- June 8, 2021
- Posted by: Bansari Joshi
- Category: Global growth
Last 1.5 years have not been easy for any industry. Business plans have gone vary, risk mitigation formulas have not proven effective, investment strategies have had to be revamped; not a single industry has been able to resist the wrath of pandemic. To top it, almost every part of India has experienced a natural calamity or an additional epidemic in the past 1.5 years, intensifying the uncertainty. If global trends are any indication, catastrophic events will grow more frequent but less predictable in future.
Leaving the Covid-19 pandemic aside for a moment. In general, you might have noticed, risk faced by industries has increased manifold in the past decade. The exact nature and severity of the risk might differ from country to country but the bottom line remains the same – difficult times are here to stay. Globally, number (at times even severity) of natural disasters has increased, internet & data breaches are on the rise, not to mention flipside of technological innovation: a variety of new legal & financial risk. The old risk mitigation formulas did not consider the technological advancement in terms of availability of data, pace at which data can be transmitted, or climate change & it’s direct or indirect impact on companies’ risk-return profile, or the changing regulatory aspect. For that very reason, our industries have been caught unprepared to face the events of last few months.
Each industry needs to develop the ability to withstand adversity and bounce back stronger. In other words, each industry needs to develop resilience: first to survive, and then to thrive. I am of strong opinion that a sound business model should be embedded with the following facets of resilience:
- Invest in strong and secure technological infrastructure. This doesn’t necessarily mean invest in an expensive technological infrastructure. Understand the requirement of your entity and then choose an appropriate structure in order to keep your data safe, your teams connected, and your communication with third parties uninterrupted.
- Device regular backups to ensure minimal data loss in case of a mishap
- Understand regulatory requirements about privacy and data protection & follow them well.
- Plan the cashflow to keep sufficient liquidity should the entity have to go through some difficult times. Keep investments plans at bay for now.
- Re-strategize risk-return policy based on current situation after considering revenue, cost and credit issue.
- Trade off unrequired/unnecessary expenses – can you make do with a smaller office or can some of your offices be converted into virtual offices only? Can you put off new hiring and outsource the work instead?
- Ensure the contracts accommodate for force majeure situations. A force majeure situation is the one which is completely out of your control – such as the Covid-19 pandemic
- Draft/vet the Indemnity Clause, Limitation of Liabilities clause and Termination Clause carefully – do they imply that you are responsible for any losses or damages which may incur on account of situations out of your control? Is your liability exposure disproportionate to the gain you are receiving out of the agreement? If yes, now would be the time to revise the contract.
- Do you have any contracts which are expiring/have expired during the pandemic period? Apply for extension of term or renew the agreements.
- Build a strong supply chain and delivery mechanism to maintain operational capacity. Maintain and update a list of alternate suppliers. Spread the risk of delivery failure by maintaining more than one service provider for deliveries.
- Is your production capacity & methodology flexible enough to survive a few days/months of lockdown? Can you adapt to significant shifts in customer demand?
- Are your mission and vision in line with your short, medium and long-term goals? Mission and vision are intangible communication streams through which you can communicate with your stakeholders, your human resources and your customers
- Build a strong team – the one which can adapt to your vision and mission, where everyone feels included and is empathetic towards the goals & work of the other team members.
- Protect your organisation’s assets through insurance policies: Group Mediclaim Policy, Property Insurance Policy, Data Insurance Policy, Accident Insurance Policy, etc.
- Draft an HR Manual if you do not have one – it acts as a source of direction for employees. It gives the employees an overview of what their organisation stands for, actions expected out of them and organisation’s commitment to their welfare.
An effective resilience policy evolves with time – it anticipates the requirements, the future scenarios and responds to drive superior performance. It has been long proven that entities which respond early to disruptions or downturns, survive and thrive for a longer time.