What are new business risks post-pandemic and how to mitigate them?
The past year was tough. With the restraints of the pandemic kicking in, businesses all over the world had to adapt and solve multiple, competing for priorities simultaneously. Businesses saw employees stay at home due to quarantine, the world shutting down and putting a pause on economic growth, new employee and customer engagement protocols being set up, remote working on an unprecedented scale, and uncertainty about how long would these measures be implemented, and how extensive would they be?
After a year of strenuous protocols, businesses all around the world have recognized the long-term risk outlook and how the pre-pandemic life may never return, which makes them wonder how to prepare for what may lie ahead.
“Given the nature of the crisis, all hands should be on deck, all available tools should be used”
-Unknown
Some of the new business risks the world faces post-pandemic:
Disruption due to Social Distancing: Social distancing interventions were seen to be effective against the epidemic but potentially detrimental for the economy. Businesses that relied heavily on face-to-face communication or close physical proximity when selling a product or providing service were particularly left vulnerable. Due to business events and travel being canceled during this peak period, most organizations had trouble generating revenue and executing operations with workplaces mostly either off-line or remote. Workplace environments and team meetings took a hit. All the practices whose premise was direct personal contact were replaced by work from editions, with employees attending meetings from their bedrooms and couches, half-dressed professionally, some lazy, some just gotten from a nap.The biggest risk here is workplaces becoming a status symbol, and business travel could come to an end.
“People will still gather for work, but the amount of time you work in proximity with others, and what your work week looks like — I see that to be the biggest cultural shift moving forward.”
Recession, Unemployment, and Investment Pull-back: Economies across the world started their decline in the April-June quarter, 2020. RBI called it the “historic technical recession”, which led to deficiencies in both consumption and investment demand. Consumption and investment have been the main drivers of business growth in India in recent times. Though businesses that handled export contributed to earlier versions of India’s growth story, the immediate aftermath of the pandemic questioned its efficacy to boost growth.Not just export, all businesses across the country were faced with uncertainties that negatively impacted investments. Corporations were seen to cut growth investments that contributed to a rapid rise in unemployment. A significant number of layoffs happened at existing businesses because work-from-home employees didn’t seem to contribute the same efforts as pre-pandemic, and the funds allocated for employees saw a major cut too. Another factor that was seen in causing unemployment was the mental health of employees. 19% of WFH employees reported extreme loneliness and isolation, which could become chronic and cause deterioration of mental health as much as a physical ailment.When the pandemic started, the employees felt safe, relaxed and contributed to the work with maximum productivity. But with time and no change, a cloud of uncertainty was presented above everybody. Nobody knew when it was going to end, what felt safe initially turned to increase irritability and frustration. This led to a lot of employees resigning from their positions to focus on their health, and find a new passion.
Additionally, during the peak pandemic, some 40% of the staff was unable to work due to sickness, either directly or indirectly. Even if the employees are not sick, many were affected by the need to care for ill family members. This led to plummeting productivity and in extreme cases, unemployment.
“The number one thing to focus on is employees and customers.” When it comes to taking care of employees, the goals should be: “keep them well, keep them employed and keep them mentally healthy.”
Stressed Supply Chains: The COVID-19 pandemic exposed vulnerabilities in the production strategies and supply chains of firms just about everywhere. Temporary trade restrictions and shortages of products, especially in pharmaceuticals, critical medical supplies, highlighted the weaknesses of production strategies. Most countries and companies rely on vendors for their business and in every field, most consumer-good products were delivered with purchasing delays. Heavy equipment and manufacturing supply chains were heavily impacted by COVID-19. The biggest risk in a post-pandemic world would be restocking these supply chains and making connections as strong as they were before. Another challenge would be finding more homegrown supplies and strategies that minimize inventory held in their global supply chains.
Mitigation strategies for a post-pandemic world
A risk mitigation strategy, by definition, is taking steps to reduce the risk or the severity of the impact and/or probability of the occurrence.
Regardless of how the situation develops, action steps have to be taken to help mitigate the impact of COVID-19 on your organization. Businesses will need to strengthen and constantly review their risk mitigation strategies to improve their resilience to future shocks and prepare themselves for further crisis developments.
Some strategies are:
Wherever possible, set up a home office, and enable your employees to work actively from home.
Initiate Risk Management plans, and assess your business continuity plan to identify gaps.
Assess the impacts of the pandemic on your organization from the operational and financial perspectives, and review your workforce locations.
Manage cash flow across the supply chain, and evaluate the supply chain constantly.
Address the impact of the pandemic on obligations arising from contracts with your business partners.
Make the health of employees a priority, and include continuous screening and social distancing norms in the workplace.
The world faced several challenges in the past year. As part of the business community, it’s our job to come forward as a team and fight this challenge one risk management strategy at a time, to emerge stronger and wiser by the end of it.
For your growth,
Team Shoonyas.