Managing Risk in Abnormal Times
Posted Under: News
The global business and risk management environment was anything but normal for most of 2020.
The COVID-19 pandemic pushed markets around the world into a sharp and sudden downturn 2 years ago. And as new infection waves and hotspots emerged, there appeared no end in sight to volatility. Now into 2023 we’re still seeing some volatile markets.
Organizations doing business across borders see this up close: currencies fluctuating, national economies re-opening and closing, market opportunities changing seemingly week to week.
Whatever your industry—e.g., manufacturing, travel and tourism, food and beverage—resilience is key to managing risk. Businesses need to become stronger than they were before to both survive the pandemic and seize opportunities that emerge in the post-pandemic new normal. Here are four principal business strategies for coming out of the pandemic stronger than ever.
Strategy 1: Recover Revenue
When the shutdowns started, countless businesses took an immediate hit. Earning lost revenue back requires five new ways of thinking and working:
Startup mindset—favor action over research and testing over analysis.
Human at the core—rethink your operating model based on how people work best. This might involve smaller, nimbler teams with more authority than in the past.
Acceleration of digital, tech & analytics—embrace the shift to digital, expand digitization to more channels.
Purpose-driven customer playbook—understand what customers value in a new environment, build experiences to meet expectations
Ecosystems & adaptability—create a supply chain that is disruption-resistant
The bottom line is that businesses need to boost their bottom line by identifying and prioritizing new revenue opportunities. The list of possibilities is long—e.g., targeted campaigns focused on loyal customers, improving customer experiences through an increased focus on health and safety, adjusting pricing and promotions, re-skilling the salesforce to support a remote selling model, and automating sales processes.
Building resilience also involves preventing further revenue losses going forward. Anyone doing business abroad should consider a risk management strategy to prevent losses due to foreign currency exposure.
Strategy 2: Rethink the Organization
The pandemic economy has forced a lot of organizations to work in new ways—speeding up goal-setting and decision-making, for example. The challenge moving forward is how to maintain competitive advantages gained by new ways of working and avoid falling back into old paradigms. But doing so requires rethinking the organization. Who are you? How should work get done? How should the company grow?
One notable characteristic of companies that have adapted well is their strong sense of identity. Leaders and employees share a strong sense of purpose and a common performance culture.
Also, flatter and more decentralized organizations that delegate decision-making to a dynamic network of teams are proving more effective than traditional models. Fast beats slow.
Strategy 3: Rebuild Operations
There are five aspects business leaders should think about as they work to boost the resilience of operations:
1) Accelerate end-to-end value-chain digitization
2) Rapidly increase capital and operating expense transparency
3) Embrace the future of work
4) Re-imagine a sustainable operations competitive advantage
5) Take action
The most important piece of this list is taking action: To rebuild, your business must position itself to act fast and decisively in response to an ever-changing business environment.
Strategy 4: Accelerate Adoption of Digital Solutions
The pandemic is accelerating digitalization trends that predate it—that’s been abundantly clear as businesses across sectors scramble to retool to connect with customers digitally rather than in stores.
The challenge is to refocus digital efforts to reflect changing customer expectations and deliver more efficient and nimble operating infrastructure. For most businesses, huge opportunities remain for using data, the internet of things, and AI to better manage operations, accelerate tech modernization and increase the speed and productivity of digital solutions.
And don’t overlook digital tools that can protect profits and deliver savings in the financial realm, such as FX.
Agility Above All
A common theme runs across the four strategies detailed above: agility. Speed, nimbleness and empowerment of teams to make the right decisions are key as we exit this pandemic. Businesses that nurture those qualities and ways of working are setting the foundation of the new normal that is emerging in our post-COVID economy. Agility and resilience will go hand in hand, helping businesses survive the current crisis and thrive in what follows.