The war in Ukraine:

Addressing the crisis and preparing for its impact

In this POV, we survey some of We close with actions that
the consequences of the war in
Ukraine to date. We also frame the organizations may consider
critical uncertainties that will
shape scenarios about the war’s to strengthen their outlook,
economic and business impact.
regardless of the scenario
that ultimately unfolds.
Meet the Authors

Michael Brueckner Kathleen O’Reilly Svenja Falk Michael Moore

Senior Managing Director – Senior Managing Managing Director – Principal Director – Thought
Growth & Strategy Lead, Europe Director, Lead – Strategy Accenture Research Leadership, Accenture Research

Michael leads Growth & Strategy for Kathleen leads Accenture Strategy, Prof.Dr. Svenja Falk is Managing Director, Mike Moore is the Global Research
Europe, overseeing all aspects of serves on Accenture’s Global Accenture Research and leads their Europe Lead for Strategy & Consulting.
Accenture’s strategy including Management Committee and as operations. She also heads Accenture's Berlin Mike’s research focuses on disruptive
shaping and implementing strategy Executive Sponsor for the company’s office and is a member of the Executive innovation, foresight and long-term
and investments, including several work with the World Economic Forum. Board of the Accenture Foundation. strategic planning. He is the
significant acquisitions. He also serves She also oversees the company’s Research Director of Accenture’s
on Accenture’s Global Leadership private equity work. Svenja leads the working group on “Digital Business Futures program, which
Committee and Europe’s Management Business Models” in the Platform Industrie identifies and tracks the Signals of
Committee. Kathleen works with CEOs and boards 4.0, is deputy chairperson of the German business change that are most
to address their most critical business Council for Digital Sovereignty and serves on critical for enterprises to respond to.
Michael has been with Accenture for challenges and build value by tapping the Board of Trustees for Fraunhofer ISST.
more than 22 years and held many new market opportunities, applying She has co-published and worked with the Mike’s work is regularly published in
significant roles including Head of innovative technologies, executing World Economic Forum, B20, The European leading business journals, including
Health & Life Sciences, Strategy & large-scale restructuring and Commission, UNIDO and the Chancellors Harvard Business Review, MIT Sloan
Management Consulting lead, transformation, achieving growth Innovation Council. She is honorary Management Review, The European
Regional P&L for Products through M&A, and embedding professor at the Justus Liebig University in Business Review and the Ivey
Industries, and Global Growth & sustainability and responsible practices Giessen and a fellow at the Hertie School, Business Journal.
Strategy Lead for Accenture Digital. in every aspect of their business. Berlin.
The war’s
impact to date
The war’s The war has led to a dramatic increase of refugees in Europe
Refugees

impact to date
(mn)

Asylum applicants in the EU Ukrainian refugees, as of April 18

5.0
The Ukraine invasion has had
a deep human, economic and
business impact. 4.0

A humanitarian disaster 3.0

In only a few weeks, thousands of lives

have been lost. More than 4.9 million 2.0
refugees have fled Ukraine to date and at
least 7.1 million people have been
displaced within the country.1 The growing 1.0
humanitarian crisis has led to an influx of
public and private aid. On March 10, the US
Congress, for example, approved US$13.6 0.0
billion in emergency spending for Ukraine.2 2014 2015 2016 2017 2018 2019 2020 2021 2022
The EU has announced €10 billion (US$11
billion) in aid for Ukrainian refugees.3 Source: Accenture Research analysis based on: Eurostat data on asylum applicants by type; UNHCR’s
operational data portal on the Ukraine refugee situation—numbers are from February 24 to April 18.
The war’s impact to date

Unpredictable economic Significant organizational

and cyber conflict challenges
Within one week of the invasion, governments around The sanctions triggered actions by many businesses
the world passed a range of sanctions. Met with beyond governmental requirements. More than 750
retaliatory countermeasures by Moscow, the sanctions companies have announced plans to suspend, scale
have impacted the flow of some goods and services. The back or close their operations in Russia, affecting,
sanctions also could trigger retaliatory cyberattacks. among others, at least 3,500 retail outlets across the
Accenture Cyber Threat Intelligence has observed country.6 Supply-chain disruptions could be even more
volunteer hacktivists and cyber criminals threaten to substantial: More than 2,100 US companies and at
attack Western critical infrastructure and leak sensitive, least 1,200 EU companies have Tier 1 suppliers in
stolen data.4 National governments continue to reinforce Russia. And those numbers expand sharply for sub-
the message that organizations worldwide should contractors: more than 190,000 US companies and at
remain vigilant for renewed Russian activity designed for least 109,000 EU companies have Tier 2 and 3
maximum service disruption.5 suppliers n Russia.7
Economic and
business impact
Economic and
business impact Supply shocks
Before the invasion, Russia supplied around 10% of the world’s crude
oil, as well as almost 40% of the European Union’s natural gas. The
The current view among country is also the top exporter of nickel (used in car batteries) and
palladium (used in car-exhaust systems).10
leading forecasters is that
Meanwhile, Ukraine and Russia together supply 26% of global exports
the war will lead to a material of wheat, 16% of corn exports and 30% of barley exports.11 Supply
deceleration in growth.8 disruptions of these key commodities have led to considerable price
volatility. Over the past month, oil prices have reached as high as
US$130/barrel, while European gas prices climbed above €200/MWh
Under a baseline scenario, Oxford Economics (US$220/MWh).
forecasts that the world will avoid recession,
but global GDP will be 1.1 percentage points A prolonged supply shock could ripple across industries, driving
lower in 2022, relative to pre-war forecasts inflationary pressures and supply chain disruptions. Energy price
made in January.9 increases, for example, would impact most industries via direct
energy costs or input cost increases (e.g., steel costs would rise due
Beyond the scale and duration of the conflict to pricier energy; costs for automotive parts would rise due to pricier
itself, at least four uncertainties create risks steel). Inflationary pressures could also be felt in sectors affected by
that could lead to very different scenarios restricted trade in other products. For example, high wheat and grain
unfolding: prices may increase prices of foodstuffs. High metal and mineral
prices may increase prices of electronics and industrial equipment.
9. Oxford Economics’ Global Economics Database. Pre-conflict refers to forecast as of December 2022.
Economic and business impact

Inflation Globalization Energy transition

Even before the war, inflation had hit multi- Many commentators have argued that the Some have argued that the
decade highs in the US and Europe, driving invasion and sanctions may contribute to conflict could make the green-
up costs for consumers. Accelerated greater market fragmentation and energy transition more
inflation from soaring energy and other deglobalization.13 A decline in global challenging, at least in the near-
commodity prices can impact consumer integration had already been a prevailing trend term.17
confidence and spending. prior to the war. World trade (relative to GDP)
has been on the decline since 2008.14 Tariffs The crisis has brought energy
In March, the University of Michigan’s and other barriers to trade have been security back into conversation
measure of US consumer sentiment increasing. alongside sustainability. Some
dropped to its lowest reading since European countries and states in
September 2011. Declines are also visible in The number of industrial policy interventions the US have introduced measures
the EU consumer sentiment survey.12 made by governments over the past five years to cut energy taxes and
increased by more than 200%.15 compensate households for
In parallel, inflationary pressure may higher gas prices.18 But there are
accelerate the rise of wage inflation in some Some, though, have expressed hope for an also signs that some countries
countries and industries. The industries that alternative path. Ngozi Okonjo-Iweala, director may double down on the energy
could be most impacted by wage inflation general of the World Trade Organization, has transition and amplify incentives
are those in which labor represents a large urged a move for “re-globalization,” saying, to expand greener energy
part of their overall cost structure. “Deeper, more diversified international markets production.19
remain our best bet for supply resilience.”16
Potential scenarios for
the war’s impact on the
economy and business
Potential scenarios for the war’s impact
on the economy and business
These and other uncertainties lead to a wide range of potential scenarios for the impact of the crisis on the global economy
and business in the near-term. At least three scenarios with different levels of impact over the next year can be considered:

01 02 03
Controlled impact Ongoing impact Protracted impact
• Sanctions do not escalate • The supply of key commodities • A wider oil and gas embargo
further and may even be scaled continues to be disrupted leads to significant structural
back as part of a negotiated throughout 2022. An oil and gas supply disruption.
truce, alleviating supply embargo remains limited to a • Commodity prices remain
disruptions. select number of countries. elevated and volatile into 2023.
• Commodity prices return to • Commodity supply shocks lead • Sustained price rises reduce
pre-war levels. to a sustained rise in prices in consumer spending power,
• Consumer and business the near term. contributing to a significant
confidence increases, and • Consumers cut back on some decline in consumer and
companies and people return to nonessentials and businesses business confidence and
pre-war investment plans focus on increasing the slowdown in growth.
and spending. efficiency of their operations.
Economic Impact Scenarios
The economic impact of these scenarios, of The US, meanwhile, would primarily be affected by higher oil prices
course, will potentially vary widely by country and their knock-on effect on household wealth and consumer
and region. Compared to the US, Europe’s spending. In the event of a protracted impact scenario, Oxford
stronger trade linkages to Russia and heavier Economics estimates that US GDP could decline relative to pre-war
reliance on Russian energy imports make it estimates by 1.0 percentage points in 2022 and 0.6 percentage
more vulnerable to a growth slowdown. points in 2023.21
Oxford Economics estimates that, relative to
pre-war forecasts, Eurozone GDP would Beyond Europe and the US, net oil and commodity importers like
decline by 1.1 to 2.9 percentage points in 2022. Japan and India would be affected by a sustained period of high oil
European countries with higher dependency and commodity prices. Emerging-market commodity importers in
on Russian oil and gas would be more Asia and Africa would be particularly exposed to higher prices. These
significantly impacted. In the event of a nations also would be affected more by the strain on food supply
protracted impact scenario, Eurozone inflation chains. At least 50 countries rely on Russia and Ukraine for 30% or
could rise by 4.1 percentage points in 2022 more of their wheat supply—among the most reliant are emerging
relative to pre-war forecasts.20 economies in Asia and northern Africa.22
Potential economic impact of the war in Ukraine
The Eurozone’s trade relationships make it vulnerable to The U.S. could be impacted by the ripple effects of
a slowdown higher prices

Forecasted impact on Eurozone GDP relative to pre-war forecast Forecasted impact on US GDP relative to pre-war forecast
(Percentage point change) (Percentage point change)
Ongoing impact scenario Protracted impact scenario Ongoing impact scenario Protracted impact scenario

0.0 0.0
-0.3
-0.3
-0.6
-0.9
-0.6
-1.2
-1.5 -0.9
-1.8
-1.2
-2.1
-2.4
-1.5
-2.7
-3.0 -1.8
2022 2023 2022 2023

Source: Based on mapping Oxford Economics’ World Economic Prospects estimates to our Source: Based on mapping Oxford Economics’ World Economic Prospects estimates to our
scenarios. Data as of 8th April 2022. Pre-conflict refers forecast as of Jan 2022. scenarios. Data as of 8th April 2022. Pre-conflict refers forecast as of Jan 2022.
Potential economic impact of the war in Ukraine
Inflation is forecast to rise in the Eurozone… …and in the U.S.
Forecasted impact on Eurozone inflation relative to pre-war forecast Forecasted impact on US inflation relative to pre-war forecast
(Percentage point change) (Percentage point change)
Ongoing impact scenario Protracted impact scenario Ongoing impact scenario Protracted impact scenario

5.0 5.0

4.0
4.0

3.0
3.0
2.0
2.0
1.0

1.0
0.0

0.0 -1.0
2022 2023 2022 2023

Source: Based on mapping Oxford Economics’ World Economic Prospects estimates to our Source: Accenture Research analysis based on Oxford Economics’ World Economic Prospects
scenarios. Data as of 8th April 2022. Pre-conflict refers forecast as of Jan 2022. monthly data. Data as of 8th April 2022. Pre-conflict refers to forecast as of Jan 2022.
Industry
impact
Different industries could Shortages of wheat and other commodities could
affect the consumer goods and service industry,
also feel the war’s impact to where raw materials represent total input costs of 24

different extents. High oil

and gas prices mean energy-
intensive manufacturing 25% 26%
sectors may be most in Europe in the US
affected. In the US chemicals
sector, for example, energy Specific pockets within supply chains may have
greater exposure to the crisis, too. Some car
costs represent 35% of total manufacturers, for instance, have been closing
input costs; in Europe, they assembly lines due to shortages of wiring harnesses
manufactured in Ukraine.25
represent 21%.23
Operating in an
uncertain world
Operating in an Not every company may be affected in the same way.
Organizations that operate in Ukraine and Russia have

uncertain world been most immediately affected and are focused on the
welfare of their people. For organizations outside the
conflict zone, the focus has been on complying with
sanctions, responding to supply chain disruptions and
assessing the impact on customers.
As the shock of the
When facing such unforeseen challenges, many leaders
invasion reverberates aim to strengthen the resilience of their organizations by
prioritizing adaptability. Digitizing enterprise functions at
through the world speed and in parallel, rather than sequentially, therefore
economy, executives can seems essential for many companies. The premium on
agility will intensify the focus on compressed
consider how to position transformation.

their businesses to Regardless of how the situation evolves, companies can

minimize the impact. consider taking a series of simultaneous actions around

• Strategy
• Systems
• Supply chains
• People
• Ecosystems
Operating in an
uncertain world - Strategy
Some organizations analyze and model the The value of flexible strategies is
transmission of shocks and stress-test their
strategy using scenario planning. Leaders influenced by the quality of insights
concerned about substantial impact based on this
analysis can reactivate proven tools from the used in developing and amending
pandemic and other past crises. Among them are
“watchtowers,” or collating data on critical
such strategies. To find new patterns
uncertainties to catch risks early. in data and better anticipate future
decisions, organizations can capture
real-time data from inside and
outside the organization and across
the value chain, and process it with
AI-enabled analytic tools.26
Operating in an
uncertain world - Systems
The war has brought to In the near term, organizations can take high-priority mitigations suggested by
Accenture Cyber Threat Intelligence, which include:
the fore the potential • Patch all externally facing infrastructure, such as VPN appliances, firewalls,
web servers and load balancers.
of cyberattacks to • Log and monitor events for suspicious activity, back up data and isolate
disrupt business backups that might allow malware to spread.
• Implement security training and awareness programs that show employees
operations. Whether how to identify and report phishing attacks. Such programs could be
extended to ecosystem partners whose cybersecurity affects those they
the conflict is quickly interact with.
• Maintain standard cybersecurity hygiene practices, like regularly updating
resolved or continues, software and firmware.
securing assets now Longer-term resilience comes when security and business leaders align as
can help fortify their partners in reducing risk. Actions include:27
• reviewing alert-response capabilities, such as treating malware detection with
longer-term resilience. the highest priority across the organization;
• segmenting IT and OT (operational technology) networks where appropriate,
such as within industries responsible for critical infrastructure; and
• reviewing incident-response and business-continuity plans.
Operating in an
uncertain world - Supply Chain
A pressing priority for organizations is to understand their level Rising energy prices and potential shortages in key raw
of supply chain exposure. This can start with a tactical review of materials like (but not limited to) metals and agriculture
risk by internal and external supplier-management teams. mean that organizations should take steps to mitigate
Resilience stress tests can then quantify an organization’s inflation in the cost of purchased goods. Commodity price
longer-term resilience and simulate how the supply chain would risk management is a set of coordinated actions that
respond to a range of conditions. This knowledge can help includes:
companies understand their risk exposure, how long it would
take them to recover from disruption and how performance may • proactive monitoring of vendor disruptions;
be affected. • analysis of commodity prices; and
• aggressively seeking out alternative categories and
Accenture’s approach in running such stress suppliers to help contain cost pressures.
tests, co-developed with MIT, uses a “digital Over time, the value chain parts most affected by continuous
twin”—a real-time digital model—of an disruptions can be made routinely adaptable. Organizations
organization’s unique supply chain to run can look to move away from centralized, linear models of
different disruption simulations. These might supply to more flexible decentralized networks.29 These
networks are often more global, not less. They use factories
include spikes/drops in demand, sudden that are higher tech, smaller, more numerous, more local and
supplier/facility shutdowns, disruption at a key closer to customers—thus more capable of quickly
transport hub, raw materials scarcity and so on.28 producing goods that reflect shifting needs.
Operating in an
uncertain world - People
The pandemic had already altered the longstanding employee-employer
relationship—whether it’s a compressed work week, radically flexible work
When companies take
schedules, variable locations or the need for higher purpose. Continued this approach, they can
uncertainty and elevated pressure on personal lives mean organizations
will continue to explore how they can provide meaningful jobs. better read and respond
Some organizations are beginning to implement new ways of working, to the needs of complex,
moving beyond spaces and places to create omni-connected
experiences. These will focus on connecting workers in differentiated
evolving markets.
ways that create a level playing field and a supportive, energizing Organizations can also
environment.
better manage the risks
Harnessing the entrepreneurial spirit of the workforce could be another
crucial way to boost organizational flexibility, allowing companies to find
associated with shifting
new approaches to solving problems. To create a more entrepreneurial political tides.
culture, organizations could encourage more employee autonomy,
pushing decision-making to the “edges” of their organization.
Operating in an
uncertain world - Ecosystem
By developing more connections across In the near term, the power of
companies’ borders while accounting for
geopolitical risk, organizations can be better networks—and the knowledge and
positioned to strengthen their collective resilience.
experience embedded within them—
can support organizations in assessing
and managing risk more effectively. In
a network, the vast number of
information sources available today
can be further amplified, creating an
early-warning system of what lies
around the corner.
Uncertainty:
The new reality for business

For leaders and their organizations, Going forward, success

there is no return to the relative may ultimately depend on
comfort and safety of the not-so- how well leaders adapt to
distant past. The war in Ukraine has the demands of this new,
made clear that many of the old, testing environment.
comfortable certainties on which More than ever, their
business relied are no longer with us. resolve will be critical.
References
1 “Ukraine Refugee Situation,” UNHCR (2022) as of April 18th 2022 11 “2021/22 Grain Trade in Flux Amid Russia-Ukraine Conflict,” US 20 Based on mapping Oxford Economics’ World Economic Prospects

Department of Agriculture Foreign Agricultural Service (2022). estimates to our scenarios. Data as of 8th April 2022. Pre-conflict refers to
2“Ukraine Supplemental Appropriations Act, 2022,” US government forecast as of Jan 2022.
website (2022.); “Visualizing the $13.6 billion in US Spending on Ukraine,” 12 Accenture Research analysis of University of Michigan Consumer Survey

The New York Times (2022). for US; and Consumer Sentiment Survey for EU. 21 Based on mapping Oxford Economics’ World Economic Prospects

estimates to our scenarios. Data as of 8th April 2022. Pre-conflict refers to

3“War in Ukraine: MEPs Unlock Emergency Funds for Refugees,” European 13 See, for example: Adam S. Posen, “The end of globalization?,” Foreign
forecast as of Jan 2022.
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4“Russia Ukraine Crisis Overview,” Accenture (2022); “Global Incident blow for globalization,” The Wall Street Journal (2022). Guardian (2022).
Report: Russia-Ukraine Crisis March 25,” Accenture (2022); “Global Indirect
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Ukraine Conflict on Underground Forums,” Accenture (2022).
15Accenture Research analysis of Global Trade Alert database, accessible 24 Accenture Research analysis of OECD World Input Output tables.
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6 “Over 600 companies have withdrawn from Russia—but some remain,” Yale School of

Management (2022); “Russia’s war is creating corporate winners and losers,” The 16 “DG Okonjo-Iweala tells sustainability conference “trade is part of the 26 “Business Futures: Signals of Change,” Accenture (2021).
Economist (2022). solution to challenges we face,” World Trade Organization (2022).
27“State of Cybersecurity Resilience 2021: How aligning security and the
7Accenture Research analysis of Interos and FactSet. 2,100+ US companies 17See, for example: Vigya Sharma, “This is how the conflict between business creates cyber resilience,” Accenture (2021).
and 1,200+ EU companies have Tier 1 suppliers in Russia. Those numbers Ukraine and Russia could impact climate change,” The World Economic
28 “Accenture and MIT Team to Create a Supply Chain Resilience Stress
expand sharply when considering sub-contractors: 190,000+ US Forum (2022); Leslie Hook and Neil Hume, “Will the Ukraine war derail the
Test,” Accenture (2020).
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Russia. Stanley Reed, “Will war make Europe’s switch to clean energy even 29 “Business Futures: Signals of Change,” Accenture (2021).
harder?,” The New York Times (2022).
8Estimates from Morgan Stanley, Barclays, Goldman Sachs, BNP Paribas,
Credit Suisse and J.P. Morgan 2022 GDP & Inflation Outlooks, as well as the 18See, for example: Arne Delfs and Carolynn Look, “Germany slashes fuel
OECD, IMF, and European Commission. Data as of 21st March 2022. tax in $16.5 billion energy package,” Bloomberg (2022). “Maryland, Georgia
pause gas taxes with prices near record highs,” The Wall Street Journal
9 Oxford Economics’ Global Economics Database. Pre-conflict refers to
(2022). Chiara Albanese and Alberto Brambilla, “Italy could revive coal
forecast as of December 2022. plants to break Russia energy dependence,” Bloomberg (2022).
10 “A 10-Point Plan to Reduce the European Union’s Reliance on Russian 19 See, for example: “Netherlands ramps up plan for doubling offshore wind

Natural Gas,” International Energy Agency (2022); “Russian supplies to capacity by 2020,” Reuters (2022); “The Med gets first offshore wind farm
global energy markets”, International Energy Agency (2022). “Russia’s war as Italy vows energy revolution,” France 24 (2022); “Germany to speed
is creating corporate winners and losers,” The Economist (2022). renewables push due to Ukraine crisis,” Reuters (2022).
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