Coronavirus: 6 New Business Risks
Your risk management strategy can and should play an important role in managing your business’s response to the coronavirus outbreak. By implementing the right risk management strategies for coronavirus, your company can reduce your exposure to the risks presented by this and future crises. I want to discuss some of the most common issues companies have encountered in the post-COVID-19 world and how you can mitigate their impact. Thankfully, this is the perfect time to begin planning for the future and put our newfound experience to work.
Below are some of the key risks companies will face as the COVID-19 crisis deepens. Awareness of these risks will help prepare team members and position your business for success
Risk #1: Social Distancing Disruption
Social distancing is a term widely applied to the new social norms designed to assist in controlling the spread of COVID-19, or “bending the curve.” Throughout what health experts are calling “peak contagion” (that point where new cases peak worldwide and subsequently fall), policies of “social distancing” are most likely to be necessary among the U.S. workforce to prevent future outbreaks. The challenge is that every community will face varying degrees of outbreak at different times. Expect travel restrictions or cancelations throughout this peak length of roughly five months. Because of the piecemeal approach of states to enact social distancing measures, we are also likely to see future outbreaks as we bring the economy back online. Will you be able to continue generating sales with your executive team, and administrative offices remaining remote or offline? Nearly 20% of all retail sales worldwide were completed online in 2019. With in-person sales cycles potentially disrupted, a strategy for how your organization will continue to capture the remaining 80% of business activity will become a vital aspect of any business continuity plan.
Risk #2: Accelerating Digital Transformation
If given a choice between picking up essentials from the local grocery store while maintaining a 6 foot distance from every other person, meticulously washing your hands, and risk exposing yourself or your family to a deadly disease, or, conversely, tapping an app and having the same goods brought to your home; which do you think you will be more likely to choose? This is especially true for businesses that cater to anyone 45 and younger.
For years, digital transformation has been a byword in almost every corporation. Forbes estimates 70% of corporations have transitioned to a digital workload. The confluence of factors around the world today should finally provide an answer of how important digital transformation is to your organization. It has been proven that the companies who embraced digital transformation as a risk mitigation strategy, have been able to navigate this pandemic more effectively.
How much business does your organization stand to lose if you cannot appeal to customers who would rather weather the storm at home?
A second consideration for companies testing their continuity plans in the face of a worldwide pandemic is whether your IT infrastructure can deal with the added demands of online clients and additional remote workers. A more conventional challenge is how existing records, or intellectual material may be remotely reported, accessed, and managed securely. What happens to the system during periods of increased demand because of a surge in remote workers? Who is there to physically protect this digital infrastructure if the office is shut down?
Another, more acute concern for risk managers, is the understanding that hackers have placed a premium on compromising and profiting from online assets. Ransomware attacks, Zoom bombing, Advanced DDoS attacks, Phishing excursions, and even innovative browser-based attacks targeting site visitors have been and will continue to be used by bad actors. The rapid adoption of digital technologies by businesses has often lagged a company’s ability to regulate their use. As demand continues to shift to online commerce, the need for businesses to both embrace and manage this transition is increasingly clear.
Risk #3: Employee Productivity Suffers
Economists estimate that nearly 40% of the U.S. workforce will be affected by COVID-19 either directly or indirectly. Even though your employee may not be sick, they may need to care for a sick child or relative, or likewise impacted by child care closings or medical care shortages. Being extra empathetic to your employee’s needs will pay dividends in the long run. Your employees are important to the success of your business.
Risk #4: Supply Chain Interruptions
The global economy is highly integrated, and most businesses rely on suppliers in order to operate their business. Across the board, we are seeing disruptions to supply chains ranging from raw materials, technology, food, heavy equipment and even manufacturing. For example, within the last two weeks we’ve seen major food processing plants brought offline due to COVID-19. Simply due to the nature of how these plants are structured and the sheer number of people working at these facilities, any sort of viral outbreak is likely to spread like wildfire. These disruptions have a dramatic impact on the supply chain. Let’s also not ignore the trade war between two globally dominant trading partners that remains unresolved.
Risk #5: Recession Risk
A key indicator for economic growth may very well be the hospitality, travel, and tourism industries, which have been hardest hit by the outbreak. Experts remain bearish that we will have a vaccine for COVID-19 by 2021, although there are promising signs coming out of institutions like Emory University who are already testing the first coronavirus vaccine.
Luckily, we’re likely to be much better prepared for the second wave if and when the second wave arrives. Companies and agencies will continue to stockpile necessities in order to lessen the supply chain pressure caused by future lockdowns or shutdown. Leading experts, many of whom will never appear on the nightly news, continue to put in the hard work to keep our world safe.
Risk #6: Political Risk
The United States will go through an election cycle in November, at the same time experts predict the second wave of COVID-19 will arrive. This election, more than any other in recent memory, represents two distinct sets of policy choices that will have a big impact in how businesses are taxed, regulated, and even how they manage international talent.
Either state of affairs is manageable. It’s the uncertainty surrounding that state of affairs and how those policies will be enacted that will be a key risk. The U.S. deficit is high, and spending is likely to increase as more economic stimulus moves through congress. The full impact of this new spending may not be fully realized, however; as this is new, uncharted territory for everyone.
Next Steps: Coronavirus Risk Assessments
So now what? It may sound bleak, but every crisis is an opportunity. The companies that have a plan for how to seize that opportunity are the ones who will thrive during this crisis. We as a country have a wonderful opportunity to leverage the lessons we are currently learning and apply them to future crises. Despite the novel nature of this outbreak, agencies like the FBI have been preparing for this eventuality for years. As was the case in 2008, and during the Savings and Loan crisis in the 1990’s a new organization or agency will likely be stood up to investigate and prosecute cases of fraud regarding the Payment Protection Program (PPP) and the Small Business Administration (SBA).
Organizations need to have in place actionable mitigation strategies that address each of these risks and put a business continuity plan for coronavirus in place. By considering these measures you will be in a better position to reduce the impact that the coronavirus crisis will have on your business. New innovations, industries, business models, technologies, and whole sectors will be developed in the wake of this pandemic. The renewed focus on economic independence will ensure sectors like manufacturing will see investment and growth in the coming years. Many business owners struggle to fully grasp the myriad risks they face. That’s why we’ve built a framework that teaches businesses how to anticipate and navigate risk before it becomes a crisis. Don’t wait for the next crisis.
Let’s make a plan together.
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