The coronavirus pandemic has amped up risk management, forcing executives and employees to adapt to remote work, learn new technologies, and find different ways to serve clients and customers.
In a webinar and follow-up interview on risk management lessons from the pandemic, Mark Beasley, CPA, the KPMG Term Professor of Accounting and director of the Enterprise Risk Management Initiative at North Carolina State University in the US, said executives are still learning important takeaways from the pandemic. He said he hopes they will realise planning ahead for risks is crucial to a company’s success.
“COVID-19 has helped more people than before understand that a single root-cause issue can totally trigger risk at an enterprise level that affects everything,” Beasley said.
How to keep risk management on track
Beasley outlined five principles businesses should adopt when it comes to risk management:
Put people first. The coronavirus pandemic has forced many office workers to set up their laptops in kitchens, dining rooms, or home offices, where they attend virtual meetings and complete tasks online. Weeks and months of working remotely have highlighted the challenges of turning a home into an office, particularly in families with children in which both parents work from home.
A lot of people are stressed, Beasley said. As employees adjust to working from home, some are dealing with the extra challenge of young children being out of school and learning virtually. Companies must recognise that and support their workers.
“I think so much of it is messaging, particularly from the C-suite — acknowledging that the workforce has been thrown into an uncertain world and acknowledging that it’s not easy,” he said.
Remote working also offers opportunities and could help industries rethink their hiring strategies.
“I think the huge opportunity for us is [that] we can open up our vision on how to attract talent,” he said. “I can have talent working for NC State, and they live in California. Why not?”
Identify the “main thing”. Beasley said it’s more important than ever for businesses to narrow their focus to what he calls the “main thing”, whether it’s selling or making a product or offering a service essential to the business. Anything nonessential could be sacrificed to cut costs.
He used a recent no-frills hotel stay as an example. Pre-pandemic, Beasley said, the hotel had breakfast, happy hours, and automatic daily cleaning. But this time, a simple breakfast was served in a plastic container, happy hour was cancelled, and his room was cleaned only at his request.
Identify risks. Dealing with the health and economic impacts of the pandemic is creating new risks. Business leaders must identify and prioritise them, Beasley said.
For example, he said, as a college professor he has been preparing to teach online classes this fall. The risk of switching to online classes is that instructors might not have the technology in place by the start of the semester, and students might not have reliable internet access or the bandwidth to use certain programs.
Businesses find themselves in similar situations with the number of new risks skyrocketing during the pandemic. Beasley said businesses need to ask themselves, “What could keep the main thing from happening?”
Multiple uncontrolled risks are on steroids, he said. “Pre-pandemic, a single one may be on steroids — not all of them at the same time.”
Respond to risks. Once risks are identified and prioritised, leaders need a plan of action. They should be realistic, especially in situations such as a global pandemic, Beasley said.
“We’re so used to doing things so well that we might fall prey to perfection tendencies,” he said. “In this COVID-19 environment, responding to risk is, ‘Let’s respond the best way we can, but let’s not wait until we can get the perfect response.’”
Planning ahead can be the key to responding effectively. Some business leaders used to be hesitant to plan for worst-case scenarios, Beasley said, but the pandemic is changing that.
“Executives were saying, ‘That’s not going to happen. We don’t have time for this. We’ve got more critical things to work on today,’” he said. “I think they’re realising, ‘Ooh, it would have been really helpful had we done that.’”
Monitor and communicate. Risk strategies might need adjustments at times, Beasley said, cautioning against making plans for years ahead.
“There’s still so much uncertainty that we as leaders need to not be too fast to start looking too far out into 2021,” he said. “Because the crisis is still so real. The uncertainty is changing so rapidly. We’re very short-term right now. And that’s probably OK and probably appropriate.”
Some things may change once the pandemic is over. Strategic planning sessions, for example, are better in person than online.
Other things may stick, Beasley predicted. Some companies will likely continue remote work even after the pandemic is over, he said. “Approving a budget, things like that, we can do remotely.”
Companies may also keep new practices that customers have embraced during the pandemic. Beasley points to his 85-year-old mother’s newfound appreciation for grocery pick-up.
“She’s pretty savvy on technology stuff,” he said. “She’s figured out doing her grocery order online. She’s like, ‘I should have done this a long time ago.’”