A Start from the End
No doubt, the impact of COVID-19 has been deeply significant on the Nigerian economy and the rest of the world. On 30 January 2020, the World Health Organization (WHO) officially declared the pandemic (COVID-19) to be a public health emergency, and multiple Consumer News and Business Channels (CNBC) reports have predicted a coronavirus-induced global recession.
According to a UN News report, the United Nations Conference on Trade and Development (UNCTAD) estimated the economic costs of the outbreak at $2 trillion in 2020. However, most central banks, finance ministries, and independent economic experts around the world have taken solace in the supporting predictions that the impact might be sharp but short-lived, and economic activities will return to normal thereafter.
Over the last century, recessions have almost always been started by sustained periods of high-interest rates but never a virus.
The virus which has been confirmed in at least 187 countries and territories has led to business shutdowns across various elements of the value chain in multiple sectors, leading to a shortage in supply.
As a result of the pandemic, there has been a global decline in demand, exacerbated by the closure of country borders. Furthermore, with strict ‘work-from-home’ stipulations, countries that thrive on exports to other nations for their revenues, have paused until the coast is clear and some degree of normalcy is restored.
The impact of COVID-19 does not only create challenges for public health, but also for the Nigerian economy and businesses across various sectors. An obvious example is showcased in the global oil and foreign exchange markets which have reflected the sharp drop in global oil prices. Almost invariably, this has negative impacts on the prevailing exchange rate and the budget, consequently calling into question the short, medium, and long-term health of the economy.
Most notably, the consensus indicates that COVID-19 is a wakeup call for Nigeria to look towards an economy less dependent on oil.
Alluding to Maslow’s hierarchy of needs, it is clear that survival has become the most important goal of global economies, with increased investment in healthcare, physiological needs, and security as opposed to the funding of inter-trade economic activities. Furthermore, in Africa, the pandemic has disrupted trade, increased debt vulnerabilities, and limited the scope for monetary policy maneuvers.
In looking forward to the new normal, the signs are clear that things may never be the same again.
Recently, a popular meme circulating asked: “Who is responsible for your company’s digital transformation?”
If your answer is ‘C’, don’t worry, we have got you covered, with practical steps to follow carefully.
Business continuity management is a holistic management process that identifies potential impacts that threaten an organization. It provides a framework for building resilience with the capability for an effective response that safeguards the interests of its key stakeholders, reputation, brand, and value-creating activities.
Building in business continuity as a norm in your practice for running your business, rather than as an element for ‘firefighting’ in emergencies, enables restoration to ‘business as usual’ in the quickest possible time. A planned business continuity management process reassures customers, suppliers, and staff of the effective policy and practices for managing the unexpected and it builds confidence in the business.
IF YOU DO NOT HAVE A BUSINESS CONTINUITY PLAN IN PLACE, THESE BASIC STEPS WILL HELP GET YOU STARTED:
- Choose your players wisely
- Put the right team together and identify your goals. Be realistic about what you can sustain and how you should prioritize. It is unlikely that your organization can continue business as usual right now. This is why you need to (virtually) bring together the people who understand your core business competencies well enough to make judgment calls with available information.
- Leadership direction must come from the most senior levels (CEO and/or Board of Directors). Then form a steering committee that includes senior representatives from operations, finance, human resources, information technology, and legal as well as input from the heads of your various product or service lines. If you don't have a plan now, you probably don't have a business continuity planner or consultant on your team. You should identify a member/consultant educated with the subject matter, who can serve in that function and lead your process.
- Understand your risks
- Identify the current or potential risks that can adversely affect your organization. Amidst COVID-19, in a worst-case scenario, you should consider how business operations can continue if 35-40 percent of your workforce is out sick. However, it is important that you dig deep in your scenario analysis. For example, work from home opens you up to all kinds of cyber vulnerabilities and other technical challenges. Once you have a list of top risks, assess those risks to determine the potential impacts on your organization, enabling you to determine the most effective use of resources to reduce potential impacts. This process is known as a risk assessment.
- Analyze the impact
- Identify and prioritize your organization's key functions and processes to identify which ones will have the greatest impact if they aren't available. For example, many employers and employees are currently being forced to test operational efficiency without access to facilities for a prolonged and ultimately uncertain period. Once you've identified how the current scenario will impact your business, you need to analyze the findings to identify any gaps between your requirements for continuing service levels with minimal disruption and your current ability to deliver those requirements. This process is known as a business impact analysis.
- Devise a strategy
- Use the results of the analysis completed in the previous step to decide on a plan of action. You will need to come up with practical, cost-effective strategies to reduce the deficiencies you identified during the risk assessment and business impact analysis processes. Congratulations, you have identified what is at risk and how it will hurt your business. Now, you can go through and brainstorm how to minimize those risks with the information and resources you have at hand.
TWO KEY TAKEAWAYS:
First, analyze the impact of the crisis on your business to identify any gaps between your requirements for continuing service levels with minimal disruptions and your current ability to deliver those requirements. Also, cash is king during a crisis, so protect cash flow to ensure you have a cash runway for some time. Figure out your cash runway (how long the company has until it runs out of cash), take the money left in the cash reserves and divide it by the burn rate (rate at which the company is ‘losing’ cash). This will inform you of what expenses you can cut and enable assessment of your receivables position to see what you can collect.
Second, don't assume that this will all be over soon. This is likely to be the new normal for some time. Therefore, plan for that so that you are prepared no matter what happens. You can come up with a moderate and severe scenario and then monitor outcomes to see how your indicators are performing as time passes and adjust accordingly.
As a leader, you will need to make tough decisions and keep calm under pressure. But this does not mean you should ignore the deeply unsettling emotional side of this crisis. Do what you can to protect, retain, and support your team as we all work together to face the daunting challenges posed by the COVID-19 pandemic. The 2019 EDELMAN TRUST BAROMETER Global Report shows that we trust our own employer above other institutions including the government, media, and business and by a significant margin. Therefore, now is the time to show that trust is earned.