Risk can be defined as the effect of uncertainty on objectives (ISO 31000). There is no gainsaying that the COVID-19 pandemic has created a myriad of uncertainties. With thousands dead, businesses closed in many countries and people on lockdown the future has never been as uncertain as it is today. The only thing we are sure of is that sometime in the future this will become history. How that history will be written for our businesses depends on how we manage those risks today. Here are fifteen things you and your business can do to manage the risks and come out ahead.
1. Keep an eye on Key Financial ratios relevant to your industry or sector. – With so much going on, and so much to think about, ratios might be your early warning sign of emerging issues.
2. Develop Financial Scenarios – Create best case, worst case and most likely case scenarios for your business. Play around with assumptions. Carry out what-if-analysis and see whether you can find ways to cut costs or increase incomes.
3. Conduct a thorough risk identification and risk assessment given your current objectives and in the light of the current situation.
4. Revisit objectives in the light of risks that cannot be avoided, mitigated, transferred or accepted. Consider whether risks identified, present any opportunities that can be exploited.
5. Create a dashboard to keep an eye on measures and metrics that are important to your business.
6. Manage COVID related cyber risks especially mitigating risks created by remote access to IT resources while enabling staff work from home.
7. Manage employee related risks such as health and safety. Analyze roles and physical access requirements for business continuity. For staff who cannot work from home and must be onsite; consider transportation, accommodation near the office location, sanitization, feeding etc.
8. Scrutinize cost structure and cut down on controllable expenses that are not key to your revised objectives.
9. Communicate with lenders, bankers, creditors and landlords. Chances are that the pressure on cash and revenue might put the meeting of obligations at risk. Ensure to reach out to these group of people early and often keeping them informed prior of any payment delays.
10. Communicate with key customers. Find out from your customers the challenges they are facing and see how you can serve them at this time.
11. Communicate regularly with employees. Pass on relevant useful information about staying safe and how the business is responding to the challenges. In times of uncertainty staff are liable to become anxious. Regular communication, even if you have nothing to say or no new information to give, is still reassuring.
12. Conserve cash as much as possible. Postpone unimportant expenditures. Consider bartering, instead of paying cash for important expenditures. Match your liabilities and assets, currency wise, to avoid exchange losses.
13. Review your staffing model. Emphasize retention of key staff especially in a knowledge or technical business.
14. Monitor government responses and seek to apply for available reliefs.
15. Seek collaboration wherever possible. Collaborate with customers, suppliers, employees, creditors, advisers, bankers and even competitors.