Have you started thinking about your company’s risk profile post COVID-19?
There is still a high level of uncertainty. But among the unknowns, one thing is clear: your risk register will look nothing like it did six months ago.
The business landscape, as we knew it, will change.
There will be lasting impacts to the economy and knock-on effects to businesses’ P&L.
New risks will be introduced. And the severity and likelihood of existing risks will likely increase.
We will enter a new normal. So, as risk managers, when do we begin to help our businesses prepare for this new landscape?
Now.
That’s what our Network of risk managers have told us through our COVID-19 private messaging service we released 4 weeks ago – ahead of Risk Leadership Network’s official launch on 29 April.
As businesses continue to operate under crisis management mode, conversations among our community have now turned to how they, as risk managers, can prepare business for a post COVID-19 world.
As they say, “What we do now will affect how we come out of the crisis”.
Here’s a summary of the risks, trends and considerations being placed under the microscope.
1. Macroeconomic risks will remain at the top of the risk register
There is no hiding from the lasting impact that COVID-19 will have on the world economy.
Some risk managers believe that recovery will come faster than the 2008/09 financial crash. It will take months and months to return to pre-COVID-19 GDP – and the consequences of this will weigh heavily on businesses.
There is no doubt that macroeconomic risks – and the related consequences – will feature at the top of your risk registers.
2. Risk managers are reviewing competition risks
The competitive landscape will change. There will be winners and losers: some companies will be in a stronger position to bounce back than others.
The likely winners will be those operating in the e-commerce space or companies with a robust and supporting online offering. They will likely gain greater market share.
Could now be a time to discuss competition risks?
3. Suppliers along the supply chain continuum may change
Your existing suppliers may not survive the financial impact of the virus. Risk managers are working with stakeholders to review their supply chains.
Key considerations include:
Diversifying 1st and 2nd tier suppliers – and doing the same for 5th, 6th, and 7th tier suppliers.
Conducting a full assessment to identify the weakest links and to get a sense of what the supply chains look like in the future.
4. Operations and management processes will evolve
The virus will have affected business operations and performance. In some cases, conversations may need to move on from ‘risk severity and likelihood’, to ‘how we can support our businesses to be resilient, agile, and flexible’.
These are the characteristics that will help business operations recover more quickly from the crisis.
Some risk managers are developing a start-up guide for the C-suite and board directors, that considers changes to traditional management processes and supply chains. For example: when should process changes be implemented?
5. Will human capital and knowledge management become a greater risk?
Businesses are under cost pressures: there will likely be talks of a company reshuffle, redundancies and cutbacks. But a company’s strength lies in the knowledge and expertise of its workforce. It can take a year or two to fully realise the loss in knowledge.
As one risk manager put it, knowledge management is important for future resilience and agility. Manage it.
6. Cyber security will likely become a bigger risk
Remote working may become a permanent option for some departments who performance and productivity have been unaffected or improved. There are obvious cost benefits for the company, but IT and cyber security vulnerabilities will increase.
7. Return to work strategies are being formed
Recovery teams, including risk managers, operations, and HR, are being formed to look at return to work strategies – including splitting teams for a ‘staggered return to work’ approach.
But reassurance measures and internal communications will be critical, such as safety and protection policies (temperature checks, mandatory masks and gloves, deep cleaning).
There has never been a more important time for meaningful collaboration between risk managers, and the Risk Leadership Network is already working with its Members to transform how they exchange knowledge with peers.
Are you an in-house risk manager who could benefit from access to the knowledge and expertise of a global network of senior risk professionals? Talk to us about becoming a Member today.
