Never underestimate the small, neither in life, nor in business. Not even if the size of your opponent isn’t visible to your eyes.
The diameter of COVID-19, colloquially called “coronavirus”, is around 120 nanometers (nm). Write down the number “120” on a paper sheet; then, add six zeros before that number. That’s the size of it.
In some years from now, the Hollywood movie industry could be releasing a thriller about the story of the one-billionth of a meter virus that managed to stop Earth. Perhaps there won’t be a need for a soundtrack because, if something is characterising this story, that’s the silence of empty streets. There haven’t been any bullets, not even one single bomb.
It’s as if, suddenly, the largest cities in the world woke up one day and everything had changed. These days, there isn’t magic at Disney, the Great Wall of China doesn’t seem that unbreakable and strong, New York and Madrid have managed to get some sleep, Milano’s pollution is unexpectedly low, and neither cars nor planes want to get to Rome. We’re fragile, as nature is, but the urgency of life in the 21st century doesn’t give enough room to reflect on that.
This sui generis world health crisis is a reminder of how the world is tightly linked socially and economically greatly due to globalisation. China has sneezed and the entire world is about to experience a tissue-paper shortage. Yes, epidemics have occurred throughout history, but the proliferation was slower and, in certain cases, more localised.
Considered the first global pandemic of this century, another type of coronavirus called SARS (severe acute respiratory syndrome), affected +8000 people and killed around 11% of them in 2003. However, experts argue that it didn’t have “the fitness to persistin the human population,” so it ultimately faded. COVID-19’s endurance seems to be higher. In this Bloomberg article, one can read that if the estimated cost of SARS was around $40bn, COVID-19’s cost could be three or four times higher.
Crisis management is an inescapable task of a business leader but, even if most of them have experienced at least one corporate crisis in the last five years, COVID-19 is already testing their abilities to the limit. They are severely concerned about the welfare of their people and their organisations.
This is the moment to prove the effectiveness of both business continuity and business resilience plans. However, the increasing need for isolation and quarantine that the fight against a quicker spread of this nanometric virus needs, is also making obvious the importance of having a digitally-enabled company which systems allow for seamless remote working.
Consider this article as a handy checklist to ensure your organisation is in the best shape possible to cope with what’s happening and what’s ahead. If you’ve already started, it’s always good to review what has been already put in place and think of other aspects that will make your crisis action plan stronger. If you are running late, don’t panic. The worst thing you can do is nothing.
The key to managing any crisis is preparation
The World Health Organization (WHO) has declared the Covid-19 outbreak a public health emergency of international concern. From how it started in late December 2019, to the situation we’re living three months later, many things can be said and written. What’s undeniable is its disrupting power that’s influencing negatively on people’s lives, businesses and entire communities.
In the beginning of 2020, both the mass media and specialised press inundated the news with numerous articles on an upcoming financial crisis. But none of them, not even the boldest journalist imagined that the trigger would be a health-related issue with global reach.
Organisations are facing significant challenges to which they need to respond rapidly. Based on the experience that the PwC Network has gained over previous outbreaks, we are working closely with local and global organisations to help them prepare and respond promptly to this novel situation.
First things first, the saying goes. Here are four basic actions that will be the pillars of any other action you plan to undertake:
Gather your Crisis Management Team or any other body that plays a similar role.
Identify the communication channels you will use to convey information.
Identify the audiences with whom you want to primarily communicate with, (employees, clients, stakeholders, third party providers, regulators, authorities, group entities, etc.).
Review your regular communication plan and think thoroughly if there’s a need to update it to respond to this particular situation.
Key business matters that the COVID-19 outbreak asks you to prioritise
For any of the five matters we are listing below, it’s a good idea to use scenario analysis.
With the COVID-19 outbreak, uncertainty is abundant. Both businesses and governments are updating stakeholders on a daily basis or even several times a day because of the rapid development of the crisis.
May history judge decisions made in “slow motion” or the initial disdain towards the outbreak’s scope as the main triggers of this global emergency, only time will tell. But the potential it has to impact every part of a business for months is undeniable. For now, scenario planning is a critical tool to test preparedness.
What are the best- and worst-case scenarios, and is the business equipped to cope?
Ask searching questions—i.e. go straight to the heart of the subject matter—to your teams so you can truly highlight critical sensitivities. For instance, what could be the impact in the longer term on working capital or bank covenants? Is there enough technology bandwidth to cope with the need for remote work? Will your operations be impacted if outsourced, offshore workforces are unable to come to work? How will data flow during this crisis?
As every cloud has a silver lining, businesses in some sectors could see a significant rise in demand if more of the population is spending more time at home rather than at work — are they prepared for this?
Your crisis response capability has to be as strong as possible to manage incidents more efficiently. Many organisations have crisis plans in place for the workplace and supply chain but COVID-19 is an unprecedented issue that is unveiling flaws or lapses. Given the unknown variables surrounding the outbreak, it is important to review crisis and business continuity plans, develop different scenarios and put them to test.
Matter 2. Effective communication: focus on Information
Proactive communication to all stakeholder groups, based on factual, verified information, is essential to manage public perception of the outbreak, minimise misinformation and associated panic, and reduce the detrimental impact on the economy and individuals.
Leadership should be seen as a source of truth.
Matter 3. Workforce
The first priority is to establish exactly the staff location, how many workers are in the most affected areas and if they need to be repatriated. Home-based work is likely the safest measure to implement for your teams. Upcoming travel plans will need to be reviewed, rescheduled, or canceled.
Equally, define and communicate clear policies to address absence due to sickness or caring for relatives, the protocol for visitors to company sites, the procedure for reporting illness, and travel restrictions.
There are other employee challenges, though. Examples include establishing the tax and social position of people who are moving between countries every day (this is particularly important in the Luxembourg context, considering the large amount of people transiting from/to France, Belgium and Germany). Your business may also have to pause production lines due to supply chain issues, which, in turn, could require employees to temporarily stop working.
Matter 4. Supply chain
Analyse your supply chain, seeking any potential vulnerabilities. Begin with the most critical products and look beyond first- and second-tier suppliers, right down to the raw materials, if possible.
In the most affected areas, businesses that rely on supply chains are rapidly depleting stock levels, so the need to work on alternative sourcing is imperative.
Matter 5. Financial impact and planning for a turnover slowdown
The Covid-19 outbreak is negatively influencing the financial markets. It has raised concerns about the world economy’s growth predictions priorly made. As we mentioned in the beginning of this article, its costs are maybe three or four times higher than the SARS’s, but, for now, there isn’t a clear picture because the crisis is under development.
The shutdown of Chinese production and the movement restrictions of populations can greatly reduce cash reserves, jeopardising the stability and even the future of any organisation.
Businesses must, therefore, take actions to increase or build up reserves and working capital to be better prepared for the Covid-19 outbreak impacts.
Some practical questions to think about
The time when the world almost shut down, that’s how we will remember this health crisis.
And our children and grandchildren will feel like they are at the movies when sharing with them our memories, because, quite frankly, that’s what we all feel like nowadays. Or like living in an apocalyptic series offered by your favorite streaming service platform.
Life, these days, is unusual and certainly unknown, but the show must go on.
Stay healthy. Stay positive.
What we think
Thomas Wittische, Risk Assurance Director at PwC Luxembourg
Not everyone around us ponders the impact of the current situation and does not react appropriately, at least not quite yet. Since both the French and Belgian authorities announced the confinement at home, I see elderly people that I had never seen before having a walk behind my house. Like if freedom was becoming that important when being reduced to take such risks.
To face this unforeseen one-of-its-kind crisis scenario, we have a collective responsibility and we can make a difference. Take the time to reach out to families, friends, colleagues, clients, neighbours… and share your opinions, ideas, and beliefs about the situation. Do not fall into the emotional trap, though. Stay rational. Let’s be all responsible and follow governmental guidelines.
I remain positive about the future, but we need to ensure that each and all of us can overcome this crisis, and come out of this situation, stronger.
Time will come to analyse the lessons learnt and be better prepared for the next one.
Be all safe and inspire others. Take care.
Seeherethe actions we’re taking to navigate through the COVID-19 crisis.
