Article

Crisis management planning lessons from the COVID-2019 outbreak

On 20 January 2020, novel coronavirus pneumonia was revealed in Wuhan by public healthcare practitioners. The whole of China has since been united in its efforts to fight the epidemic. All levels of government have launched health and safety responses, and some enterprises with advanced epidemic crisis management plans launched immediate emergency responses. As a professional services firm with rich experience in crisis risk management, Deloitte Risk Advisory published 10 Key Actions for Enterprises in an Epidemic (the 10 Actions) on 28 January to help enterprises that are inexperienced or lack crisis risk management plans to take prompt, effective action.

To help enterprises progressively implement the 10 Actions, Deloitte interviewed a multinational, service-oriented enterprise that in response to the epidemic has taken a series of efficient, powerful measures that match the 10 Actions. This article sets out the best practices of this organization, which we will call ABC to preserve its anonymity.

First, establish an emergency decision-making organization

On 24 January, ABC established an epidemic response working group, headed by the person in charge of its Eastern Region, which covers Hubei, the province most affected by the epidemic. The team members also include the China CEO and the heads of its risk and security, human resources, logistics support, marketing and communications, information technology and finance departments. Implementation was promoted based on the organizational structure, reporting channels and division of labour set out in ABC's epidemic risk management manual.
During promotion, the working group found many issues still needed to be submitted to the decision-making committee in accordance with the organization's articles of association. Given the importance of prompt decision-making during the epidemic, the organization decided to add decision-making committee members to the working group who were not originally included, reducing the number of reporting tiers and improving efficiency.
When the Chinese Government announced the extension of the Spring Festival public holiday, various organizations announced notices delaying their return to work. ABC's working group immediately realized its emergency response was not a short-term task, and that the delayed return to work would challenge and impact its normal business development. It immediately decided to further expand the scope of working group members and add two core business line leaders.
At the same time, having referred to the 10 Actions, the working group assessed its professional strength and contacted ABC's external legal and risk consultants to so they could seek professional advice at any time.

Second, assess risks and clarify response mechanisms, plan and divide labour

ABC established an epidemic crisis management manual after SARS in 2003, and updated this after avian influenza in 2009. The manual clearly defined crisis conditions, mechanisms for initiating crisis responses, the formation and composition of emergency response teams, the division of labour and key work of each member, and how the work would be done. It included education and training for all staff and the use of strategic scenario analysis templates.
As early as the day on which the official warning about COVID-19 was issued on 20 January, ABC launched a business continuity plan, and its chief risk and safety officer deployed and made staff and business arrangements in Wuhan, including immediately implementing a flexible working mechanism and encouraging work from home. The IT department increased network bandwidth and enhanced other software and hardware to support remote work, and HR started to produce statistics on employees' health.
With the establishment and operation of the emergency response team, ABC assessed various risks and formulated responses according to its analysis of different scenarios, gradually improving its epidemic response mechanism as well as various work templates and toolkits.

Third, establish a positive, active means of communicating information to employees, customers and suppliers, and create standardized communication documents

According to the manual, under the leadership of the working group, the HR department was responsible for communication with all employees; the marketing and communication department dealt with communication with the outside world, including governments, customers, suppliers and other stakeholders; and the CEO was responsible for communication with ABC's Asia Pacific Region leadership and global headquarters. The content, frequency, format and tone of communications was determined by the working group.
Communication with employees encompassed email, telephone, SMS and online meetings. The contents included physical and mental health instructions and guidance, return to work arrangements, policy updates on leave and overtime, travel restrictions and special situation communication and approval policies, as well as details of flexible working mechanisms.
The main communications with customers and external stakeholders covered the impact of the epidemic on ABC, its customers and other external stakeholders, the emergency actions it had taken, answers to common problems arising during the epidemic, as well as channels and contact information for individual questions and communications.
Given all these communications contained a huge amount of information, and ABC's policy of facilitating timely notification of internal and external stakeholders on queries and updates, the organization also provided direct links to special pages on its company website and intranet about its outbreak responses, giving users all the information about the epidemic and linking to other useful websites, including the WHO and the CDC.

Fourth, maintain the physical and mental health of employees, and analyse the nature of different businesses and jobs to design appropriate solutions for the resumption of work

As a large, service-oriented enterprise, ABC had long since adopted a flexible work policy, but most of its middle and back office departments still worked from a fixed location. After the COVID-19 outbreak, the working group immediately initiated a flexible work mechanism for middle and back office staff, including its logistics support department, arranging for them to enter the workplace on a rotation basis. HR and other back office support departments went into the office one day per week to conduct the minimum on-site work required to continue basic operations.
ABC used optimal technical measures to establish information flow and data on the health of employees in its various units. Four days after the establishment of the working group, it launched an employee health declaration platform. In one week, travel and health status information on nearly 20,000 employees, who were scattered across the world due to the Spring Festival holiday, was collected. The information platform allowed information to be input via mobile terminals, and the data could be compared with that held on employees in ABC's HR system. By sending automatic email and SMS messages, it could automatically remind employees to input information. Moreover, different declaration frequencies could be set according to the region where employees were located. Colleagues in Wuhan were required to declare every day.
The working group also designed different processes and communication templates and channels for reporting results. No suspicious or confirmed cases have been found at the company.
After staff in various locations gradually returned to work, ABC further upgraded its employee health declaration system. So it could provide the required protective measures, it ascertained the daily work locations of employees unable to work from home.
For employees working on company premises, ABC upgraded its for seat and meeting room reservation system, connecting this to its office entry security system to ensure no colleagues made reservations without necessary protection.

Fifth, attach importance to supply chain risk response planning

Supply chains are not the most important area of the service industry, so the working group initially only communicated with existing suppliers, in accordance with its manual, such as cleaning and express delivery providers. But on 21 January, the first day on which the company provided masks to its nearly 20 offices across China, the team immediately realized its supply of masks would face stiff challenges.
In response, the working group immediately contacted ABC's headquarters and other regions to request masks, and mobilized management to guarantee mask supply. At the same time, based to information from its health declaration platform, data analysis and predictions were made to ascertain actual demand.

Sixth, develop solutions to performance and customer relationship maintenance risks caused by an inability to quickly resume production

Inspired by the 6th of the 10 Actions, the working group immediately communicated with ABC's legal department and the heads of each business unit to begin a comprehensive review and evaluation of contracts, including whether there were risks of temporary cancellation of contracts at the signing stage, terms not being met on time, temporary suspension or termination of executed contracts, and failure to complete contracts. There was also a risk that recovery of accounts receivable would be difficult.
After comprehensive evaluation, personnel from each business unit communicated promptly with customers and suppliers in everyone's best interests.

Seven, practice social responsibility, do a good job managing stakeholders, and add sustainable development strategies to decision-making

Due to its large number of employees, it was very difficult for ABC to rapidly understand governments' work resumption, transportation and isolation requirements. The working group arranged for a team supported by the technical department to collate compliance requirements in real time, analyze and handle these, and then promptly transmit them to corresponding departments and personnel;
Meanwhile, on 24 January, ABC, which is an established practitioner of corporate social responsibility, donated money to support Wuhan. Its foundation also called on employees to donate money to support Hubei. It has donated millions of yuan in cash and medical supplies, including surgical masks.

Eight, properly arrange employee data, information security and privacy management

ABC has very strict data security management and has been audited by the International Organization for Standardization. To meet customer and government needs for employee safety information, its risk and safety department formulated a data safety management system for employee health information, and reminded and guided employees to implement this through multiple emails.
ABC launched an IT security emergency response plan in spring 2020 to ensure the safe and stable operation of its information systems during the epidemic, including arranging remote and on-site personnel, establishing a 24-7 remote and on-site duty system to ensure real-time monitoring of computer room operations, its networks, systems and application programs, and use of resources.
After people returned to work, the IT department further upgraded requirements for remote office software and hardware facilities, shared daily equipment and software usage suggestions for remote offices, and issued quick guidance to employees on how to use resources.

Nine, enterprises need to consider adjusting budget, implementation and cash flow plans, and international trade early warning mechanisms

Based on scenario analysis of the economic impact on the company's business, ABC set out emergency budget adjustment plans, and made precautionary arrangements for possible capital flow problems, including interim board meetings, improved examination and approval of bank loan limit management, and access to temporary funding positions within the group.
On this basis, stress tests were carried out for extreme situations, and related response measures and trigger conditions were formulated. Responses will be activated if the stress-test conditions occur.

Ten, use the emergency to upgrade enterprise risk management mechanisms

Although ABC already has an advanced epidemic crisis management manual, and has played a positive role in the prevention of the epidemic, the extent and scope of COVID-19 are not comparable with SARS or avian influenza. Therefore, the team leader interviewed by us suggested that after the war against the epidemic ends, it must sum up its experiences and lessons, and update the manual.
In addition, the impact of the epidemic could last for some time, and various means of remote working deployed as emergency measures could become the mainstream. This should prompt discussions at every enterprise about requirements for an agile organization, online services, rapid response and other capabilities.

For more information on how to strengthen your enterprise risk management in particular scenarios, or if you have any questions, please contact Deloitte China Risk Advisory at RAMN@deloitte.com.cn.