South Korean companies are less resilient than their counterparts in other countries in major business crises, suggesting the need for investment in employees and technology.

SAP Insights has released the results of a study on business resilience for the future. The study was conducted on 4,239 organizations, including 332 domestic companies.

Research results show that Korean companies are less resilient than their counterparts in other countries when faced with major business crises. Slightly more than half (54%) of Korean companies have developed appropriate response strategies to address unexpected events such as severe weather, geopolitical conflicts, and cyberattacks, compared to 67% of global respondents.

Additionally, domestic companies need to plan effectively for talent shortages, unexpected market conditions, and supply chain issues, and increase resilience for more strategic challenges.

This plan is particularly crucial, given that economic volatility (49%) is the top growth risk for domestic companies next year. Key risks include changes in customer demand (42%), changes in the competitive environment (38%), and supply chain disruptions (37%).

While labor and skills shortages are recognized as future risks, Korean companies are confident in their current human resource management capabilities. More than four in ten Korean companies (42%) responded that they are very or fairly satisfied with their employees' skill development capabilities. These results were supported by effective workforce management plans to address talent shortages (54%) and the right processes to prepare employees for new roles (60%).

SAP stated that the results of this study indicate a close relationship between business resilience and employee resilience. Furthermore, it emphasized that Korean companies must continue to invest in employees, new ideas, and new technologies to achieve future growth beyond resilience. However, Korean companies still face many challenges to overcome. More than a third (36%) of Korean companies responded that "to respond more flexibly to change, we must address the talent shortage," a figure that significantly exceeds the global average (29%). A third (32%) also responded that they need to address the skills shortage.

Domestic companies are developing plans to leverage technology to enhance their employees' capabilities. More than one in three (36%) companies believe that leveraging intelligent technology for decision-making will be the most beneficial to their growth, and 62% said they are securing adequate data to plan for the future.

Meanwhile, about 39% of respondents said that technological improvements are still needed to cope with change.

While this is likely due to fixed work practices and the resulting work attitudes, the biggest obstacle to innovation in Korea is the difficulty in changing existing products, services, and business models. The study found that flexibility—the ability to quickly respond to change—is essential for future success, and Korean companies lag behind other countries in terms of business process flexibility.

SAP emphasized that it can create powerful business performance by connecting the entire value chain through a consistent and integrated innovation platform. Accordingly, Korean companies are investing in technology to strengthen their resilience. Among these, automated business networks (44%) and business collaboration tools (40%) were cited as the most important innovation factors, followed by experience management and cybersecurity software. Furthermore, Korean companies rated the importance of AI and machine learning lower than other countries (41%), at 33%.

SAP recently introduced AI into its core business process support systems, discovering superior insights and efficiencies. Furthermore, the company emphasized that this can be used to integrate employees, innovation, and core business processes to prepare for the future of business.