Written by Luc Machiels
(click here to download the COVID-19 risk assessment tool)
The COVID-19 epidemic is a tragedy — the already most vulnerable populations will suffer disproportionately from the outbreak of the new disease. While this fact needs to be addressed in a direct way, it is also important that business leaders assess carefully the situation as it is affecting the global economy. Our immediate responsibility is to keep sufficient room to manoeuvre for our businesses given the uncertainties linked to the epidemic.
Immediate measures
In the past week, you have taken the immediate measures suggested by the authorities and the World Health Organization such as having symptomatic employees stay home, encourage as much as possible working from home, avoid traveling, increase awareness about preventive measures (e.g., avoiding public activities, frequent washing of hands with soap and water), increase the frequency of cleaning, disinfecting often the common areas of your office buildings to protect your employees, etc.
Keeping room to maneuver
Since there is now evidence of community transmission, it is certainly time to reflect on how the epidemic could affect your business operations in the weeks to come — it is essential that you keep the ability to evaluate your options as the disease propagates. To do so, you should critically assess the robustness of your business model and the possible actions you could take to mitigate the risks of the continued spread of the disease. To this effect, we have prepared a set of suggested questions, which you might find useful in performing your analysis.
Critical operations and teams
- What are your critical operations which could not suffer disruption?
- What are the teams able to control or perform these critical operations?
- How do you make sure that teams remain physically separated so that if a team is affected by the disease, it does not spread to other teams?
- How do you ensure that you will always keep critical skilled personnel available (redundancy, etc.)?
Supply-chain disruption
- Have you recently performed a risk analysis of your supply chain — could you update that analysis to reflect your operation today?
- Can you isolate the likely points of disruption of your supply chain given the above analysis?
- What risk-mitigation measures could you take? (Could you further diversify your base of suppliers to mitigate that risk?)
Markets
- How is the demand for your products likely to evolve (e.g., high demand as your customers are creating stocks, or low demand if your products cannot reach their markets)?
- Should you proactively shift your production or adapt your services to emphasize certain products or services while reducing others given the crisis?
- Are there additional services that your company could provide that would be needed as the outbreak propagates and habits of customers are disrupted (e.g., home delivery)?
Finance
- How much time can you sustain reduced cash flows given your fixed-cost base?
- What are the alternative temporary financing sources (e.g., state aids, etc.)?
- What are the various plausible scenarios for the impact of the outbreak on your business?
- What would be the revised business plans for 2020 according to these scenarios?
Cost-base management
- In case of reduced operation for an extended period, what are the possibilities to manage your human resources cost base (e.g., unemployment benefits, encouraging unpaid leave of absence, state aids, etc.)?
- Should you temporarily close some offices or facilities?
Task force
Within your organization, a task force is in place or will need to be mobilized rapidly to:
- carefully monitor and anticipate the evolution of the epidemic and its consequences -which includes, among other things, monitoring carefully the recommendations of the authorities (often in several countries) or global agencies and put them readily into application in the enterprise; reviewing and weighting the new evidences in real-time by monitoring several official and nonofficial news channels, etc.
- coordinate the analyses suggested in the previous section with the management and operational teams; it is critical that these analyses are revised on a continuous basis, so as you can swiftly adjust to the evolving situation as the disease propagates.
Of course, we understand that the tasks are numerous and this situation can place significant stress on your management and operational teams. We thus stand ready to support you, for instance in helping you to coordinate your task force, or to perform specific analyses, or providing our views and feedback (click here to download the COVID-19 risk assessment tool).
We remain available to support you with the challenges regarding the COVID-19 crisis, do not hesitate to reach out.