Responding to COVID-19 requires leadership and ongoing operational resolve
Business leaders across every industry face a myriad of important and difficult decisions in dealing with a situation that is highly volatile and for many unprecedented. As new information keeps pouring in, scenarios for the crisis change and prompt new decisions, on a daily basis.
In a situation like this, business leaders have a duty to ensure employees’ safety and security, limit client impact and maintain efficient and effective control over business operations. This is by no means an easy or trivial task considering global scale of the crisis, the complexity of modern supply chains, and our usual reliance on international mobility.
Based on Deloitte’s global experience with crisis management, a grounded understanding of the leading practices of multinational companies in Business Continuity Planning (BCP), and analysis of past incidents and major emergency management of infectious atypical pneumonia, H1N1 influenza, Ebola hemorrhagic fever and other major infectious diseases, we have gathered some recommendations to be aware of.
Act quickly, but in a coordinated manner
In the face of the current epidemic, Deloitte believes that the greater the urgency, the more important it is for companies to stay in control, be organized and orchestrate their crisis management carefully. This will take considerable resources and require critical skills. Only through strong organization will the company be able and agile enough to respond professionally and timely.
Duty of care comes first
The first obligation of any company is to take care of its employees and ensure the safety of other stakeholders. It is key to be able to monitor all employees’ whereabouts to ensure they are not putting colleagues, clients or others at risk. In this regard, companies should establish a staff health monitoring system while still keeping employees’ personal health information confidential. Additionally, companies will need to ensure the safety of working environments and strengthen epidemic safety education.
Understand and deal with the risks to your business continuity
Many multinational companies have established emergency contingency plans or business sustainability plans, usually implementing them immediately in the event of a major emergency. If a company has no such plan, it should conduct a comprehensive assessment of all risks straight away, including assessment of employee, outsourcing, government, public and supply chain issues. According to the risk assessment, the company should respond to issues regarding office space, production plans, procurement, supply and logistics, personnel safety and financial capital.
Anticipate supply chain disruptions
With the possible shutdown of geographies, different crisis scenarios must be developed and analysed, and business continuity planning done accordingly. Additionally, companies must have an overview of the pandemic preparedness of critical suppliers. In inventory management, organizations must consider the prolonged inventory digestion cycle caused by blocked consumption, the corresponding increase in financial costs, and the pressure on cash flow. At the same time, in industries with long production cycles, organizations must prepare in advance for a rebound in consumption once an epidemic has eased to prevent the risk of insufficient inventory.
Avoid dropping the ball on other risks
The COVID-19 situation will require focus, but be mindful not to open up the organization to other threats like cyber-attacks, fraud, etc. which often become more likely as criminals take advantage of an already bad situation.
Manage your commercial obligations and relationships proactively
Business partners will likely challenge, invoke or seek to renegotiate contracts as they come under strain, or as governments intervene with regulation. Companies should anticipate this, map their contractual landscape, and understand how different crisis scenarios will play out. The more proactive the approach the bigger the chance of protecting the key relationships that are critical for the company – or in case of an escalation, the better-prepared company will have secured and retained evidence to use in a potential civil lawsuit.
Mind your owners
Investors are extra jittery and looks closely at your response and crisis management. Stakeholder analysis, management, and communication will be important and again with proactivity and continuity being the key.
Step up your financial binoculars
Many companies need to look at budget adjustments and early warning mechanisms for international trade. According to Deloitte data, 46% of companies plan to lower their performance hurdles for 2020. At the same time, companies must pay attention to cash flow consequences, and arrange cash scheduling to ensure the safety of funds according to the rhythm of upstream and downstream suppliers and employees' work plans. In addition, they should be aware of potential tax consequences caused by operational impacts. In case of, for example, closure of production facilities or the triggering of an insurance event, it will be relevant to analyse the impacts on the transfer pricing setup of the group.
Respect privacy and maintain information security
Companies should establish good employee data management, and register internal and outsourced personnel, suppliers, partners, and other personnel with whom they have contact. They should also formulate timely emergency response plans to ensure a stable and secure operation. To arrange for remote and on-site staff to carry out their duties, establish 7*24 hours remote and on-site support to ensure the monitoring of computer rooms, networks, systems, applications and resources. Companies should also protect personal privacy and clinical trial data, especially to those patients (whether customers or employees), strictly control access to, transmission and usage. For clinical and medical data, access control and protection level should be set up.