What earlier this year looked like a disruption that will pass in a few weeks, has become the cause of a global crisis with long-term and unpredictable consequences. As a result, the risk assessments that were held a few months ago are certainly no longer valid in many activities today.
What has happened so far and what else can we expect?
The entire world economy can be divided into three main groups of business.
In the first, there are those who have increased sales due to the pandemic and even experience the need to expand their capacity. The second group includes companies that experience the crisis, but can endure it without major upheavals. In the third group, however, the activities are in a deep crisis, as a result of which companies are laying off or have even gone bankrupt.
The next important consequence is remote work. After the first shock due to quarantine the businesses have managed to adapt by introducing remote work and online meetings, and consumers by shopping online and home-delivery.
At the same time, disruptions in the procurement of products, materials and raw materials have forced many companies to thoroughly change their suppliers. The advantage over cheaper but remote and less reliable ones has been given to slightly more expensive, but closer and therefore more reliable partners.
Due to the uncertain situation, the companies also took care of larger liquidity reserves and postponed some less urgent costs and investments.
The economy is linked to supply chains, meaning that cancellations of mass events, sporting events without spectators, interrupted tourist flows and other consequences affect many other activities. However, the latter provide services and supply them with products, which will only become apparent over time.
Predictions that COVID-19 will not end soon and that new pandemics can be expected, are a severe warning that things will probably not be the same for a long time, or perhaps never again.
All of the above is a good reason enough to rethink the risks and prepare for future situations as much as possible.
Because risk management is not just a formality that we deal with one or several times a year, but an intelligent and widely applicable tool that helps us monitor daily operations and detect early warnings that help us prevent and mitigate the crisis in all areas.