How to Prepare for and Manage Unanticipated Global Risks

The scale and severity of the coronavirus outbreak sent shockwaves around the globe. The threat to human life and the need to protect our most vulnerable necessitated unprecedented levels of change, causing widespread disruption to the way we work, interact and go about our daily lives.

Companies had to set in motion business-continuity plans, and they had to do this at breakneck speed. These plans have been designed to preserve operations in the face of a range of possible emergencies, yet the global pandemic is an extremely rare event that has caught many firms by surprise.

The number one priority for all businesses has been the protection of employees, customers and all contributors to the supply and value chains. Within a very short space of time, companies have had to adapt to conditions that are far outside business-as-usual.

For many markets, the business impact was felt first in the supply chain, but the economic impact grew as the virus swept across the globe, altering many aspects of daily life. The travel and hospitality sectors were hit particularly hard, and other industries weren't too far behind. While demand fell in many areas, in others it soared, with grocery retailers coming under intense pressure - both in-store and online.

Preserving Operations

Companies working through the crisis have found themselves battling many challenges, such as maintaining a workforce in the face of enforced staff absences. Wherever possible, firms have drawn on plans and processes for remote working, marking a significant shift in the daily routines of their employees.

Switching from defunct, coronavirus-infected offices to alternative (back-up) sites is another operational option. A similar approach has been applied, at times, for supply chains: when primary suppliers have not been available, back-up suppliers have been called upon to provide materials.

Such business continuity measures are sound practice and work to help preserve at-risk operations during times of crisis.

Staying in Touch

Crisis communications plans are vital to reassuring and informing employees, customers and other stakeholders. They need to strike the right balance - detailing any changes to business-as-usual while giving advance warning of what is likely to follow.

Employees must understand not only the measures that are being taken for their health and safety but also the details of any changes that have to been made - or will be made - to work practices and processes. Moreover, they desire reassurance about their livelihoods.

Despite the challenges, communications in times of crisis are central to maintaining customer relationships and brand values. It is therefore important to be prepared with the right spokespeople, messaging, timing and execution.

Crucially, companies need to be prepared to pivot, as the pandemic evolves. Extremely rare tail events can escalate at an alarming rate, and plans must be flexible enough to adapt.

To decide upon and implement action, many companies now hold a senior leadership daily stand-up meeting, which very well may rise to several meetings per day, as the crisis deepens.

Companies that had a comprehensive contingency plan in place, pre-pandemic, have held an advantage, because they have been able to organize these sessions quickly - knowing who should attend, what the responsibilities of varied employees should be and how decisions can be quickly executed.

Leveraging Data for Decision-Making

In all emergency situations, planning and data play essential roles in maintaining business continuity. The business-continuity plan provides a structure that companies can draw on as they start the potentially long fight back to normality.

Data, meanwhile, underpins the expeditious decision-making that must take place. Knowing that reliable data is on-hand can take some of the stress out of crisis handling. The data in question will take many forms, but must include employee locations and contact details and operational data on supply chains, site locations, logistics and more.

By making connections in the data, risk managers can see the impact that a pandemic is having today and is likely to have in the future. Proper support can be given to the people, physical assets and third parties that enable key activities, like maintaining stock levels. Risks, and controls for those risks, can then be mapped accordingly.

Crisis management strives always to respond effectively, and in a timely way, to minimize negative impact. The goal is to equip the senior team managing the crisis response with the data and tools they need to make informed decisions.

Risk management helps provide a foundation for an effective response - one that draws on scenario planning and reliable data. At times of crisis, data-driven decision-making avoids potentially ill-informed action being taken, so that operations can be preserved and business activities can be sustained as much as possible.

Peter Bannister is the SVP of GRC at MetricStream. Prior to joining MetricStream last year, he led the GRC program at Fannie Mae.