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Risk and resilience – top tips for business scenario planning

As many countries begin to emerge from the first wave of the COVID-19 pandemic, now is the time for businesses to plan ahead and prepare for a possible second wave, says Matthew Humphrey of RSM UK.

COVID-19 has had a hugely damaging impact on many businesses across the world. In the UK alone, according to the UK Office of National Statistics, nearly a quarter of UK businesses have been forced to completely close or pause operations since the start of the pandemic. Alongside that, falling stock prices, disrupted supply chains and a global lockdown has left many of those still functioning in considerably destabilised positions making them more vulnerable to risk.

In anticipation of a second wave of the pandemic, or an unrelated crisis such as cyber-attack for example, it is vital that businesses act now to create greater resilience and safeguard themselves to achieve long-term survival. This means learning from their response to COVID-19, evaluating the new normal and its risk landscape, and ensuring that their crisis plans meet the current threat level. Not to do so risks further harm.

What are some of the key steps that you can take to make your business more resilient against another potential lockdown?

  • Review lessons learned - The first thing is to ensure that you have heeded any lessons learned from the first lockdown period. Consider what went well and what did not. Next, ensure that you have a plan in place to make sure you can continue facilitating the successes and address the failings.
  • Review your risk profile and risk controls - Make sure that these have been updated for the way in which COVID-19 has affected your business and its activities. This should cover aspects such as customers, suppliers, operations, staffing. This risk profile needs to be kept under regular review by the company leadership team, potentially even daily.
  • Maintain vigilance - As a business leader, you must also remember that aside from COVID-19, other “big ticket” risks and issues will continue (probably made more challenging due to the pandemic) but it is easy to lose sight of these. These issues include those from a business as usual perspective such as technology and data security, compliance matters and the more extraordinary issues such as government policy changes and regulation changes. If these other items are not kept in check and properly managed, company resilience will be further weakened.

What can you do to ensure that your organisation not only survives but thrives in the wake of COVID-19?

Survival has much to do with resilience, so a large portion of recommendations are covered above. Additional considerations to build into the company response plans include:

  • Making it clear through effective stakeholder communications that the business objectives remain the same. During the peak of COVID-19, many reasons for businesses doing something or not doing something revolved around the response to the virus - it took over everything. We now know that we can operate within it. It is no longer a viable reason to simply stop.
  • Maintaining good governance is important by making sure that the company leadership and board room are still effective, and that the elements of direction and control are still being fulfilled. This might include setting a strategy as to the effectiveness of the internal control environment. Ultimately, a rudderless ship is no good in a storm.
  • As a business leader, you must listen to your stakeholders and what they are telling you. Whether they are your clients, suppliers, staff or the public, these groups will provide information which needs to be distilled and acted on as soon as possible.
  • Look at analysing what new things are emerging in your sector - what are your competitors doing / experiencing, what can we learn from them.
  • Stay abreast of specialist advice such as the government or their professional advisers.

Quickfire do’s and don’ts for scenario planning for a second spike in COVID-19.

1. DO reforecast to identify specific financial resilience and sustainability challenges.

2. DO take steps to re-shape the business as required, recognising that the way in which business will be done in the future will be different to today.

3. DO communicate with key clients and suppliers, and work more collaboratively to get through the lockdown, recognising that in some cases things do not always go as planned.

4. DO create a sense that we are all in this together, emphasising that preparation will ease the situation for everyone involved.

5. DON’T just fall back into doing things in the same way as before, embracing the new normal is crucial to success.

6. DON’T avoid using COVID-19 as an opportunity to re-think how to make your business more efficient, effective, economic. Grasp the nettle and make the change – it may create pain in the short term but will be best for the longer term.

7. DON’T ignore feedback and advice, no matter how negative it might seem. By carrying on and burying your head in the sand, the problems that are occurring will simply continue to occur.