Whitepaper: Anticipate the Unknown

Insights to Turn Market Risks into Business Opportunities

Market Upheavals Continue to Impact Global Entities in 2023

The big question for many organizations at the start of 2022 was how quickly world economies would recover from the COVID-19 pandemic. However, Russia’s invasion of Ukraine in February of that year swiftly turned attention to a host of new macroeconomic challenges, including historically high inflation rates, additional supply chain disruptions, and concerns about energy security. In 2023, these market upheavals continue to create headwinds for rated and unrated, public and private entities alike.

Current conditions are especially painful for small- and medium-sized enterprises (SMEs) that were already strained by prolonged shutdowns and depressed demand from the pandemic. These firms account for approximately 90% of global businesses and more than 50% of employment worldwide, and the World Bank says they play a major role in most economies. Tracking their financial stability has become more important than ever.

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¹ “SMEs Finance”, The World Bank, 2017, www.worldbank.org/en/topic/smefinance

² “Global Credit Outlook 2023: No Easy Way Out", S&P Global Ratings, www.spglobal.com/_assets/documents/ratings/research/101570029.pdf

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A Trying Year Ahead

According to S&P Global Ratings, ² strains on credit in 2023 leave little room for error. Many governments grew their debt during the pandemic and, as a result, have limited fiscal capacity to spend their way through this turn in the cycle. This means that credit pressures are likely to intensify in the near term. While there could be a stabilization of financing conditions in the latter half of the year, uncertainty remains high, with the Russia-Ukraine war and its implications for energy markets breeding the unknown.

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² “Global Credit Outlook 2023: No Easy Way Out", S&P Global Ratings, www.spglobal.com/_assets/documents/ratings/research/101570029.pdf

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Other Trends Add Complexity

Adding to market volatility is the increasing importance of sustainability and climate risk. Analysis shows that heatwaves, wildfires, water stress, hurricanes, and droughts present high risk to over 40% of the world’s largest companies, while up to 23% of company profits are vulnerable to regional carbon pricing policies aimed at minimizing climate change impacts. ³ These issues can no longer be ignored, especially as mandatory disclosure and reporting of sustainability issues takes hold around the world.

Automation and digital strategies must also be considered as companies aggressively look for new ways to increase operational efficiencies and gain a competitive edge. The complex and rapidly changing digital ecosystem both complements and disrupts financial markets, with a wide range of operational, product, and credit implications for market participants.

Given this backdrop, how do firms anticipate what lies ahead and develop strategies to protect and possibly grow their businesses? This report looks at three important realities surrounding credit and provides insight into how businesses can turn these market risks into opportunities:

Market volatility

Sustainability and climate risk

Automation and digitalization

Market volatility

The difference between risk and opportunity is perspective.

Sustainability and climate risk

Automation and digitalization

Market volatility

Sustainability and climate risk

Don’t just make sustainability progress. Measure it.

Automation and digitalization

Market volatility

Sustainability and climate risk

Automation and digitalization

Is your intelligence evolving alongside your risk?

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³ “Accelerating Progress on Climate Risk”, S&P Global Market Intelligence, April 29, 2020, www.spglobal.com/marketintelligence/en/events/webinars/accelerating-progress-on-climate-risk

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Find potential with credit and risk solutions that help you anticipate the unknown

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