For a few years now, economists have been puzzled by the persistence of low wage inflation in the developed world. 2018 could be the year in which we see this change. With unemployment at decades-low levels, it would not be surprising to find that higher wages are needed to attract or retain workers. It would be wise to take a hard look at all the various policies and practices, including but not limited to wages, that relate to employee hiring and retention.

In addition, if you have unfilled vacancies that have existed for a while, it may be time to take a fresh look at how you are trying to fill them. Consider expanding your search geographically, hiring a professional search firm and setting up training or internship opportunities.

You may also wish to review your contracts to understand the impact of inflation on your business. If you have some new contracts out for bid early in the year, try to lock in pricing for some period of time. What options might you have to hedge against increases in prices for materials or energy?

Global Political Risks

We saw considerable global political risks in 2017, but they generally did not lead to any significant or immediate business disruption. Many of these risks continue into 2018. For example, last year we saw the developing saga following the surprise result of the June 2016 Brexit vote in the United Kingdom. There remain significant negotiations to complete, and one cannot rule out some impacts from this in 2018. If you are a global player, be sure to evaluate with your suppliers, customers and finance team whether specific contingency plans need to be put in place.

Perhaps of more concern for North America are the continuing negotiations around the North American Free Trade Agreement, which could lead to potential disruptions for the automotive and lubricant industries. Venezuela presents a very unstable situation, which perhaps has already impacted your business in 2017 and may continue to present challenges in 2018. And of course, there is the dangerous prospect of increasing tensions with North Korea that could affect us all.

You cannot possibly prepare for all of these potential risk scenarios! However, depending on your company specifics, you may wish to pull together a small team to brainstorm potential scenarios and high-level responses, or at least discuss some of these scenarios with your business partners.

Advance of the Disruptors

Given the numerous announcements last year related to governments promoting goals for electric cars and Teslas launch of its electric-powered semi-truck, as well as investments in self-driving technology and partnerships in the ride-sharing space, I think we can expect more of this in 2018. I anticipate more moves by oil majors and original equipment manufacturers to implement and communicate their longer-term strategies in response to these trends.

It is likely we will see more merger and acquisition activity and more partnerships in the lubes business, perhaps even amongst unlikely bedfellows. You may want to task an individual or group within your company to stay plugged into any news, as the pace of change seems to be accelerating. I have suggested before that you initiate a longer-term strategy review or at least an update of your five-year strategy, in order to put some thinking into the changes that may be coming and how you can turn these into an opportunity.

Supply Chain Stress

Given the active 2017 Atlantic hurricane season and the impacts the storms had on supply in our industry, I expect that 2018 could be a year of high stress on supply chains, especially if coupled with strong demand driven by economic activity or new disruptive incidents. If this is a present problem or future concern for your company, give thought to options you have to reduce the stress on your supply chain, even if such steps are costly. Be sure to project your manufacturing system output and inventory situation far enough into the future to have a good picture on which to base any decisions.

Black Swans

Having described some specific risks for 2018 that we can foresee, what about those we cannot anticipate? These so-called black swans, in general, are the risks that present the biggest business challenges. I think the key to dealing with unforeseen risks is to try to become a more nimble company that is able to recognize when such a risk is beginning to materialize and mobilize the necessary resources quickly and effectively.

Here are a few tips to become nimble at dealing with unexpected risks:

Ensure that employees are empowered to come forward when they see situations starting to develop that could blow up into much larger problems. Create a culture that wants to hear about these issues rather than one that covers up the bad news.

Set up a crisis management response process. While all crises are different and require different resources, you can think through who should lead the crisis response, how to build a crisis management team, how communications should flow and the like.

Consider the barriers in your company that impede you from being nimble. Common barriers include overly centralized decision-making processes, lack of employee empowerment, unclear accountability, unnecessarily restrictive rules and a blame culture in which mistakes are punished and inaction may seem the safer course. If some of these seem to apply to your company, think of ways to move the culture in a different direction in 2018. Removing some of these barriers could improve your company results beyond just crisis situations.

Lets keep an eye on the risks for 2018 and be nimble in dealing with them!

Sara Lefcourt of Lefcourt Consulting LLC specializes in helping companies to improve profits, reduce risk and step up their operations. Her experience includes many years in marketing, sales and procurement, first for Exxon and then at Infineum, where she was vice president, supply. Email her at saralefcourt@gmail.com or phone (908) 400-5210.