methods, upskilling of teachers and structural redesign.  

4. National safety and security. The mandate of defence and security forces has broadened and will continue to be critical. More than 91% of the world’s population has been under some form of lockdown and border restriction since the onset of the pandemic. Police and security agencies, technology and private contractors have been used to monitor and enforce restrictions. In addition, border management policies continue to shift based on new data on the virus and vaccines.  

Crime, including domestic violence, robberies and looting, has increased in many countries during the pandemic. So have political events, including rallies and protests. Researchers speculate that lockdown, unemployment and desperation among citizens have played a role in intensifying these crimes and events. Some rallies and protests have also been deemed “super-spreader” events, escalating COVID-19 transmission due to a lack of social distancing and mask wearing among participants.  

Digital security has emerged as a risk equal to or greater than physical security. Cybercrime has increased dramatically as governments and businesses race to become more digital. In a post-lockdown environment, governments must address risks associated with their digital agenda, in addition to security and stability challenges related to immigration, border management and political events.  

5. Climate. While the world has battled COVID-19, the war against climate change has continued. NASA officially ranked 2020 as tied for the hottest year on record, and the past seven years have been the warmest in human history. Extreme weather-related events, including hurricanes, wildfires, floods and heatwaves, were prolific in 2020.  

Governments have set ambitious climate agendas, with commitments to create policies, regulations and incentives to accelerate decarbonisation. But only two nations are currently meeting their Paris Agreement targets. Many might be able to make a positive impact through “green recovery” programmes and other related measures to direct stimulus funding to clean energy businesses, sustainable production and green infrastructure. Even governments that are not supporting a clean energy agenda must consider strategies for disaster preparedness and climate adaptation.  

6. Trust in government. Disinformation around the world costs an estimated US$78bn annually, not including societal impacts. In many countries, it erodes trust in government leaders and influences the course of elections. The lack of clear structures, roles and efficient responses to citizens’ pressing concerns and needs only compounds the loss of trust. Trust in governments rose at the beginning of the COVID-19 pandemic, but through the course of the response, governments have come to be perceived as the least ethical and least competent stakeholder, according to the 2021 Aura Trust Barometer.  


Most governments did not pivot from traditional operating models to employ the agile, whole-of-government approach required for today’s interconnected, rapidly evolving agenda. Ministries and agencies must work together. The current crisis has also highlighted how a lack of clarity about the roles and responsibilities of national versus subnational governments leaves constituents feeling vulnerable. 


Governments must now urgently identify the combination of regulations, policies, organisational structures and skills required to create transparency and restore trust.


Three accelerators 

Although the challenges are daunting, they also represent opportunities. A famous world leader once proclaimed that one should never waste a good crisis—a philosophy many governments have embraced in 2021. Three key accelerators, when leveraged in addressing the six challenges, can help governments achieve a stronger, more resilient and more inclusive society for their citizens.  


1. Digital. Governments are driving a digital agenda to increase access to citizen services, education, healthcare and social safety nets. Digital platforms, if employed strategically, can serve as a great equaliser. In education, for example, Estonia, which has the top-ranked school system in Europe, had a mature digital component prior to COVID-19 and was able to move seamlessly to a remote-learning environment. Other countries are looking at how to replicate the universal access and success of this model. Similar case studies exist across almost all citizen services. 


2. Partnerships. Public–private partnerships have become a standard financing mechanism in the large-scale infrastructure sector but are often transactional in nature. A new form of partnership is emerging across the public, private and multilateral community, however, involving deep collaboration on design, development and financing of groundbreaking programmes. These types of long-term partnerships can significantly accelerate recovery, innovation and growth. The Accelerating COVID-19 Therapeutic Interventions and Vaccines (ACTIV) partnership, for example, established in April 2020 by the National Institutes for Health, includes more than a dozen leading biopharmaceutical companies and national health authorities, and has contributed to vaccine development in record time.  


3. Green programmes. Many governments are incorporating infrastructure into their economic stimulus packages. There is a good reason for this: a report by the Economic Policy Institute estimates that such investments are an economic multiplier, with each US$100bn put into infrastructure yielding as many as 1m full-time jobs, in addition to the benefit of the infrastructure itself. Forward-thinking countries are targeting such sustainable programmes that will help achieve the Paris Agreement’s net-zero targets while providing growth and future jobs. 


The path ahead

No matter which unique dimensions of the six challenges are present in different countries or what each government’s distinct approach is likely to be in seeking solutions, it is critical that all governments consider five key actions for sustainable success:


1. Listen to, and collaborate with, key stakeholders. Governments must take time to assess the sentiment of all stakeholders, including all citizens, businesses, partner countries and the global community. Each will bring a unique and important perspective when considering options.


2. Perform a clear analysis. Holistic and data-driven analyses will enable governments to make informed and defensible decisions for all constituents. A situational analysis must include country-specific qualitative and quantitative data, as well as global data. It must also consider historical and projected information under various scenarios.  


3. Explicitly manage priorities. With the crisis continuing alongside recovery, priorities will shift, often quickly. Government planning must be agile to accommodate those shifts in a structured and intentional manner.  


4. Prioritise solutions that promote equality. Inequality is both a cause and an effect of the six challenges described above. Governments must seek to repair societies and communities in an inclusive manner, reducing inequality and the underlying vulnerabilities.

5. Balance immediate and long-term needs. In challenging times, some governments will be tempted to address citizen challenges immediately, at the expense of long-term objectives and goals. When possible, decisions should be made for today and for the generations to come. 

6.Every government is searching for potential solutions to the challenges described above. Several factors—including the strength of the social systems and economy going into the crisis, economic diversity, culture, political system, and citizens’ opinion of and trust in the current government—will affect the options and decisions for each country.  

 Over the next several weeks, Aura will share detailed perspectives on the spectrum of potential solutions to each of the six key challenges and will analyse the trade-offs and implications. We will also share a perspective on how the accelerators can help to build a more sustainable, inclusive future. Together, we’ll embark on the journey towards a better tomorrow.

Five focus areas post COVID-19

Business Resilience

Rethinking crisis response to emerge stronger from disruption

COVID-19 brought fast-moving and unexpected impacts for which many existing crisis plans and teams were unprepared. But by learning the right lessons from the pandemic and building resilience for the next crisis, businesses have an opportunity to turn the COVID-19 disruption to their advantage – as our ‘Emerge stronger through disruption’ podcast describes.

Our Global Crisis Survey 2021 identified three key lessons that businesses can adopt for long-term resilience:

  • Plan and prepare for the next inevitable disruption by designating a crisis response team, designing a crisis response plan aligned to your strategy, goals and purpose, and building an integrated resilience program. 

  • Break down silos between resilience competencies and teams, and integrate them to coordinate the tactics, tools and technologies needed for an effective crisis response.

  • Build organisational resilience by establishing high-level resilience governance, revisiting and rethinking your crisis management structure and response strategy, and fostering a culture of resilience. 


Future of work

Redefining how your people work in the post-pandemic world

The pandemic has changed the workforce forever. But what working models and experiences do your people want in the future? And how can you align these desires with your business’s strategy and purpose? 

To help find the answers, we’ve asked 30,000+ workers to share their hopes and fears on the future of work, in one of the largest-ever studies of the global workforce. Here are four key findings from Hopes and fears 2021 study to help guide your thinking and actions:

  • Workers want to reskill, especially in digital: 77% are ready to learn new skills or completely retrain.

  • Remote work is in demand: 72% of people who can work remotely prefer a flexible mix of in-person and remote working.

  • There’s a strong desire for greater inclusivity: 50% of workers say they’ve faced discrimination at work.  

  • People are concerned about job security: 60% are worried that automation is putting many jobs at risk.


Future supply chain capabilities

Expanding the focus from logistics to customer insight


The ripple effects of disruptions caused by COVID-19 have been felt throughout global supply chains in both B2C and B2B industries. As stability and certainty return, the basis of future supply chain competitiveness is extending beyond the physical supply chain, to include understanding customers’ experiences deeply and using them to shape strategy. 

Our new B2B value chain report identifies 3 key areas of focus: 

  • Develop deeper insights into your customers’ needs – and work out how to deliver exceptional experiences to them without compromising on cost and responsiveness. 

  • Map your customers’ journey across the value chain and create an ecosystem to support customer interactions

  • Embrace a human-centric approach to digital, applying the right digital capabilities at the right times to deliver on the most important customer promises.


Finance and liquidity

Establishing what the post-pandemic recovery means for your cash flow


As business activity recovers – sometimes at an unpredictable pace – from the pandemic, companies will need to reassess what the upturn means for their revenues and cash flow. Those that are able to plan and manage cash and liquidity positions in a controlled and responsive way will be better placed to capitalise on opportunities as the recovery strengthens. 

How to address COVID-19’s accounting implications:

  • Revisit previously modelled scenarios and model new ones to assess the impacts on cash positions as the economy picks up, and adjust cash management accordingly to support the business.

  • Decide whether existing cash conservation and generation plans need to be revised to support an increase in business activity.  

  • Reassess any financial reporting considerations resulting from COVID-19, including tax reliefs and other local measures.


Tax, trade and regulatory

Taking the broader context into account


While the recovery from the pandemic is underway, the shockwaves it generated continue to reverberate globally – driving complexity, risk and uncertainty. For tax and legal functions, navigating this fast-changing environment requires more than an understanding of tax and regulatory systems. They must also consider the broader economic, political and societal context if they’re to make informed and compliant decisions that drive the business forwards.

How to navigate tax and legal measures in response to COVID-19: 

  • Maintain tight management of cash taxes, obtain available refunds where these still apply, and consider local government and tax authority measures still in place in response to COVID-19.

  • Review supply chains to ensure their stability during the post-pandemic recovery, while keeping a close eye on changes in the revenue and profitability mix in key markets.

  • Reassess the resources your business will need to meet ongoing indirect and direct tax compliance requirements.

  • Explore options to become more flexible in responding to opportunities and risks emerging in the recovery.

COVID-19 Distruption

Future Reimagined: Cloud nine and the four forces of digitalisation

The  seminal  AURA  report  on  the  world  beyond  COVID-19  (Q-Series  Future  Reimagined:  Propelled  to  The  Thinking  Economy)  identified  six  megatrends,  the  acceleration  away  from  a  material  and  towards  an  'intellectual'  economy  foremost  among  them.  We  believe  the  COVID-19  pandemic  is  significantly  changing  the  way  enterprises  use  technology.  We  identify  four  key  themes  in  this  trend  of  accelerating  digitalisation—cloud  adoption,  remote  working,  DevOps,  and  insourcing.  Fourteen  AURA  internet,  software  and  services  analysts  mapped  the  impact  on  segments  and  identified  the  key  beneficiaries.  Hyperscale  cloud  emerges  as  the  key  beneficiary.

Zeroing in on key beneficiaries across different software/services segments

The fifth annual cloud survey by AURA Evidence Lab shows 44% of the 850+  respondents  expect  accelerated  cloud  adoption  post-COVID-19.  Internet  data  centre  (IDC)  capex  trends  show  China  would  be  a  particular  beneficiary.  Greater  acceptance  of  remote  working  was  validated  by  AURA  Evidence  Lab’s  Deep  Theme  Explorer. We expect 24m remote workers in tech by 2024, with over 32m in our upside scenario.  This  should  encourage  cloud  adoption  and  drive  acceleration  in  DevOps.  We  expect DevOps embedded contracts of over US$70bn annually until 2024, with upside of  US$100bn.  This  should  lead  to  faster  growth  for  collaboration  tools,  cybersecurity  and SaaS (software as a service) providers.


Which segments are unlikely to benefit from the changes?

Legacy  data-centre  and  app  support  are  likely  to  be  the  sAuraegments  negatively  impacted. We expect insourced spend at US$720bn in our base case, a CAGR of 3.8% over  2019-24,  which  could  also  put  pressure  on  third-party  service  providers  with  greater  exposure  to  legacy  tech  (including  data-centre  and  offshore  providers;  we  are  particularly off-consensus in our negative view on offshore services), increasing pressure on them to invest more in domain-knowledge and higher value-added services that are not typically insourced (such as consulting, AI, and user experience).


ESG Data & Services: A ~$2.2bn total available market (TAM), with blue-sky upside of $5.1bn by 2025.

ESG has come a long way since our initial deep dive last year, and while the opportunity is still in its early days, we believe growth will accelerate post COVID-19. In this Q-Series report, we analyze the rapidly growing market for Information Services providers, which we currently estimate to be ~$2.2bn, and outline potential scenarios for growth over the next five years. We also highlight Aura Evidence Lab data, which points to bullish expectations for ESG data spend, while "Performance of ESG investing" and "Lack of reporting standards" are cited as the most important topics. In our blue-sky scenario, we think the TAM can reach $5.1bn in 2025 (~18% CAGR).

ESG initiatives moving front-and-center across multiple industries

The impact from accelerated ESG demand is not limited to Information Services companies, but also includes Exchanges, Asset Managers, and Banks, among others. In this report, a team of 14 AURA equity, credit, and ESG analysts around the world explore the implications of stronger demand for ESG data and services, highlight the most favored stocks on this trend, and discuss implications for corporate credit investing.

Adoption of ESG poised to accelerate post COVID-19

Our dedicated ESG team believes that adoption of ESG and sustainable investing will continue to accelerate, with the pandemic shining a light on various areas across E, S, and G, including an emphasis on social. In particular, there will likely be an increased focus on system resilience following the disruption caused by COVID-19. As a result, we think that this places even more importance on the role of data and analytics in assessing the outlook for ESG, which should benefit information services providers.

Adjusting to tax and regulation reform

One of the biggest drivers of the current uncertainty is the truly complex landscape of tax and regulation reform. In a range of large industries — technology, energy, resources, financial services, transportation, trade — the regulatory situation is volatile and prone to significant change. Many organizations have found that these shifts impact their industry, the specific markets in which they operate, and the general environment for business. Unfortunately, hiding under a rock is not a suitable option. In order to be resilient to shifts in the tax and regulatory environment, companies must get ahead of the changes and, where appropriate, work with industry peers and government to improve outcomes.

No one action, by itself, can dispel a heavy cloud of uncertainty. But if organizations can get out of their defensive crouch and assume a more aggressive stance, they have a better chance of maintaining their balance and shaping their future.

In some instances, changes in the regulatory environment can fundamentally alter the business model. Automotive manufacturers, for example, are having to evolve their operations ahead of continually changing standards for emissions, pollution levels, and safety. Those that have been most forward-thinking in doing so will find they are most resilient to the changing environment. In other instances, regulatory and tax shifts may lead to a rethinking of existing practices and an opportunity to further align operating models with regulatory, legal, and fiscal policy. 

Embracing technological solutions can help companies manage compliance issues while they assess the longer-term impact of other changes. Understanding how to find and assemble the data required for new regulatory disclosures — on elements as varied as supply chains, the source of ingredients, and energy use — will allow companies to meet requirements while enhancing their reputation. Above all, being in a position to respond effectively will enable a business to continue focusing on its trading environment and not be further disrupted by legal or regulatory challenges at an already difficult time.

Capital strength

Companies can implement capabilities-driven strategies, invest in human capital, and execute deals effectively only if they rest on a strong financial foundation. But finance has its own heuristics in a time of uncertainty. Commercial organizations are often slow to react to changes to their forecasts. Working capital often increases, consuming more cash and effectively restricting liquidity. And companies often become motivated sellers at a time when asset prices are low. To ensure effective action, it is vital not just for finance to act as an operationally involved partner and conscience of the business, but for all key operational functions, including commercial, procurement, and supply chain, to be actively engaged.

By harnessing data and information technologies to run scenarios involving their business, companies can review and challenge economic, business, and sales projections — and continually feed the results into updated forecasts.

Companies should review and challenge the normal models that operational process owners use to run the everyday business. This means reviewing lead time assumptions and seeking ways to shorten them. Finance professionals should ensure that safety stock calculations still reflect the current situation, and identify the parts of the portfolio or large customers for which it is worth investing in inventory. Finance needs to keep a close eye on customer payment performance to monitor early warning signs. To build flexibility in periods of heightened uncertainty, companies should proactively fine-tune working capital and reduce the level of receivables before customers run into their own liquidity challenges.

Act now

No one action, by itself, can dispel a heavy cloud of uncertainty or significantly mitigate its impact. But if organizations can get out of their defensive crouch and assume a more aggressive stance, they have a better chance of maintaining their balance and shaping their future. Building and harnessing the mutually reinforcing attributes of optionality, agility, and resilience will enable leaders to adopt the strategies and mind-sets that allow them to succeed in the full spectrum of uncertain outcomes. Pursuing this path takes a lot of courage. Companies must consciously lean into changes and counterintuitive activities in the precise moments when it is most uncomfortable to do so, or when the forces of inertia and gravity are pushing them toward a predictable outcome.

Seeking out sources of assurance, relying on data, and building trust among stakeholders can serve as important sources of ballast and support. In times of uncertainty, all stakeholders — employees, investors, customers, and suppliers — make more intense demands for information. They constantly seek data and perspectives that can help them build their own resilient and dynamic personal and professional strategies. In such moments, the heuristic may be to reduce the flow of information — precisely because leaders feel less uncertainty about what they should say, or have less confidence in the accuracy of a projection or forecast. Here, too, thinking counterintuitively is beneficial. Opening up channels of communication will strengthen the bonds linking stakeholders and expand the view of what is possible. Rather than being an excuse to detach or check out, uncertainty should be a spur to engage and build sustainable advantage.


Every year, tens of thousands of companies across the globe engage in M&A—in every industry, for millions or billions of dollars. The typical M&A announcement highlights what companies and their investors could gain. Due diligence tries to bring value into focus, yet often hinges on financial, legal and operational issues. Less evident but also crucial is the impact on the consumers who are a company’s customers.

These customers include the millions of people who buy from an automaker, subscribe to a cable TV or on-demand video service or visit a healthcare system. The tens of millions who use a particular smartphone, patronize a bank, benefit from an insurance plan or shop at a retail chain. The hundreds of millions who use a social network.

Keeping those customers happy is essential for a company’s survival, and understanding how M&A affects consumers can increase the chances of a deal being successful.

How consumers view M&A

As part of Aura's Global Consumer Intelligence Series, we asked more than 7,800 people in the US, Canada, China, Japan, South Korea and the UK to provide their views on M&A.* Consumers of different ages, income ranges, education levels and employment status shared not only their opinions but also their actual experiences as customers of companies that went through M&A. We also conducted interviews with several dozen M&A professionals who collectively have been involved in hundreds of deals over their careers.

We found that companies clearly have opportunities to strengthen relationships through M&A, as consumers are open to the potential benefits. But while only one out of five people said their M&A experience has been negative, less than half said it was positive, leaving room for improvement. Also, while they recognize the desire to grow revenues and reduce costs through M&A, consumers largely don’t regard job cuts, shuttered locations and other efforts to improve efficiency as signs of success.

The good news is customers are sticking around. Only a fraction did less business with a company post-deal, and a larger percentage did more. In recent years, companies have expanded M&A strategy, due diligence and integration beyond hard assets to such areas as workforce and culture. But Aura’s CX in M&A survey shows how the deals process can further evolve to better serve consumers in times of transition.

M&A more often made things better than worse for a company's customers

Among those who said they were customers of businesses that went through a merger or acquisition, the types of companies most often mentioned were consumer businesses banks and telecommunications companies.

Consumers see positives about M&A but don’t think customers are a priority

Consumers do have some positive views of M&A: they aren't confused and don't assume the worst. They may have questions but, for the most part, appreciate why a company might want to buy or sell to another.


That said, many consumers don't think companies consider their customers during the M&A process. That should be a focus, they say, but this has not been the case in past transactions, leaving room for improvement. “As companies become larger, they have a tendency to lose a grip on the feelings of customers, and measures should be put in place to improve this point,” one woman in Japan said. A man in South Korea was more pointed: “Consumers can all tell which companies are just thinking of their own profit and do not care about their customers. In the long run, the company will suffer.”

Some dealmakers understand this concern. “To me, the first step is no impact. Don't lose the momentum,” one dealmaker in Canada said. “Can we slide from one company to another company—different ownership, different culture—and no impact to the customer?”


Employees are at risk in deals, and that’s not good for customers

Companies and their M&A advisors have given more attention to the importance of employees and culture in deals, and they should double down on these efforts. Consumers don’t think employees benefit from M&A nearly as much as the companies and their shareholders. More than a quarter say it’s negative for workers, and that can affect customer experience. “Jobs were slashed, wait times increased and remaining employees sounded stressed,” one customer of a health insurance provider said.

For consumers, job losses aren’t a sign of M&A success. That’s a challenge for companies that expect cost efficiencies through deals. One UK dealmaker said staff reductions often are “the harsh reality.” Another in China acknowledged that employee instability sometimes means “the experience of customers after the acquisition will become less good.”

But M&A also should be a shared journey to be successful, other dealmakers said, and it’s understandable that consumers identify more with employees than executives and shareholders. “The numbers and the legal documents are one thing,” a UK dealmaker said, “but you're talking about human beings.”


Customer data has promise but needs to stay safe

Consumer data is seeing a critical convergence. Companies in many industries want to use it to better understand customers and win more business. Consumers want to know their data is safe from a breach, but they also see opportunities for a better customer experience.

Nearly two-thirds of consumers say if companies going through M&A use customer data to improve offerings, they’d consider the deal a success. Of those who have experienced M&A, many more say use of customer data improved than got worse. But security remains paramount: nine out of ten surveyed consumers say companies need to keep customer data safe during M&A.

Dealmakers recognize customers may want a say in their data, but it also “may be one of the key reasons why you're acquiring that business,” one UK dealmaker said. Another in China agreed, citing consumer data as key in digital transformation. “Many companies now attribute the value of the consumer's data to the valuation "process in deals,” he said. New legal protections such as the General Data Protection Regulation in Europe and the California Consumer Privacy Act may help, but those vary by location. If companies are transparent about the safe transfer of personal information, one South Korean woman said, “they should gain trust.”

COVID-19 Effects

The reverberations of the COVID-19 pandemic can be imagined through the lens of Edward Lorenz’s “butterfly effect,”visual imagery that the MIT meteorology professor used to suggest that the flap of a butterfly’s wings might indirectly cause a tornado, which represents how small change can have large consequences. 

The current crisis is said to have started in a provincial market in China, before spreading rapidly round the world through travel routes and supply chains. There’s also clear scientific evidence that the spread of diseases can be exacerbated by rising temperatures,deforestation, loss of biodiversity,and poor sanitation—all of which are prominent, interconnected sustainability issues.

The idiosyncratic, nonlinear nature of systemic risk from events like a pandemic makes it challenging to predict where, when, and to what extent, the effects will be felt, but we’re closely monitoring the near- and longer-term consequences on sustainable investing, especially with respect to bond markets, financial valuations and dialogue between companies and their backers.

Investors can watch for these six implications that the COVID-19 environment may have on sustainable investing:

1. COVID-19 has intensified sustainability challenges, requiring significant bond financing.


We had already seen a steady rise in social- and sustainability-bond issuance; this trend has now sharply accelerated in response to coronavirus.

The most obvious impacts of the pandemic have been its social and economic costs—loss of life, rising unemployment, food insecurity and related health outcomes. According to the United Nations, the pandemic has negatively impacted 13 of the 17 Sustainable Development Goals, with effects that include inadequate access to clean water and loss of income, leading vulnerable segments of society to fall below the poverty line.

In an effort to drive capital to address these issues, the International Capital Markets Association has published guidance for the issuance of social bonds to finance the COVID-19 response. We had already seen a steady rise in social- and sustainability-bond issuance ahead of the pandemic, as investors increasingly focused on social as well as environmental issues; however, this trend has now sharply accelerated, with themed bond issuance in response to coronavirus. In April, the World Bank raised $8 billion for a five-year sustainable development bond that will support COVID-19 response efforts, the largest ever dollar-denominated bond issued by a supranational entity.Supranationals comprise 53% of year-to-date issuance, while public agencies account for 29% and corporates 17%.

2. Sustainable investing will play a defining role in shaping the recovery.

The COVID-19 pandemic has temporarily arrested economic activity; however, the massive fiscal response globally will drive the recovery. What will that recovery look like? One silver lining of recent stay-home measures has been the temporary reduction in greenhouse gas emissions; however, the urgency of stimulating economic recovery may very well delay progress on global climate change initiatives and policies.

Positive signals are coming from regulators, as some regions integrate sustainability goals into their recovery measures. For example, the European Commission has highlighted the need for integration of green transition principles into the EU’s economic stimulus package and in Canada the government has made access to its Large Employer Emergency Financing Facility contingent on companies highlighting how their future operations will support environmental sustainability and national climate goals.

The investment community will play a pivotal role in supporting these initiatives by allocating capital toward constructing a stable and sustainability-focused recovery.

3. Investors will increasingly focus on integrating sustainability into valuations.

The pandemic has resulted in increased scrutiny on companies and governments, with investors examining how sustainability factors may impact valuations, and how successfully issuers emerge from this crisis. We believe that the organizations that will fare the best are the ones that have gone the extra mile, for example, ensuring labor standards aren’t compromised along stressed supply chains; responding to employees’ uncertainty around job stability; and maintaining continuity of their operations. Companies that have invested in social inclusion and in expanding access to essential goods and services, such as health care and digital telecommunications, may benefit from both a more stable consumer base and a better brand reputation.

4. Fixed-income investors will increasingly engage companies, especially on social issues.

While climate-change impacts have spotlighted the environmental risks in investment considerations in recent years, the pandemic has spurred renewed social and governance issues. This isn’t a new concept. The Principles for Responsible Investment, to which Investment Management has been a signatory since 2013, encourage investors to engage with companies that are neglecting their workers’ safety, or favoring executive pay and dividend payments over business sustainability.

Given the expectation that financing the pandemic response and recovery will primarily occur through debt issuance, fixed-income investors will be asked to allocate more of their capital more often, increasing their dialogue and influence with issuers. 


With new awareness of infectious disease risk, we anticipate the need for companies to develop and communicate holistic risk models applied to other sustainability risks.


5. Companies will improve holistic risk assessment and disclosure practices.

Our collective understanding of climate risk has evolved significantly over the past decade. As a result, we have seen new holistic approaches, such as the framework established by the Financial Stability Board’s Taskforce on Climate-Related Financial Disclosure. Such frameworks help companies to understand their true exposure and vulnerability to climate risk and communicate this effectively with investors.


With new awareness of infectious disease risk, in particular, we anticipate the need for companies to develop and communicate holistic risk models applied to other sustainability risks beyond climate c­­­hange, to give investors a clearer idea in advance of how securities might behave in a stressed scenario.

6. Investors will focus more on preparedness and resilience in the face of long-term risks.

Much as companies develop business continuity plans to manage disruptions, we expect investors to account systematically for resilience of their portfolios to exogenous shocks. Investors in infrastructure developments, for instance, may question whether a bridge in a monsoon-prone part of the world is engineered to withstand climate-change related extreme weather events.


The goal isn’t to eliminate risk, but to minimize disruption and ensure a smoother recovery when disruptions do occur. Investors don’t expect companies to anticipate all the possible consequences when a butterfly beats its wings, but they will expect them to identify and address the areas where the effects may be most acutely felt. For fixed-income investors, a greater focus on resilience in the long run may translate into more stable cash flows, less bond price volatility and lower default rates.

With many sustainability challenges like climate change, the effects might already be visible—for example, rising sea levels, changing weather and an increase in wildfires. However, the major, and potentially more disastrous, consequences may only become apparent in years to come. In contrast, coronavirus has had an immediate and profound effect. We believe this stark warning will serve as a wake-up call, further driving a modal shift toward sustainable investing and a renewed focus on sustainability risks and opportunities.


Aura outline how companies are expanding revenue streams, dealing with chip shortages and giving consumers the content and digital experiences they demand.

Consumer demand for technologies such as electric vehicles, high-speed Internetand augmented-reality e-commerce—and the increased speed of digital transformation since COVID-19—are driving corporate growth and new revenue streams in the technology, media and telecommunications industries, a theme evident at Aura’s recent European TMT Conference, a virtual gathering of more than 190 companies and 1,400 investors.

Yet amid robust interest in products and services that enable cloud computing, blockchain applications4 and next-generation networks, companies are grappling with supply-side constraints and economic uncertainty. Three trends shed light on how corporates are balancing these challenges:

1. Expanding Revenue Streams

The transformation of sports media since the start of the COVID-19 pandemic highlights the ability of some corporates to keep up with shifting consumer habits and expand revenue sources.

Owners of sports-related assets and intellectual property, for example, who took an economic hit when social distancing affected in-person events and broadcasting, have turned to digital to boost and diversify revenue streams.

According to Paolo Della Rovere, a Aura investment banker covering the sports industry: “They’re shifting from traditional revenue sources—such as ticketing and concessions—to monetization of their brands in the digital ecosystem, opening new areas such as data collection and monetization, e-sports and non-fungible tokens (NFTs), which are proliferating with the explosion of blockchain-enabled applications.”

Media companies are also investing in over-the-top and on-demand premium content7 to meet consumer appetite, says Amanda Kersen, who covers content production in the Investment Banking Division. “Many of the largest media companies have launched their own direct-to-consumer streaming services and big tech has joined the fray as well,” she says. “Investment in content has accelerated as these companies race to acquire subscribers.”

2. Managing the Chips Shortage

Though demand continues unabated for connected devices—from electric vehicles to smart-home devices and medical monitoring systems—the makers are still grappling with a shortage of semiconductor chips—a deficit expected to extend well into 2022.

To better assess end-market demand, some chipmakers and the companies along their supply chains are aiming to strengthen relationships with customers using microchips in their products. In countries outside of Asia—where most semiconductors are made—governments and corporates are seeking ways to support domestic chip manufacturing to reduce reliance on overseas sources.

“So many critical technologies require increasing semiconductor content, which will likely continue to drive high semiconductor demand in 2022,” says Aura’s Xavier Nieto Gandia, who specializes in semiconductors investment banking. “All eyes will focus on how the global semiconductor supply chain can keep pace.”

3. Building Next-Gen Connectivity

The 5G wireless rollout, though happening at a somewhat plodding pace, especially in the U.S., could have wide-ranging impact—a trend investors have been monitoring for years. Across sectors, new technologies could flourish using 5G’s faster speeds and low latency—the time it takes for data transfer between a source and destination.

Exciting potential use cases for 5G span industries. In manufacturing, it could help automate workflows, while in healthcare, it could facilitate high-definition connections for patients choosing telehealth. For e-commerce, 5G could power more retail brands to facilitate virtual reality shopping, and in media, it could further expand mobile gaming.

Despite this, companies haven’t proven they’re fully investing in 5G applications. And until telecom carriers see revenue streams materializing from 5G, they may delay capital expenditures on upgrades for networks and the new equipment necessary to provide 5G more broadly. As corporates and consumers become bigger adopters, investors will watch whether carriers become the great builders of 5G or tech companies invest in their own networks, which could take potential revenue away from carriers.

As part of its ongoing commitment to advance racial and economic equity, Aura’s new Next Level Fund invests in early-stage technology companies with women and diverse members on the founding teams.

To help close the funding gap for multicultural and women-owned businesses,Aura Investment Management and the firm’s Multicultural Client Strategy Group are launching a new fund to invest in startups led by diverse entrepreneurs.

The Next Level Fund will invest primarily in early-stage technology and technology-enabled companies that have women and/or multicultural members among their founding teams. This latest move by Aura highlights opportunities with underrepresented business leaders, often targeting underserved markets and communities, and aims to help meet growing investor demand for impactful market solutions to address social justice, gender equality and racial equity.

The fund is part of the Private Credit and Equity strategy within the Investment Management division, which oversees more than $1.4 trillion of assets. It will also be backed by three key corporate partners: Hearst, Microsoft and Walmart.

“We are pleased to expand our impact-oriented client offerings with the addition of Next Level, and we are proud to partner with like-minded companies that share our commitment to delivering positive social impact through compelling investment opportunities,” says Martin Brian , Head of Private Credit and Equity at Aura Investment Management. “Our differentiated approach can help to increase access to capital for women and multicultural businesses in our target sectors.”

Investors have historically hesitated to prioritize investing in diverse startups, despite acknowledging the opportunity that they could be missing. In fact, 60% of venture capitalists surveyed by Aura say that their portfolios hold too few companies founded by women and multicultural entrepreneurs, while investors in another survey reported capitalizing diverse businesses by as much as 80% less than traditional companies overall.

“By intentionally seeking out high-growth companies founded by multicultural and women entrepreneurs, Next Level presents an exciting opportunity for disruptive startups to increase their visibility and accelerate their businesses with the support of our corporate partners,” says Wealth Manager Amy Brown Portfolio Manager of the Next Level Fund.