Resilience of the Swiss Economy
Deloitte Resilience Barometer 2022
Pandemics, geopolitical tension, climate change: Switzerland’s economy is continuously exposed to major events that have the potential to cause considerable damage in an interconnected world. Deloitte investigated how crisis-proof and resilient the Swiss economy is for three realistic scenarios. The results were validated with external experts. Encouragingly, it was found that public services and infrastructure are stable overall, however reveals some major differences between the eight areas that are key to a well-functioning economy
The three scenarios
The three scenarios that were chosen are ones that could realistically occur in the next three to five years: 1) an escalation of global political tension with block formations, an increase in sanctions and supply chain disruptions ; 2) worsening climate change with extreme climatic events such as heat waves and floods; 3) a highly contagious pandemic with a high morbidity rate.
Geopolitical tension and bloc formation
There has been greater formation of geopolitical blocs in recent years, with escalating tension between them. Cyber-attacks and acts of sabotage on businesses and critical infrastructure are increasing; they are intended to destabilise Switzerland both politically and economically.
Increase in extreme climatic events
Extreme environmental conditions are becoming increasingly common worldwide, and this trend is set to continue in the future. In Switzerland, climate change is manifested in droughts and heavy precipitation. Permafrost continues to thaw.
Global pandemic outbreak
A highly contagious virus spreads throughout the world in the space of three months. It is transmitted primarily via respiratory droplets. Face coverings only partially reduce the risk of infection. The virus is not generally life-threatening, but it does lead to severe illness and inability to work for several weeks.
Assessments of resilience
For the Deloitte Resilience Barometer, the authors summarised the basic pillars of a well-functioning Swiss economy into eight areas, which in turn were broken down into further sub-areas.
Findings
- The high vulnerability of logistics during a pandemic is concerning.
Findings
- The weakness in the area of imports underlines the importance of domestic production and inventories. These are not completely resilient, either.
- Even though Switzerland itself has plenty of drinking water, it will face pressure from abroad. When water becomes a scarce commodity, there is a high risk of strategic conflict.
- Drinking water infrastructure is relatively resilient across the different scenarios. However, recent examples of civilian infrastructure (energy, water) being sabotaged show that it can also be vulnerable.
Findings
- The low resilience of healthcare during a pandemic is almost impossible to avoid. After all, in such a situation, sick people are helped by healthy people. Thus, until humans have been largely replaced by technology, the weakness in the system will remain.
- However, the weakness of the healthcare system during geopolitical tension is less inevitable. It is caused by the high dependence on products from abroad, as well as the uncertainty with regard to an uninterrupted energy supply.
Findings
- Numerous institutions in Switzerland are based on the ‘militia’ system of part-time public service. In a prolonged crisis, decision-makers would eventually have to return to their normal jobs. It would be hard for them to keep performing these dual roles in the long term and they could potentially end up with a double workload.
- The army’s weakness in the face of political tension is due to the arms and financial policies of the last 20 years or so, which in many areas have relied on growth during a crisis.
Findings
- The resilience of the energy supply in the event of geopolitical tension is too low. In combination with the increasing digitalisation of the economy, this is problematic.
Findings
- The clear weaknesses in the pandemic and geopolitical tension scenarios are a source of major problems for the economy. In many cases, these can be temporarily cushioned with automated processes and virtualised infrastructures, but only with considerable effort and expense.
Findings
- With the exception of cash transactions, the financial market infrastructure is sufficiently resilient in all scenarios. The only real weakness (cash transactions) in the pandemic scenario is almost impossible to avoid.
Findings
- The rather low resilience in the area of raw materials and components has implications for the production and maintenance of capital goods. This then has a negative knock-on effect on the resilience of other areas, such as ICT, logistics and some other public services and infrastructure.
- In many areas, digitalisation and automation have made it possible to reduce inventories and thus capital tied up in stock. However, this has a negative effect on resilience in the area of availability of electronics.
Findings
- The high vulnerability of logistics during a pandemic is concerning.
Findings
- The weakness in the area of imports underlines the importance of domestic production and inventories. These are not completely resilient, either.
- Even though Switzerland itself has plenty of drinking water, it will face pressure from abroad. When water becomes a scarce commodity, there is a high risk of strategic conflict.
- Drinking water infrastructure is relatively resilient across the different scenarios. However, recent examples of civilian infrastructure (energy, water) being sabotaged show that it can also be vulnerable.
Findings
- The low resilience of healthcare during a pandemic is almost impossible to avoid. After all, in such a situation, sick people are helped by healthy people. Thus, until humans have been largely replaced by technology, the weakness in the system will remain.
- However, the weakness of the healthcare system during geopolitical tension is less inevitable. It is caused by the high dependence on products from abroad, as well as the uncertainty with regard to an uninterrupted energy supply.
Findings
- Numerous institutions in Switzerland are based on the ‘militia’ system of part-time public service. In a prolonged crisis, decision-makers would eventually have to return to their normal jobs. It would be hard for them to keep performing these dual roles in the long term and they could potentially end up with a double workload.
- The army’s weakness in the face of political tension is due to the arms and financial policies of the last 20 years or so, which in many areas have relied on growth during a crisis.
Findings
- The resilience of the energy supply in the event of geopolitical tension is too low. In combination with the increasing digitalisation of the economy, this is problematic.
Findings
- The clear weaknesses in the pandemic and geopolitical tension scenarios are a source of major problems for the economy. In many cases, these can be temporarily cushioned with automated processes and virtualised infrastructures, but only with considerable effort and expense.
Findings
- With the exception of cash transactions, the financial market infrastructure is sufficiently resilient in all scenarios. The only real weakness (cash transactions) in the pandemic scenario is almost impossible to avoid.
Findings
- The rather low resilience in the area of raw materials and components has implications for the production and maintenance of capital goods. This then has a negative knock-on effect on the resilience of other areas, such as ICT, logistics and some other public services and infrastructure.
- In many areas, digitalisation and automation have made it possible to reduce inventories and thus capital tied up in stock. However, this has a negative effect on resilience in the area of availability of electronics.
Deloitte Resilience Barometer 2022
Download the reportContacts
Matthias Scherler
Government & Public Services Industry Leader
Ralph Wyss
Defense, Security & Justice Sector Lead
Céline Neuenschwander
Consulting Business Operations – Government & Public Services
Michael Grampp
Research Director & Chief Economist
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