5 Steps of Risk and Management Planning

Businesses will have to manage every aspect of their operations over several months, even years, in a way they have never needed to before.

Understanding the broader context of the pandemic on demand and supply during the various phases will help ensure you are well-positioned to survive and resume operations as and when the situation returns to normal - albeit a new normal.

There are four key phases to consider:

1. 1.     Lead-in phase - During the lead-in phase, priorities for businesses focused on caring for staff, customers and other stakeholders from a public health perspective; and to assess the short-term cashflow implications of the sudden drop in demand.
2. 2.     Acute phase - During this phase, you will need to streamline and review staffing levels, production and development, while ensuring your business remains agile, allowing you to slowly build through the suppression phase and into the recovery phase.
3. 3.     Suppression phase - Businesses in this phase will have limited reserves which need to last as long as possible to ensure survival until the recovery kicks in.
4. 4.     Recovery phase - The longer-term impact of the crisis could last two to three years as the global economy recovers.

As we know, the recovery phase is going to take a lot longer than initially expected, so businesses need to be agile and flexible to gradually increase operations over six months to a year.

To do so will require an unprecedented level of vigilance, planning and flexibility, with businesses developing comprehensive strategies to deal with a range of different scenarios – best case, likely case and worst case.

Revisions will need to be made too, on potentially a monthly basis as more information becomes available and circumstances become clearer.

BELOW ARE 5 KEY STEPS TO CONSIDER WHEN NAVIGATING YOUR WAY THROUGH THESE PHASES.

1. A clear pre-crisis financial starting point. Conduct a fair and honest assessment of your pre-crisis financials in terms of revenue, cost base profile, profit, cash flow and balance sheets.
2. Pandemic revenue impact assessment. Assess the likely duration of each pandemic phase and its associated revenue impact on your business, including metrics such as sales volume decline, supply problems and staffing availability.

Scenario analysis will help to identify the range of forecasted reduction in revenue vs. current operating models, budgets and cost base. During this step it is also important to understand the Government funding options available to you, more information can be found on these here.

3. Clarify crisis management priorities. Set clear priorities for your business to help orient the response. Working on innovating the business model to better compete in the current environment and be prepared for the recovery phase may also be a necessary priority.

4. Build an integrated 18-month crisis management plan. Identify a realistic suite of tactics and actions to deliver on priorities and develop new operational and financial plans to support delivery.

These plans should be built around the most likely scenario, yet also identify additional contingency measures that may be needed in both the best and worst-case scenario.

5. Execute plans and continuously monitor operational performance. Closely track your operational performance each month against your crisis management plan. Reviewing revenue, profit, working capital, funding and cash flow position will ensure that key actions identified are being executed – all the while maintaining relationships and communicating with key stakeholders.

This step also requires ongoing reviews of the environment for key changes to make sure the planning assumptions are still relevant. At all times, operational plans and cost bases should remain consistent with the changing needs of your business.

Following these 5 key steps will help you to create a crisis management framework and KPIs that will enable ongoing performance review and implementation of the necessary tactics to deal with the specific challenges of each stage of the crisis, from now until the new normal returns.

HOW WE CAN HELP

During this time, we are here to support you and your business as you navigate this ongoing pandemic. If you require support with risk and management planning, or with any other business operations, please do not hesitate to get in touch through the form:

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