Before the coronavirus outbreak, the U.S. was experiencing the lowest level of unemployment in decades. With strict quarantine measures and mandated business closures now in place for most of the country, a new reality is gripping organizations across industries. No organization is immune. If anything, the coronavirus crisis has revealed just how connected all segments of the economy are. Shutting down restaurants, for instance, doesn’t only affect those employees, it also impacts the farmers, bakers, cleaners, linen suppliers, and all the others providing behind-the-scenes support. And those people have their own suppliers, who have their own suppliers – all of which are feeling the effects.
Businesses have adapted to these rapidly changing conditions by sending workers home, cancelling events, and switching to videoconferencing. But the depth of the impact of the coronavirus caught leaders off guard. The closest comparison to the current crisis happened with the Spanish flu pandemic in 1919 – an event not in the collective memories of today’s leaders.
Resilience in the face of uncertainty
With crisis management plans out the window, many businesses are thinking creatively about solutions that will help them emerge from the coronavirus relatively intact and ready to go. So far, the organizations that seem to be handling this the best already had well-oiled processes in place to move quickly and decisively in a situation few could have imagined. They know where their risks are and aren’t afraid to make impossibly difficult decisions around the risk-reward calculus of action. Whether it’s shutting down retail outlets and cutting executive pay to keep frontline workers or switching from producing retail window displays to face shields, these organizations are nimble.
What will the coronavirus pandemic mean to your carefully crafted strategy? How can you effectively manage strategic risks in an environment where conditions are changing by the day – or even by the hour?
No matter where your organization is, there are three things you can do now – in the midst of the crisis – to help you become better prepared for the next one:
- Assess and quantify the risks you’re facing and get leaders aligned on the organization’s exposures. Market share, financial leverage, diversification, and the ratio of fixed and variable costs all come into play.
- Map and prioritize your risks and model the impact on your current strategy. What’s your Plan B – or Plan C? Identify all the weak links and have a plan if one – or more – breaks. Take supply chain, for instance. If you are highly dependent on one company or one country for supplies, consider diversifying with suppliers in different locations, possibly closer to home.
- Note the information you need right now. Are you missing critical information that would help you better navigate this crisis? What parts of your crisis management plan are working? What parts are lacking? What systems, people, data, or processes do you wish you had before making the tough decisions you’ve had to make? What would help you make decisions more confidently? Record all this now while it’s still fresh, otherwise small, but important, details may be forgotten.
One thing is clear: traditional approaches to managing risk are useless in a crisis like this. By the time siloed functions come to agreement on action, the moment has not only gone, but the situation you thought you were dealing with has completely changed.
The way forward is to focus not only on the risks you know, but on preparing for those you don’t expect. This pandemic is a powerful reminder that risks do not respect silos. An integrated, coordinated response is essential for survival. The coronavirus pandemic may feel like a once-in-a-lifetime experience – but alas, the next crisis will be coming.
What do you need so that you don’t find yourself in the current situation ever again?