Firms must tread carefully in shift to pandemic recovery phase, warns Graham

Airmic and Control Risks today launched a new report that highlights the lessons organisations have learned from the Covid-19 crisis and charts the future of crisis management. It warns against knee-jerk reactions and early shifts into the recovery phase without proper planning. Julia Graham, deputy CEO and technical director of Airmic, said organisations need to be aware of the fact that this crisis is different because it is ongoing. Organisations that break too early, assuming it is over, and launch fully into recovery, will face some serious problems, she suggested. Ms Graham advised organisations to time their exit into the recovery phase very carefully, when announcing the findings of the New Challenges, New Lessons report. The report is based on a roundtable meeting of the Airmic enterprise risk management special interest group in June 2020 and a survey of 132 risk professionals carried out in August. It is designed to gain insights into how risk professionals and their organisations acted and fared during the pandemic and what competencies are now needed to be “future-fit”. Ms Graham stressed how big a challenge the pandemic and lockdown have been, and continue to be, for companies of all shapes and sizes. “Sadly, we discovered no silver bullet to pandemic crisis management,” she said during a press conference at Airmic Fest. “Leadership has been challenged by a lack of useful intelligence and data to support their decisions. This has led in some cases to what we believe are knee-jerk or short-term reactions. Particularly, some supply chains were caught off guard with limited contingency plans for strategic sourcing options in an interconnected global crisis,” continued Ms Graham. Airmic’s technical director stressed that companies need to be aware that this crisis is different to those in the past, because there is currently no end in sight. “It’s the crisis that keeps on giving. Typically an event will happen, there will be a relatively short emergency period and crisis period, followed by recovery. But of course, what we are getting is a mix of the crisis coming back again and experiencing – certainly in the UK and other parts of Europe – a second spike, which is in effect like a second crisis as business are trying to recover. So, it is changing the context constantly and therefore a crisis loop that may come back again and again until the solution is achieved – which is a vaccine,” explained Ms Graham. The key thing for risk managers and their senior management colleagues at this stage is not to rush into the recovery phase without properly analysing the risk landscape ahead, she added. “If I had to pick out one point, it is that organisations should think about the solutions they are putting in place for recovery. They should not rush to make change that is not thought through properly. You shouldn’t exit the crisis until you think the time is right. Many of our members still believe very firmly that even though businesses are trying to recover, they are still in a state of crisis. This is a very, very unusual scenario compared to other crises,” said Ms Graham. She also pointed out that the longevity of this crisis means those involved in the crisis team are under a lot of stress. “Crisis teams need to look after themselves. You cannot manage a crisis for six months and not need a break. So, taking care of teams that manage crises is also key,” she said. Several core elements to resilience are emphasised by the report. These are leadership, data, people and operating models. The report notes that effective leadership is regarded as the most important resilience principle that organisations prioritise. Some 70.7% of respondents said it was among their organisation’s top three priorities. This requires striking a balance between involving senior leadership in continuous crisis management, while avoiding knee jerk, ill-informed leadership decision-making, the report points out. The second element is data. Organisations were heavily reliant on data supplied by UK government sources for risk intelligence during the Covid-19 crisis. Some 84% of respondents found it the most useful source of risk intelligence. This was followed by third-party sources, used by 54.7% of respondents. Meanwhile, less than half of respondents relied on tailored advice and guidance from risk advisers (45.3%) and insurance advisers (22.7%). The third element highlighted is people. There was high confidence that risk professionals had the right competencies to deal effectively with the pandemic, especially when it comes to risk awareness and scenario planning skills. Some 85.4% of respondents believed risk professionals in their organisations have the right knowledge, skills and behaviours to achieve this. They felt further development is required to tackle risk interconnectivity and engage with business issues. “The structure of the current workforce in some organisations is not set up to meet future requirements. Of our respondents, 39.5% said their organisations were not considering remote working as a permanent option, even for roles that allow for it, or were still tentative about remote-working options,” states the report. Operating models are also crucial to resilience, the survey found. “There was a very strong perception that the crisis management of organisations was effective during Covid-19, according to 96.6% of respondents,” the report states. Perhaps not surprisingly, a significant proportion of organisations (41.7%) plan to make changes to their supply chains.

Firms must tread carefully in shift to pandemic recovery phase, warns Graham

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