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How to handle and prepare for unforeseen global risks

In just a matter of weeks, the outbreak of COVID-19 took the world by surprise and upended our economies, businesses, and way of life. In response to the crisis, we have seen companies quickly action business continuity plans and transition to working remotely following the strict lockdown measures imposed by many governments.

Over the years, the world has shifted towards a more interconnected and globalised business model. This established a complex environment for businesses to prioritise an effective risk management programme and incident response team to ensure resilience. With the outbreak of the coronavirus, this need has only intensified.

So much is out of our control that in the face of all this uncertainty, how can organisations handle the ongoing pandemic and prepare for future unanticipated risks?

The need to protect essential operations

Certain industries have been more impacted by the demand for social distancing than others, such as the travel and tourism sectors which have essentially paused all operations. For many other industries though, the biggest impact has been the widescale shift to remote working which has greatly disrupted people’s daily routines.

In order to allow workforces to continue working from their homes, companies have needed to execute their business continuity plans. However, most of these plans will likely have been drafted before anyone could really imagine an event that would require such a need for remote working like COVID-19 has presented.

Consequently, 25% of companies failed to have a crisis plan in place and were unprepared for a sustained period of remote working. No doubt, organisations’ productivity will have been hampered while they scrambled for a resolution, however, this could have all been easily mitigated with a forward-looking risk management programme.

Operating with a forward-looking risk management programme allows organisations to establish a framework for risk identification and preparation in the face of wide-ranging and complex risks and a fast rate of change. Using a risk programme such as this can not only help businesses prepare for remote working, but it can also help protect supply chains.

This has been another area that the pandemic has particularly affected. While demand has fallen for certain goods, it has sharply risen for others. In recent weeks, supermarkets have been under intense pressure after panic-buying led to a surge in sales by more than two-fifths in March. The stress of increased demand has caused a delay in supply chains and meant that companies have had to resort to back-up suppliers to ensure products and materials are still available.

Without forward-looking risk management, many more businesses will have struggled to react effectively, so it is sound practice for business continuity plans to include the risk programme to protect essential operations for any crises.

The importance of communication

Everyone will be feeling the same level of insecurity and uncertainty for the future, so it is vital that organisations devote their time to well-considered crisis communications to be able to reassure and inform their employees, customers, and stakeholders.

Internally, a delicate balance needs to be struck between detailing any changes to business-as-usual operations while at the same time providing advanced warning of what changes are likely to follow. There can be no room for ambiguity as employees must be able to understand why certain measures are being taken for their health and safety.

Externally, business leaders will also need to maintain customer relationships and brand values, despite all the challenges they may face. Organisations need to have the best spokespeople at the helm that can deliver the right messaging. Timing and execution with empathy and sensitivity is critical throughout the crisis.

To establish a team that can achieve this, companies must first identify who should be attending these meetings, what the responsibilities of various employees should be and how decisions can be quickly executed. Any plans made must be flexible to the ongoing situation and this may require companies to hold several meetings per day to effectively respond to further pressures on the business.

The value of using data 

In order to create a successful business continuity plan that can be rolled out for any crisis, organisations need to see the value in leveraging data during their planning. Crisis plans will only be successful in providing a company with enough information to quickly regain normality if it is backed up by data.

With reliable data, business leaders are supported in their swift decision-making which can help to relieve the stress caused by crisis handling. At the same time, data can also help businesses avoid taking any ill-informed action. Data can take many forms, but at the minimum, it should include employee locations and contact details, operational data on supply chains, site locations and logistics.

Risk teams will then be able to piece the data together to assess the impact that a situation such as the current pandemic is having and understand the effects that it is likely to cause in the future. By being able to map all risk exposure accordingly, proper support can be provided to employees, physical assets and third parties that offer essential operations.

We are still in the heart of the pandemic and as the crisis develops, those companies who are on top of their forward-looking business continuity plans and are using reliable data will be the ones who can successfully manage and prepare for further unexpected risks.

 

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Peter Bannister

Peter Bannister

SVP Governance, Risk and Compliance

MetricStream

Member since

18 Mar

Location

Palo Alto

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This post is from a series of posts in the group:

Operational Risk Management

To share information, ideas and experience relating to all aspects of op-risk management and compliance with Basel II


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