Learning From One Crisis, To Prepare For The Next

Effective decision-making all too frequently comes down to being able to prepare for the unknown and the unexpected. Building a strategy that succeeds today is laudable, but to be able to design one that succeeds despite economic headwinds, disruptions in global supply chains, climate conditions and ever-shifting consumer demand is what truly sets a leader and their organisation apart in the market.

Businesses that can emerge from a low-point of the crisis are generally those that are able to work resiliently, adapting processes, products and people to changing circumstances and finding new ways to support their clients. A resilient organisation will therefore be informed, future thinking and agile, ready to respond to the unforeseeable.

The importance of continuity

Underlying every business that has successfully recovered from a crisis is a robust Business Continuity Plan (BCP). The BCP’s most fundamental role is to reduce uncertainty. When a crisis strikes, the immediate concern is for the continued viability of the business, as previously easy assumptions about everything from cash flow to supply chain efficacy and consumer demand are thrown into question.

A BCP provides a map to help your team navigate change, often including concepts such as controlled messaging to stakeholders and support needed to maintain efficient response times, increasing the chances of returning to full production sooner.

Often, this certainty comes from clear chains of command. A BCP assists by drawing clear lines of responsibility, identifying who is responsible for strategic decisions such as discounting, running down stock, buying replacement raw materials, making staffing decisions, choosing new distribution channels or even focusing on different customers and products. Core metrics will be defined to help order and prioritise decision-making, measuring their impact on cash flow, profitability, brand value and others.

The scope of a BCP includes an initial emergency response period wherein key risks and components are identified in service of creating a full response plan. This is followed by a crisis management period where this new response plan is implemented, stakeholders are engaged, clients communicated with and financial and operational actions undertaken to secure the company’s position. Following this is a business recovery period under which these financial and operational actions are assessed and amended if required, and key longer-term objectives are defined and worked towards.

Looking beyond the recovery

A business continuity plan is just that – it’s a strategy to ensure that your business is able to operate in optimal condition within the context of the crisis. It’s at most a 12-month plan that covers the immediate post-crisis recovery. Just as an athlete who’s suffered an injury may change their training regime post-recovery to further strengthen that area and safeguard against secondary injury, work must be done outside of your BCP to ensure that your business is in the best possible condition to survive a crisis.

This inter-crisis risk management work is as vital as your BCP, allowing you to engineer the conditions under which it can be maximally effective. Generally speaking, soon after a crisis – when a business is on the path to stablisation – is a good time to start this ideation process.

A strategic approach to risk management

Across the globe,  we’ve been delivered unexpected business challenges in recent times. Many organisations have been able to modify their business models to adapt to the challenging operating environment – and many have not simply survived, but thrived.

These outcomes are the results of decisions that have lasting impacts beyond the immediate recovery, helping these organisations emerge more effective than ever. When the next crisis presents itself, they will be ready.

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Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.