What a difference a year can make. Cast your mind back to 2019: the global defence sector was on the offensive due to budget increases and military modernisation was the plan of attack, as growing security concerns forced governments to invest heavily in new equipment. So much so that international defence expenditure was forecast to grow between 3% and 4% in 2020 to reach an estimated US$1.9 trillion – driven by increased spending in the US, Russia, China and India.
Fast-forward to 2020 and the biggest threat to nations isn’t opposing armed forces, but a pandemic that has killed hundreds of thousands of people worldwide. As national security priorities switch from fighter jets and aircraft carriers to PPE supply chains and testing capacity, questions have been raised about defence spending. The economic shock of the pandemic and the funding of relief efforts are likely to force governments to prioritise health and social care spending – not to mention economic revival – over defence.
So, how will fragile defence budgets impact firms that operate within the sector? Organisational resilience is more than just surviving in the face of adversity; it’s about flourishing over a prolonged period. The long-term economic impact of the pandemic on government resources, therefore, means that long-term success within the defence sector will have to be achieved using a more with less approach.
Despite being considered a critical infrastructure industry in many countries, it’s hard to imagine defence spending will be top of the agenda given the current landscape. Take the UK for example, where the Ministry of Defence – which is preparing for funding cuts in the wake of the pandemic – is reportedly scrapping costly plans to upgrade its ageing tanks and armoured vehicles, in favour of non-traditional capabilities such as cyber warfare.
Concerted efforts by governments to accelerate procurement models to get innovative technologies into the field faster present certain challenges. Therefore, we must not overlook the obstacles the defence sector faced before the pandemic struck; obstacles that have been accentuated by the threat of budget cuts – from rapidly changing market demand and political and economic uncertainty to supply base risk and the emergence of new business models. After all, most pre-pandemic projects will be seen through to completion and will play a vital role in national and international security.
And what about Brexit? The UK’s departure from the EU has returned to dominating the column inches, having slipped down the media pecking order after the COVID-19 pandemic swept the globe with devastating effect” With the end of the transition period fast approaching and a no-deal on key issues like trade still a distinct possibility, the threat to defence sector supply chains is a very real one.
The ongoing quest for profitability, which is now set against the backdrop of potential defence sector budget cuts, has brought the need for efficiency to the fore. Despite blazing a trail when it comes to innovative design, the defence sector has traditionally been sluggish in adopting new technologies and processes that improve operations. So, how can the firms overcome these challenges in the current climate?
Ultimately, the winners will be those firms that are able to accelerate out of the crisis by embracing change.
Setting the organisational resilience wheels in motion
As defence firms prepare their post-pandemic organisational resilience strategy, they need to think about how they approach both new and pre-existing challenges. This vital process will be aided greatly by considering “How do we…?”
Camms Group provides a simple, affordable and comprehensive organisational resilience software solution that will answer all these questions and more. With integrated solutions in risk, strategy, projects and people, our business software will help you make the right decisions, manage risks, align the talents of your organisation and focus on what matters.
We're excited to discuss how Camms’ solutions can assist with your risk management practices. Reach out to us to explore how Camms can help you focus on what really matters.
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Vice President, EMEA