A new survey by Gartner shows only 12% of organizations felt prepared for the impact of the coronavirus outbreak in March. And while 26% of those surveyed believe the coronavirus will have little or no impact on their business, just 2% of companies believe they can continue business as usual.
The macroeconomic numbers are just as sobering. Manufacturing output dropped 6.3% last month – the biggest decline since World War II. Oil prices are at a 21-year low. And the number of people in the U.S. filing for unemployment hit a record high of over 30 million as of April 30.
The severity and pace of this pandemic caught many business leaders off guard. Amid this chaos, how can organizations respond today and prepare for future risk events?
Build a foundation for business stability in uncertain times.
Today’s global health and economic crisis highlights the need for agile, data-driven operations that enable fast and informed risk mitigation decisions. Here are three steps business leaders can take now to navigate uncertainty and bolster resiliency.
- Mobilize key stakeholders with quick access to risk data.
Every second counts during catastrophic risk events, and each function needs to be ready to act fast to mitigate the impact. Time spent tracking down information and creating a response plan (that could have been developed pre-crisis) is time wasted. Unfortunately, this is the reality many organizations are currently facing.
Proactive enterprise risk planning, data centralization and visualization are essential for quick movers. All risk-related information needs to be in a single, shareable, accessible location. Leverage technology to connect risks, correlate their relationships and paint a clear picture of risk exposure. Armed with that information, risk leaders position themselves to immediately identify vulnerabilities, project the risk impact of different scenarios, and respond to any crisis. If a key supplier is based in a highly affected region, for example, you can instantly see how a disruption with that partner – whether a supply issue, delayed lead time, or liquidity problem -- would impact your ability to deliver for your own customers, and you can act accordingly.
- Understand supplier and third-party risk exposure.
Which suppliers are operating in global hotspots? What is the impact on strategic suppliers? Which operate in highly impacted industries – travel, hospitality, healthcare, foodservice – and how are they specifically affected?
The landscape has changed dramatically, so take the time to assess -- and regularly re-assess -- third parties. Ask all partners to complete detailed, pandemic-specific assessments that account for the full spectrum of risk – such as security, employee health and safety, and financial distress. Your business depends on having a clear understanding of the current status of your critical third-party suppliers, their mitigating actions and your own exposure.
- Collaborate with HR to fortify success and workforce planning.
What happens if the CEO, CRO, or other members of the executive team contract the virus and are too sick to work? Proactively work with HR to identify potential replacements several levels down the corporate ladder, so if key employees fall ill, colleagues can quickly step into those roles to offer stability.
Many organizations also are making difficult decisions about layoffs, furloughs, and other headcount changes to reduce costs. As with all risk-related decisions, consider the big picture. Letting go of too many (or too few) staff could have far-reaching consequences on growth, quality of service and more. Hanging onto critical talent will help the business rebound faster when conditions improve.
Prepare Now for the Next Crisis
The coronavirus pandemic and the resulting disruption has been unlike anything we’ve ever seen. That said, the principles for response remain the same as for any crisis: Know where your vulnerabilities are, leverage data to make calculated decisions and be agile in your response.
We will come out on the other end of this crisis. But there will be others. If we can learn from our experiences, we’ll be better prepared to respond faster and more intelligently when the next crisis happens.