The 21st century opened with a slew of “unprecedented” events crash, 9/11, the financial crisis of 2008, SARS, Eboli, BREXIT, and COVID-19 to name a few. So many that one has to wonder if “unprecedented” is the new normal. This onslaught highlighted the need for improved risk identification and a more effective way to quantify risk impact. Those organizations that had strong risk management programs fared better than most during COVID-19, but even they saw their risk programs in a whole new light. Unprecedented––reached to a whole new level. This article discusses of few of the lessons learned from the pandemic.
Disaster Recovery Plans
Few disaster recovery plans covered multiple-month lockdowns of the entire world, looters, or vandals burning entire blocks of businesses in multiple cities.
And who prepared for social-distancing of employees and customers, hand and product sanitizers, new sick leave policies, or alternative delivery methods?
Disaster recovery scenarios played out in table-top exercises, once considered adequate, were woefully lacking during the reality of a pandemic.
According to a recent report, 94% of the Fortune 1000 companies saw supply chain disruptions in 2020. The risk of single-source vendors flipped from a cursory risk assessment to a goodness-gracious-what-where-we-thinking as suppliers around the world couldn’t get required source materials. Vendor stability/viability risk, pre-COVID, often focused only on finances, but post-COVID includes a review of the vendor’s ability to pivot to new regulations and business models, to keep their employees safe, and to keep enough employees working.
Innovation / Technology Investments
Technology considered unneeded or too costly pre-COVID, became a top priority as workers shifted from the office to home, and as business models shifted from brick and mortar and in-person meetings to digital transactions and online video calls.
Companies that weathered the pandemic didn’t just take on new technology, they became technology companies. Innovation was a core competency for pandemic survivors. Insurance companies are a great example. They went from Insurance organizations to FinTech leaders. They became tech companies.
The Future is Here
The pandemic didn’t change the way we do business––it accelerated the changes already in the works. Consider just a few examples:
- A 2016 Gallup Poll showed 39% of employees in 2012 worked 80% or less of their time from home. By 2016, it was 43%. Risk managers saw it coming, but not all businesses did something about it. Those that did react shifted their employee to work-from-home much faster than those who didn’t. They are also better prepared to handle the operational risks associated with an estimated 48% of those work-from-home employees wanting to continue to work-from-home after the pandemic resolves.
- Homeschooling increased up to 8% per year pre-pandemic and is not expected to slow as more parents opt for homeschooling post-pandemic.
- Digital sales, year over year, hovered around 10% a year, until 2020 where it skyrocketed to 44%. Businesses who dipped their toes into the digital world pre-COVID, we able to dive in during the pandemic. Those who didn’t plan for the digital future––lost ground.
- Video conferencing took 15 years to increase 140% (2005 to 2019). But in one year, 2020, it increased 187%.
An Enterprise Risk Management Program is expensive. It takes input from diverse sources including competitors, stakeholders, employees, adversaries, regulators, legal authorities, futurists, technology gurus, innovators to name a few. It takes the expensive time of high-level executives and pulls strategic employees away from their regular work. The benefit of this expense became clear during 2020.
A comprehensive risk program provides information to leaders, upon which they can make meaningful decisions quickly and effectively not only in times of prosperity but also during those rare and devastating black swan events.
Business leaders who weighted business model changes and future innovations through their Enterprise Risk programs turned the expense into a benefit. And those who combined that with agility to pivot without bureaucratic delays, set themselves up for success during and after COVID.
How did you do this year? Were you prepared or surprised? What changes will you make to leverage the lessons learned?
It’s never too late to plan for the future. Invest in your Enterprise Risk Management programs, personnel, and education.