Business resilience: Learnings from the COVID-19 pandemic
It is safe to say, most of us were unprepared for the COVID-19 outbreak, and even more were unprepared for the mitigation measures taken to prevent the large-scale loss of lives.
Infectious diseases are not new, as far as risks go - these risks have existed in modern times, e.g. Spanish flu, avian flu and Ebola. The situation is further aggravated by the fact that local and global economies were already depressed at the onset of the pandemic. This is still having a major impact on global economies and worse still on the African continent, due to socio-economic conditions. Furthermore, it is resulting in the rise of unemployment and many businesses, particularly SMMEs, either going into or having gone into administration.
Organisations without Business Continuity Plans (BCPs) were caught unaware and even those with BCPs had not included pandemic/lockdown in their risk register. Hence, no contingencies were in place, causing them to work under crisis management conditions. Our ability to return and grow beyond the current crisis will be determined by our resilience. Resilience fundamentally refers to the ability of a system (family, team, province, company, country) to continue to maintain its function and structure in the event of a shock.
The larger the shock, the longer it will take to return to a state of equilibrium. Some industries will never be the same again, as the system resets itself. In South Africa we witnessed the “shock” of lockdown on crime as theft, burglaries and armed robberies plummeted during lockdown level 5, but now as we exit lockdown level 4, crime continues to rise based on initial claims statistics. The impact of the lockdown is compounded by socio-economic decline and growing poverty levels.
With the easing of the lockdown and businesses returning to work, it will necessitate the need for a “recovery phase”, whereby risk assessments will have to be undertaken of businesses, to evaluate their current status. This will include aspects such as raw material stocks, manufacturing conditions, supply chain availability and their customers’ circumstances. Examples could include understanding which markets have been lost and what are the requirements of the remaining markets and any specific changes that have resulted from the pandemic.
Experience tells us that human beings tend to have short memories and, very soon, even this crisis will be forgotten and those of us who remember and adapt will be ready for the next one. A good leader will spend at least 50% of their time considering the future to identify possible opportunities and threats. Unfortunately, we find ourselves spending 80-90% of our time managing from one crisis to the next. We are stuck in the present, facing uncertainty without enough resilience to forge ahead with confidence. How can we build resilience to withstand similar “shocks” in the future?
Key lessons from the pandemic and subsequent lockdown will contribute to building organisations that can survive the next crisis and thrive beyond it. We need to think about being more resilient in future by including the following key factors into our BCPs and integrating them effectively throughout the organisation:
Renegotiate supply contracts to fast-track supplies from oversees and local providers. Avoid declaring force majeure and negotiate with customers to agree on mutually beneficial terms of supply.
- Leadership and communication:
Ensure that leadership is equipped to deal with a crisis and that communication is engrained across the organisation, to guide people through the crisis and define what is required now in order to sail safely through the eye of the storm. Teams need to be able to adapt to changing circumstances.
Increase stock levels for raw materials and finished goods.
Increase health and safety preparedness by ensuring that additional PPE specific to viruses is safely stored and ready for emergency use.
Insurers have already reacted to the effects of the pandemic by excluding many related claims. Businesses should undertake a gap analysis to mitigate shortcomings in insurance cover.
Look at the business holistically and not in isolation, and realise that suppliers and customers form an interwoven and co-dependent part of the business. In other words, emphasise that individual company BCPs should be, in parts, integrated with their suppliers’ and customers’ plans.
Regular health checks should be continued, with added aspects that could indicate possible pandemic pre-warning. It is expected that the Occupational Health and Safety Act, the Mine Health and Safety Act and other relevant regulatory documents will be updated to include similar prescriptions.
The lockdown has taught us additional skills in communication and using technology to conduct our work and business activities off-site. Business should also align their IT hardware procurement policies to ensure that all appropriate employees have equipment (e.g. laptops, notebooks, tablets, etc.) that can function remotely. Business travel could also reduce as a result of the above and companies should embrace the use of technology and consider interacting with clients differently.
An unintended consequence of working remotely is the increase in exposure to cyberattacks. The risk assessment should investigate all possible cyber risks and the appropriate prevention measures taken. These will be included in the BCPs and company IT policies should be updated.
Extend repatriation protocols to include the immediate extraction of personnel from overseas territories in case of pandemic outbreak in those regions.
Relevant and integrated BCPs are a must for businesses, no matter how small. History shows that most organisations that emerge from a crisis ahead of their competitors, retain their lead almost indefinitely because they are more prepared and capable of dealing with the uncertainty and volatility of a system in flux. The challenge before us is to prepare not just for one known scenario but for the hundreds of unknown scenarios that may disrupt and possibly even destroy business and society as we know it.
By David Vines: Risk Engineering Consultant and Jannie de Beer: Risk Specialist
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