17 May 2021|Crisis Management, Latest Posts
By Stefano Maifreni, founder of Eggcelerate. The pandemic has changed the way most businesses operate: the global supply chain has broken down, economic activities have been massively disrupted, and inequalities and social tension have been exacerbated. Initially, during the lockdown, we all had the same thought: how will our business survive?
The financial year 2020 was a challenging year for many. Most businesses faced challenges, incurred losses, and some unfortunate ones had to shut down.
Against this background, understanding the importance of organisational resilience becomes even more crucial. An organisation’s capacity to absorb stress, recover critical functionalities, and thrive in altered circumstances is what resilience is.
Resilient businesses survived the storm, and some even thrived. These businesses did so by feeding off the power of good stakeholder relationships – inside and outside the organisation.
Each component of the business driven by human relationships needs to be resilient for the organisation to mitigate and overcome the continuity risks.
Business Continuity Risks and Mitigation
Even before the pandemic, businesses faced multiple continuity risks, which led them to establish risk management processes and procedures to prevent interruptions.
From fire and flood to cybersecurity and data loss, companies face many continuity risks. According to a 2018 report by BCI, some of the significant continuity risks businesses face are: cyberattacks and threat to cybersecurity, unauthorised access to data and information; unplanned IT and telecom outages; interruption in utility supply (electricity, water, gas); adverse weather; acts of terrorism; security incidents and fire; supply chain and transport network disruptions (e.g. the recent case of Suez Canal Blockage).
According to PwC 24thAnnual Global CEO Survey, the most expected upcoming business risks are the pandemic and health crisis followed by the cyber threat.
There is a connection between the top two risks. The pandemic has forced companies to work digitally; this digital transformation then leads to increased cyber threats.
Furthermore, tax policy uncertainty and misinformation have risen drastically compared to last year’s threat expectations reaching 31% and 28%, respectively. These are some risks that a firm, big or small, must be prepared for in the upcoming years.
Preparedness is the key to mitigating risks and avoiding disasters, and what better way to prepare than planning?
For anything to work systematically, we need a blueprint. Managers need to do Business Continuity Planning, the process of identifying all the possible risks a company might face and creating a prevention and recovery system from these risks.
Understandably, SMEs are often the most exposed to the effects of certain types of risks due to limited resources and structural issues outside their control.
However, any business can manage risks using three principles:
1. Identifying the nature of the risks
The business needs to identify if the risk is related to compliance, security and operational fraud or is a financial risk. Once the nature has been determined, the firm can then take corrective actions.
2. Assessing the likelihood of the risks manifesting themselves
Rank the risks once they have been identified, e.g. which risk has a high probability of occurrence, which will impact the business more, and then prioritise them, keeping one risk under more control than others
3. Taking preventive and corrective actions to reduce the enterprise’s level of exposure to the risk.
The importance of the human-to-human connection’s resilience
Tired of looking at the dark side of the pandemic for a year, I thought hard about what opportunities a crisis may unlock to build a resilient ecosystem and relationships with all stakeholders.
The crucial point is that all these identified risks must align with the business’s day to day operations and practices. Therefore, the kind of resilience that any business can find the most straightforward to develop would be based on strengthening human to human relationships:
· How much trust do your suppliers repose in you?
· How eager is your team to contribute unflinchingly?
· How significant is the brand equity among the clients?
These could be the three most important questions that would form any risk mitigation strategy’s bedrock.
Through my business’s direct experience and that of my Customers, I realised how important it is to focus on your current relationships and build a robust ecosystem with Clients, suppliers, and staff. In the simplest terms, it could be about talking to your clients about getting paid on time and paying your suppliers on time – it’s a chain that could grind to a halt if we stop paying each other. In turn, it would help reduce the need for redundancies and furlough, maintain morale and build loyalty.
As the proverb goes, “The best time to plant a tree was 20 years ago; the next best is now.” The firms should not focus on what could have been but what could be.
About Stefano Maifreni:
An engineer by education, product manager by role and expert at achieving growth by career, Stefano has an outstanding track record in business strategy, operations, product and marketing, with extensive P&L management and international expansion experience.
His professional journey includes Senior Manager roles in global Blue-chip companies, Growing Businesses and Start-ups in technology-intensive and innovative industries (IT, Telecom, Technology Manufacturing, Drones, IoT and FinTech).
Eggcelerate is the B2B growth experts for British SMEs supporting the growth of medium and small B2B tech British and Italian companies with international aspirations, helping them manage growth and change while streamlining their operations and improving their bottom line and cash flow position. Eggcelerate has worked, among others, with British start-ups in the field of FinTech (equity crowdfunding, supply chain finance), IoT (immersive events, drones) and more mature Italian SMEs (software house, manufacturer of electronic components).