While it’s not entirely true that nobody saw COVID-19 coming—for years, epidemiologists have been warning us about the next global outbreak—it still caught business leaders by surprise. And of course, they’re not alone.
In 2019, PwC conducted the annual Global Crisis Survey, polling over 2,000 companies around the world to find out what types of economic emergencies business leaders were bracing for in the next year. Overall, the top forecasted challenges were financial, technological or operational—only a tiny fraction (7%) of respondents expected the next big crisis to be humanitarian. Like the world at large, our business community has been overwhelmed, reacting to the impacts of the pandemic as things evolve day-to-day. It may feel touch-and-go, but that doesn’t mean there isn’t time to establish a strategic plan of attack. PwC’s Crisis Management approach outlines three core steps for managing through this pandemic and positioning your business to weather future crises down the line.
But first, what are we dealing with?
COVID-19 is both a humanitarian and economic catastrophe—and it still hasn’t reached the scale of other recent epidemics. When H1N1 struck in 2009, more than 700 million people were infected across 214 countries. By comparison, COVID-19 had over 1 million cases by the beginning of April 2020 and has been confirmed in at least 178 countries. Meanwhile, while the Dow climbed 40% by the time swine flu was contained, it’s dropped 27% since the novel coronavirus started its spread.
So why the difference? For one, while influenza is widely understood, coronaviruses are still unknown quantities in terms of how they interact with humans. The mortality rate for COVID-19 is also much higher at 3.8% of cases, compared to H1N1’s 0.02%. And since this novel coronavirus puts us in uncharted territory, the measures we need to keep it in check—self-isolation and physical distancing—have massively disrupted how we and our businesses operate.
Planning for the unpredictable
Circumstances like these are a humbling reminder that determining and mitigating risk is difficult. Within our businesses and beyond, we can’t predict all outcomes and we certainly can’t prepare for them. But having witnessed SARS in 2003, H1N1 in 2009, MERS in 2012 and now COVID-19 in 2019, we can’t keep operating under the belief that these disruptions are unlikely.
We’re also reminded that we can do more to prepare our businesses for crises and successfully manage through them so as to come out stronger than before. Our approach follows three critical stages: mobilize, stabilize and strategize.
1. Mobilize
To us, mobilization means taking action as soon as you’re aware that there's a crisis. This is where most of our business community is now, figuring out how to tackle the impact of this pandemic—and while you may feel like you’re scrambling to catch up, understand that you’re not alone. The first step you can take in this process is providing transparent, consistent and fact-based information on your policies, initiatives and where your business sits within the bigger picture.
• Your employees need to know whether their jobs are secure and your customers want to know how your operations might be impacted.
• You should also inform other important stakeholders like your investors, board members and important vendors of your immediate plans of action.
• Misinformation only makes a crisis worse. Your company messages should come from a single, trustworthy source, such as the CEO or a customer’s point of contact, and should be aligned with your company’s values. For broader coverage of the crisis, encourage your community to follow credible news sources.
The next step is to update how your organization approaches crisis management and business continuity plans. In the past it was standard to consider specific scenarios—for instance, your operations being impaired by a natural disaster or civic unrest—but now you should think about how to move forward and maintain core business functions regardless of the problem at hand.
There are plenty of possible situations that could undermine your supply chain, prevent your people from coming into work and upset the delicate balance that is business-as-usual. Even though you have your hands full dealing with the fallout from COVID-19, don’t let that stop you from modelling and modernizing your crisis management plans, policies and procedures. You’ll need them in future, whether that future is tomorrow or five years from now.
2. Stabilize
No one knows how long the global disruptions from COVID-19 could go on for, but governments and health officials suggest that the end may not yet be in sight. This is where stabilization comes into play: after managing the immediate consequences of the crisis, stabilizing means planning how to operate productively and successfully in this new socially-distanced world, (regardless of how long it lasts).
This presents an interesting paradox. In spite of what the word “stability” implies—steadiness and predictability—your business will have to be as agile as possible in order to stabilize in this pandemic. The situation will continue to evolve, and that means being especially proactive.
• Engage with your critical vendors, whether they’re suppliers or merchandisers, and make sure you know what their plans are for the days, weeks and months ahead.
• Fiscal discipline is critical, so monitor discretionary spending and take initiative with showing your investors, lenders and banks a coherent and adaptable plan for moving forward.
3. Strategize
As you may have noticed within your own organization, the pandemic is encouraging businesses to discover strengths they didn’t know they had. Whether it’s the ability to take swift and decisive action on short notice, or leverage technology to keep your people positive, supported and connected, these are all capabilities that will benefit your company long-term. Once you’ve successfully mobilized and stabilized, you may find that this is a surprisingly good time to strategize for the long term.
• Your new operations may lead to more streamlined, efficient and cost-effective business models.
• This is an opportunity to exit markets or discontinue products that weren’t profitable enough.
• You can prepare for conflicts and contract disputes that may arise once the crisis has passed.
• If a business you were interested in acquiring has been materially impacted, this may be the right time to have conversations around M&A.
In spite of all the hardships that a crisis like COVID-19 brings, they do eventually come to an end. And when that happens, the most successful organizations will be the ones that took time to learn lessons, enact changes and seize opportunities as they navigated this pandemic.
Forging a path forward
CEOs all around the world predicted that 2020 could prove to be a challenge, but not many believed the new year would begin with such a critical situation. Yet in spite of the unprecedented risks brought about by COVID-19, we’re seeing business leaders across our community rise to the occasion by stepping up, figuring out how to best serve their customers and finding unique ways to optimize and streamline their operations.
Crisis can lead to chaos and collapse, or it can lead to tenacity and opportunity, collaboration and innovation. At PwC, we want our business community to come out of this even stronger— and we’re here to help see you through. Please get in touch if you’d like to discuss the steps your company can take as you continue to manage through COVID-19, and plan for your future.
Edward Matley
PwC | Partner, Crisis Management & Business Continuity
Email: [email protected]
PricewaterhouseCoopers LLP
