Crisis Management and Coronavirus

If you’re a CEO and your team isn’t already asking what your organisation is doing to prepare for COVID-19, it’s probably only a matter of time.  Although Australia has been lucky so far in terms of managing the outbreak, novel coronavirus is already having a significant impact on global markets, supply chains, consumer confidence and travel.  Whilst there is no need to panic, companies in Australia should be refreshing their crisis management plans and undertaking specific scenario planning to mitigate the threat.

Best practice crisis management involves preparing an organisation for an existential threat by having the plans, resources and people in place to manage any situation.  If the threat materialises, then the crisis management team can be activated, and strategic and decisive decisions can be made rapidly using the processes already in place.

Most good crisis management plans are generic because they need to be able to deal with any situation.  However, when a threat like COVID-19 is on the radar, specific plans should be developed that fit within the existing, overarching crisis management framework.

Mature crisis management teams usually have a decision-making matrix that helps them pull apart a problem, prioritise actions, allocate tasks and assign resources.  For organisations starting to think about planning for coronavirus, this process is a good place to start.  There are a few different ways to do this but usually it involves working through potential impacts on: people, customers, the environment, assets and operations, finance and legal, and reputation.

Some companies in Australia have already pulled together their CMT to do some out of session planning.  Other CEOs have allocated the task to special working groups.  It doesn’t really matter how the work is done but the following types of questions need to be considered and worked through.

People

• What are the company’s travel policies around WHO Public Health Emergencies?  At a minimum, is the smartraveller.gov.au advice being followed?
• What happens if a pandemic is declared?
• What resources are available to provide staff travelling overseas with up to date information?  Are 24/7 contact numbers available?
• What type of travel insurance do staff have?  Does it cover pandemics and repatriation?
• What happens if there is an outbreak in Australia?  Can staff work from home?
• If staff do need to work from home, is remote access and IT support available?
• What support will the organisation provide if a staff member gets sick?
• What will be the policy if sick leave runs out?
• Will extended leave be granted for employees to look after family members?
• What happens if key members of the leadership team become ill?
• If someone dies, how will the organisation respond?
• What internal communication channels are in place?

Customers

• What support will be provided to customers if they or their businesses are impacted?
• Will variations in contracts be considered?
• Are there force majeure clauses in customer contracts?
• What happens if delivery services are impacted?  Are alternatives available?

Assets and operations

• How exposed are operations to overseas and local supply chain disruption?
• What are the levels of key inputs and stock?
• Can additional supplies be warehoused?
• What stock or products are perishable?
• What will be the impact on production if employees become ill?
• What important maintenance on plant and equipment is scheduled?
• What is the impact if it is delayed?
• Can production be slowed down or run in batches?
• What is involved in mothballing assets?
• What happens if key staff become ill in terms of service delivery?

Finance and Legal

• What modelling exists for the impact of reduced sales or limited production?
• What emergency financing is in place?
• What debts and covenants may be triggered?
• What insurance cover does the organisation have for loss of production?
• What legal liability does the company have for not being able to deliver on contracts?
• When are ASX continuous disclosure obligations triggered?

Reputation

• How will the organisation communicate with staff, customers and the community?
• How will the organisation balance transparency and preparedness with not wanting to appear overanxious and cautious?
• What plans does the company have to recover to business as usual once the crisis passes?
• What lessons will be learnt?

Current international crisis management best practice is guided by Crisis Management: Guidance for developing a strategic capability PD CEN/TS 17091:2018.  It states that

“Crises present organizations with complex and difficult challenges that may have profound and far-reaching consequences. These consequences can be very damaging, especially where it is perceived that the organization failed to prepare for, manage or recover from a crisis.”

But there’s no need to panic just yet. Instead, Australian CEOs have still got time to prepare and be one step ahead. For sure, they can pray and hope the COVID-19 doesn’t get out of hand here and it all just settles down. But the risk is real and rising.  So, now is the time to dust-off that crisis management plan and get a strategy to deal with the threat. It might not be needed but it’s what any CEO should be doing in a time like this.