2 June 2020
Many organisations will have been having discussions about the coronavirus and its implications from a risk management perspective. This article gives some tips to help organisations with their risk management as we head into the new normal. This will not be a recap on all good risk management practices, but those that are coronavirus related.
|①||Do not throw governance out the window
Many organisations have taken on a state of emergency, ending all board activity and giving the executive greater decision-making power.
Whilst the physical aspect of direction and control may be changing, the fundamentals of good governance should remain the same. Without governance providing effective purpose risk management can easily become a tick box exercise.
Those charged with governance should be in a position to monitor, guide and challenge (constructively) the progress of an organisation’s response to the coronavirus event. It is important that coronavirus event response monitoring and reporting ie progress, issues, innovations and key learnings, be a standing agenda item for management.
Adapt your governance arrangements to make sure your Board is able to function properly. This will allow your Board to set direction, measure performance, have oversight, undertake scrutiny and make decisions.
It is in exceptional circumstances such as this that an effective board comes to the fore.
|②||Coronavirus is not a risk in its own right – it currently affects everything
Organisations are now including the coronavirus pandemic as a new risk in their strategic risk register. This suggests that the risk exists in isolation with a specific set of controls and actions. This is not the case. Coronavirus adds a new dimension to an organisation’s strategic risks and the subsequent effects on the organisation.
Organisations should look at their strategic risk profile as a whole and understand the interdependencies. Too many risks (risk registers) are reviewed on a transactional basis, ie in parts but not as a whole.
Review your strategic risks cause descriptions. This will likely mean that you have to adapt your controls or create new actions in the context of the risk to ensure that it is being suitably managed.
|③||Coronavirus response – things do happen
Contingency planning is a key feature in the management of risk. By now most organisations will have some form of coronavirus response plan in hand to ensure the survival, recovery and continuity of operations.
The above goes for any kind of significant event to which an organisation is responding, not just the current coronavirus situation.
All organisations should have a contingency framework within which it can operate when situations like coronavirus or similar arise.
The World Economic Forum Global Risk report may be helpful. It is produced annually and focusses on what might be the world shapers in the next 12 months. A global pandemic has been in the report for a number of years. Organisations may wish to consider how the realisation of such risks in the future might impact on its operations and existence, i.e. what happens globally will eventually impact locally and then consider the organisation contingency framework in that context.
|④||Don’t manage the coronavirus response via spreadsheets
Some organisations have made huge spreadsheets to record their actions. But a spreadsheet is not a reporting tool and is reminiscent of organisations that still put the whole of the risk register (in spreadsheet form) on the Boardroom table. In doing this, where do you start? It is also highly likely that it is already out of date by the time this happens.
This is a fast-moving environment so make sure that the Board, management and staff have access to real time information, eg updated actions, communications, evidence etc, all in one place. This will provide all the main stakeholders visibility of the response and ensure a more coordinated and consistent approach. Investing in a system to communicate and track actions, progress and updates, and provide useful management information doesn’t have to be expensive and will cut down on unnecessary and inefficient administration. This will provide a good return on investment.
|⑤||Prepare to manage the change risks - embracing the ‘new normal’
All organisations will need to adjust to a new way of working and grasp the opportunities that this presents for increased operating efficiency and effectiveness. These will be wide ranging from where we work, how we work and how we engage with customers, suppliers and stakeholders.
In some cases, this might necessitate a top to bottom organisation restructure to realise the benefits that this change can bring.
Organisation leaders need to still be looking ahead, capturing the learning from this event, reviewing strategy and operating models, identifying emerging innovations and opportunities, listening to stakeholders. As important as it is to survive and bounce back, it is more important to bounce forward and be ready for the new normal.
Having appropriate mechanisms in place to prepare, initiate and process the forthcoming change in the future short, medium and longer term will be as crucial (if not more so) as the initial response to ensure sustainability and growth.
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