10 actions for companies facing a pandemic

At a time when more than 100 countries are seeking to prepare for or manage the impacts of a pandemic, many companies are actively playing up their responsibilities to their professionals and society. As protagonists of the economy and the business environment, organizations have as basic responsibilities the proper conduct of business and care for their employees. In view of the current global pandemic, Deloitte believes that the greater the urgency, the more it is necessary for rules to be established and followed so that the challenges are faced with reflection and resilience.

The continuous advancement of the new coronavirus has led the World Health Organization (WHO) to define it as a pandemic. Therefore, at this moment, companies may be exposed to a series of strategic and operational risks, such as delays or interruptions in the supply of raw materials, changes in customer demands, increased costs, logistical weaknesses that lead to delays in deliveries, employee health and safety issues, insufficient workforce and challenges regarding import and export of products.

Based on our analysis of the main practices of companies from around the world in Business Continuity Plans (BCP) and management of major emergencies of atypical infectious pneumonia, H1N1 influenza, Ebola Hemorrhagic Fever and other important diseases, we recommend that companies put put into practice the following 10 actions to deal with future uncertainties:

1. Establish emergency decision-making teams
Companies should immediately establish decision-making teams for temporary urgent matters, such as an “Emergency Response Team” or a “Major Emergency Management Committee” to define the objectives to be achieved and create an emergency plan, in addition to ensure that decisions can be made as quickly as possible in different situations;
As for the members of this committee, the company must evaluate its own professionals and, if necessary, bring in new ones to adapt its business to regional characteristics.

2. Assess risks and clarify emergency response mechanisms, plans and division of labor
Many companies already have “emergency contingency plans” or “business sustainability plans”, generally implementing them immediately in the event of major emergencies;
If a company does not have such plans, it must carry out an immediate and comprehensive assessment of all risks, including issues with employees, third parties, the government, other external stakeholders and its entire logistics chain. According to the risk assessment, the company must answer questions related to office space, production plans, purchasing, supply and logistics, employee safety and financial capital, as well as taking care of other important matters related to emergency plans and division of work.

3. Establish a positive reporting mechanism for employees, customers and suppliers, and create standardized communication documents
It is important to stabilize logistical supply chains and provide security for employees and external partners, as well as strengthening the management of information and services to customers to avoid a negative view due to negligence or inconsistency;
At the same time, the company’s existing information system should be used to collect, transmit and analyze information on the pandemic and immediately issue risk warnings.

4. Maintain the physical and mental well-being of employees and analyze the nature of different businesses and jobs to ensure the proper resumption of these jobs
According to Deloitte’s latest human resources survey on epidemic responses, 82% of companies believe that “flexible working conditions” are essential for professionals. We recommend that companies immediately establish flexible vacation and work mechanisms, with the support of technologies, with non-face-to-face and remote working parameters during specific periods;
In addition, the company must establish a system for monitoring employee health and maintain the confidentiality of information about their health;
Companies must ensure the safety of work environments by rigorously cleaning and disinfecting workplaces in accordance with the management requirements of national and regional public health and public health authorities during periods of high spread of infectious diseases;
Companies should strengthen safety education during pandemics, establish personal protection guidelines for employees based on facts and raise awareness of safety and risk prevention.

5. Focus on supply chain risk response plans
Large companies generally provide in advance the use of similar office facilities in other regions, which have the same capacity as affected areas, so that work in the “infected area” can be resumed quickly or so that production does not cease due to lack of capacity or raw materials;
In inventory management, organizations should consider extending the goods use cycle, caused by consumption blockages, increased associated financial costs and pressure on cash flow. At the same time, in sectors with long production cycles, organizations must prepare in advance for the resumption of consumption with the reduction of the pandemic, to prevent risks of insufficient stocks.

6. Develop solutions for compliance risks and maintain customer relationships resulting from the inability to resume production in the short term
After an outbreak, organizations must cooperate with customers to understand market changes and manage the impact of the recovery;
Laws on compliance with civil and commercial contracts must be observed, since not all non-compliance during a pandemic can be exempt from legal consequences;
Companies must identify and evaluate contracts whose performance may be affected and promptly notify the related party to mitigate possible losses, as well as assess whether it is necessary to enter into a new contract and maintain evidence for use in possible civil suits.

7. Social responsibility and stakeholder management practices and incorporation of sustainable development strategies into decision making
Companies must follow the local government’s unified planning and action plans;
Proper disclosure of corporate information can improve a company’s image;
The most important practice is to be able to implement corporate social responsibility in the environmental, social, economic and employee stability sectors, as well as coordinating relations with the community and suppliers. It is necessary to assess the possible impact and duration of the pandemic, adjust plans and, for shareholders or the board of directors, communicate proposed measures and evaluation results.

8. Create a data management plan for professionals, ensuring information security and confidentiality
Companies must establish good data management mechanisms for professionals, contractors, suppliers, partners and other professionals with whom they maintain contact;
It is also necessary to formulate emergency information security response plans in a timely manner to ensure the stability of the operation. Offer remote and in-house support 24 hours a day, 7 days a week, to ensure the monitoring of computers, servers, networks, systems, applications and other computer resources and, thus, enable professionals who work remotely, and those who work internally in the company to conduct their activities;
Companies must also protect the confidentiality of personal data and preliminary clinical examination data, especially those that are patient (whether customers or employees), strictly control access, transmission and use of that data. For medical and clinical data, access controls and protection levels must be established.

9. Companies need to consider adjustments to their budgets and deployment plans, cash flow planning and advance notification mechanisms for international trade
We advise companies to pay attention to their cash flow, adjust their schedule of receipts and payments to guarantee resources according to the pace of suppliers and employees’ work plans;
In addition, it is necessary to pay close attention to the situation of imports and exports in international trade, especially to sudden changes or disasters in places where most of the products originate, which will affect trade and may also generate large losses for the company. To prevent such events, companies must establish an emergency “scenario plan” for essential suppliers as soon as possible, which may include hedge plans using futures contracts, international trade and transportation, as well as alternative suppliers.

10. Improvement of risk management mechanisms
The Deloitte Business Risk Management Survey report shows that 76% of risk managers believe their companies could respond efficiently if a major emergency were to happen tomorrow. But only 49% of the companies developed relevant manuals and carried out preliminary tests based on emergency scenarios, with only 32% of the companies conducting emergency simulation exercises or training;
We understand that most companies must face unexpected risk events at any time – there is no doubt that such events will happen, but there is no way to predict when they will happen. Companies must establish or improve their risk management systems to identify key risks and develop plans to mitigate them. Strengthening the risk management system is as important as dealing with negative events when they materialize.


Author: Deloitte Source Deloitte

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