18th June 2020
This article was last updated on 18 June at 10:00.
COVID-19 is now on everyone’s risk mitigation strategies. Some emerging risks are difficult to foresee and the impact on organisations cannot be judged. We have seen that COVID-19 has had a global impact on local and multi-national organisations. The risk of a pandemic has been of little consideration due to low probability of it happening, but here we are dealing with an unprecedented situation. Sooner or later there will be another crisis which could trigger further crisis.
There is no single set of procedures or responses that will help an organisation prepare a magnitude of this pandemic, however, organisation can take mitigating steps to reduce the level of impact on its operations. Many organisations have put into action their business resilience plans and are simulating risks to assess the impact on its organisation and future operations.
We have seen a spectrum of risk management tools that organisations use to identify, evaluate, and respond to risks although not all risks are quantified by making reference to financial or non-financial impact. This makes it a challenge for any organisation to prioritise risk and how it should respond on high impact risks.
Management and organisation leaders are responsible for managing risks. To understand the organisation impact to its staff and key stakeholders, the type of risk mitigation strategies and positioning can be invaluable. Some of the key actions that management leaders should consider are:
- Understand and assess the full range of immediate risks – for example business travel, availability and functionality of employees working remotely for prolonged periods, consider interruptions to supply chains. Is there a possibility of transferring critical operations to different locations?
- Financial risk assess – risk management strategies and impact analysis should include financial impact to the organisation and how certain situations would be managed where the financial impact is significant.
- Communication – is there two-way communication with staff and stakeholders, including customers, and is there support for staff to be able to support the organisation with critical business functions.
- Business resilience plan – stress test existing business resilience plans and crisis management plans. Assess the appropriateness of the plans given the COVID-19 situation and potential second wave of COVID-19.
- Long term risks – management leaders should think beyond immediate risks. For example, ongoing cyber, financial strain, reduced income stream, and reputational threats.
- Long term implications – management leaders should consider and advise on long-term implications to the organisation by considering the current situation and its recovery lasting for several months. This would have a direct impact on productivity, business growth projections, supply chain, financial reporting, cash flow, sustainability, contract compliance, technology, governance, health, and safety etc.
- Continuous monitoring and update of evolving risks and impact – having a robust risk management framework to identify emerging risks and having actions to mitigate or reduce the impact to the organisation.