At PwC's Global Crisis Center, we respond to crises every day. However, as the COVID-19 outbreak worsened, the volume of calls our team was responding to increased significantly. By the end of February, the phone was ringing nonstop. Business leaders are concerned about the well-being of their employees and their organizations, and rightly so.
Crises occur in isolation and are not properly contained. The coronavirus outbreak is exceptional by any standard. It involves extreme scope and levels of uncertainty. This is a situation far beyond the experience of most business leaders. The median CEO tenure is five years, and the last infectious disease to approach this size was the 2003 SARS outbreak. SARS infected more than 8,000 people and lasted nine years. A few months. In far less time, the coronavirus has already infected 10 times more people and is spreading rapidly.
Crises occur in isolation and are not properly contained. The coronavirus outbreak is exceptional by any standard. It involves extreme scope and levels of uncertainty.
It is difficult to estimate the impact of the virus on the global economy. The cost of the SARS outbreak is believed to be around US$40 billion. Economists who made the calculations say the toll from the coronavirus could be three to four times higher. The International Monetary Fund has revised down its forecast for global economic growth, and the Organization for Economic Co-operation and Development has suggested that global economic growth could be halved as a result of the virus. We have already seen major supply chain disruptions, and if the virus continues to spread, we could soon see widespread school and workplace closures, whether voluntary or forced.
Business leaders consider crisis management to be an inevitable part of their role. According to PwC's latest Global Crisis Survey, nearly seven in 10 (69%) leaders have experienced at least one corporate crisis in the past five years, and the average number of crises experienced by these companies The number of times is more than his 3 times. COVID-19 will test many business leaders to their limits.
The key to dealing with any crisis is preparation. Here are seven actions you can take as a leader to ensure your organization is in the best possible position to withstand what's to come.
Check employee locations and travel. The first priority is to understand exactly where staff are located and how many workers are in affected or vulnerable areas. Do I need to be repatriated or have I been asked to work from home? You may need to review, reschedule, or cancel your upcoming travel plans.
Clear policies should be in place to address things such as absences due to illness or caring for a loved one, procedures for visitors to company sites, procedures for reporting illness, and travel restrictions. They also need to plan for policies in the event of prolonged school closures. What will the policies be like for working parents? There are also tax issues. What policies do you have in place to deal with cases where workers are forced to stay abroad longer than expected and become subject to tax? Be prepared to continually update your policies.
Reconsider your crisis management and continuity plans. Every well-run business has a crisis or business continuity plan, and many have specific pandemic plans. But nothing tests a theory like reality. For example, an Asia-based organization's pandemic plan designated a European city as a refuge for employees and their families, but flights from China to the city were suspended shortly after the pandemic began.
General plans will need to be adjusted and adjusted to address the unique challenges of the epidemic. For example, if a large number of employees need to work remotely on a temporary basis, do you have enough technology bandwidth to accommodate them? Will your business be affected if your outsourced international employees are unable to come to work? What steps can I take to update my travel advice and policies? How will communications with employees be managed? In any crisis, the biggest concern for CEOs is ensuring accurate The goal is to quickly collect information. How will data flow during this crisis?
Evaluate your supply chain. A clear understanding of your supply chain helps uncover potential vulnerabilities. This means starting with the most important products and looking far beyond tier 1 and tier 2 suppliers down to the raw materials, if possible. For example, if your product contains components from an isolated country, is there a secondary supply? If a virus spreads, contingency plans can quickly become difficult. We have already seen Chinese suppliers turn to South Korea as a Plan B, only to see that country quickly become infected.
Identify potential points of failure. Who are the teams and individuals on which critical processes and services depend? Are there employees with the right skills who can fill critical roles if needed? As the virus continues to spread, call centers and Shared service centers can be potentially vulnerable. Can we take steps to reduce the level of human interaction, such as staggered shifts or remote working?
Let's communicate properly. We have seen employers work hard to keep their employees informed, but along with the virus has spread misinformation and confusion. Your employees (and wider stakeholders) will want reassurance from you that they are protected and ready for business. Leadership should be seen as a source of truth, and according to the 2020 Edelman Trust Barometer (pdf), businesses are trusted more than governments or the media. Consistency and accuracy of messaging and reassurance from the top of the organization are key. Employees need to know that their welfare comes first.
Use scenario analysis. With uncertainty pervasive and COVID-19 likely to impact every part of your business for months, scenario planning is an important tool to test your preparedness. What are the best and worst-case scenarios? And is the business prepared to deal with it? In the long run, if public places are closed, for example, working capital or banking terms, or even stores What could be the impact on my restaurant's rent? Ask searching questions to your finance team to highlight important sensitivities. Organizations in some sectors could see a significant increase in demand as more of the population spends more time at home rather than at work. Is your organization ready for this? Supermarkets are reducing product variety, stocking up on essentials and developing contingency plans.
Don't lose sight of other risks. COVID-19 is not the only immediate threat. Organizations are often most vulnerable when dealing with crises that focus their attention. Many other risks facing businesses are not alleviated by infectious disease outbreaks. For example, cybersecurity should always be a top priority.
We don't know what will happen in the coming weeks and months. If the World Health Organization upgrades the current coronavirus outbreak to a pandemic, the conversation will shift from containment and prevention to protecting key workers to keep businesses running. Restrictions on national movement and gatherings of people may be imposed, and organizations will need to be agile.
At the Crisis Center, we like to say that crisis response is measured in months, whereas recovery is measured in years. Well-prepared companies always recover faster.
