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CRISIS MANAGEMENTDURING THE CORONAVIRUS (COVID-19) OUTBREAK
CRISIS MANAGEMENT DURING THE CORONAVIRUS OUTBREAK
The coronavirus (COVID-19) has disrupted stock markets, supply chains and led to plant closures. Responsiveness, agility and implementing necessary changes have become decisive factors, particularly in the current phase.
The economy is facing new challenges. Business
processes, value chains and communication
measures must be reviewed and reassessed.
Companies need secure information, methods and
tools to create timely and sustainable responses to
the emergency:
- Ensure your stakeholders are safe and healthy.
- Implement strategies and measures that
safeguard your company performance potential,
sales, net assets, and liquidity.
- Initiate the stages, leading from the crisis of
today to the new normal that will emerge after
the battle against coronavirus has been won:
Resolve, Resilience, Return, Reimagination,
Return.2
THREE SCENARIOS FOR COVID-19 The coronavirus’ economic impact
Source: McKinsey, COVID-19: Facts and Insights; PWC, Reactions to the Economic Impact of COVID-19, March 2020
Fast recovery and containment within a few weeks. It turns out that the virus is seasonal and can be stopped in spring and summer.
Current restrictions to freedom of movement, gatherings, and travel are effective and the number of cases is reduced again.
Economic decline until the end of Q1. Then a return to normalcy.
RAPID RECOVERYSeveral countries continue to lock themselves down, drastically restricting daily life, travel, and business.
Sectors such as airlines, tourism, and hotel/restaurants lose their summer business.
Other industries also experience an acute decline in business until mid/end of Q2.
GLOBAL SLOWDOWNWorst-case scenario. The virus continues to spread worldwide and cannot be contained by spring/summer. Health care systems are severely overburdened.
Global recessions, economic downturn, reduction of worldwide production and declining sales due to uncertainties and consumer restraint. Consequential damage to society as a whole and a sharp drop in consumption.
Consumer confidence doesn’t recover before Q3 (or later).
GLOBAL PANDEMIC AND RECESSION
3
CURRENT PREDICTION
Time
CRISIS MANAGEMENT: THE CRISIS CURVEDifferent types of crisis
DAT
AD
RIV
EN
worsening crisis
Pu
blic
inte
rest
Sudden and totally unforeseen event
Goes quickly from latent to acute
ACUTE crisis
4
Slow, covert development
First signs in the latent crisis phase
CRISIS MANAGEMENT: THE CRISIS CURVEHow a crisis can proceed, with beginning, turning point, and end
DAT
AD
RIV
EN
Beginning End
Turning point
EndCh
ance
s o
f b
usi
nes
s su
rviv
al
Time
5
THREE SCENARIOS FOR COVID-19 The coronavirus’ economic impact
Source: McKinsey, Impact of COVID-19, March 20206
COVID-19: CHALLENGES
Obligation to inform
Health
Insecurity, fears
Remote work
Flexible working hours
Reduced work
Exemptions
Continued payment of wages
Compensation for quarantine measures
EmployeesAlternative delivery routes
Value chain
Standstill/interruptions
Delays
Contract disputes
Effects on customers
Supply ChainDecline in sales
Cash flow/liquidity bottlenecks
Government aid/financing
Loan issues
RevenueReduced capacity and resources in core areas, infrastructure and services
Breakdowns of entire locations
OPERATIONSTravel and mobility restrictions
Travel bans
Quarantines
Effects on recreational activities/social interactions
MOBILITyCompliance challenges
Regulation
7 Source: PWC, Reactions to the Economic Impact of COVID-19, March 2020
Working from home is being tried out by many companies as a protective and preventative measure. Organizations around the world are adopting innovative solutions for remote working.
These measures will inevitably provide new opportunities for how we do business.
Accessibility of leadership:
Employees should know how and when they can
reach their superiors and project managers. It is
not about controlling the progress of work but
about ensuring that employees feel they are not
alone and receive support.
Assistance in task organization:
Provide employees with information and tips on
how to manage working from home. Through
management's coaching and mentoring,
employees have the opportunity to grow and
develop in their positions.
Flexible work time models
Soften the impact of the crisis with new work
time models if daily work slows down or
contracts fail to materialize. This could be
through reduced working hours, flexible holiday
leave, and overtime arrangements.
WORKING REMOTELYNew work options during the coronavirus outbreak
8
ADDRESSING THE GROWING STRESSReport signs of distress related to COVID-19 in the United States
9 Souce McKinsey COVID-19 Consumer Survey 3/29/2020
CRISIS MANAGEMENT: STAGES OF LOSS/GRIEFThe Kübler-Ross Model
Co
rpo
rate
Per
form
ance
Time
CRISIS
Anger
Denial
Withdrawal
Bargaining
Agreement
This can‘t be happening!
We‘ll never make it!
Acceptance
We can do this!
10
Goal-oriented management principlesto effectively manage corporate crises. Particularly in times of crisis, employee management and communication become top priority.
Soft skills, such as social competencies,
charisma, and building trust are essential in
times of crisis. Executives relinquish more
responsibility and take a goal-oriented approach
to leadership in order to minimize the initial
“chaos phase.”
It is about taking initiative and planning and
acting with foresight. The goal of leadership is
to bring chaos back into order. The management
process is governed by a feedback loop that
includes analyzing the situation, assessing the
situation, weighing possible courses of action,
making decisions, and monitoring.
LEADERSHIP PRINCIPLESEffective leadership during crises
32
15
4
Feedback Loop
Analysis/situational awareness
Possibilities for action
Situation assessment
Decisions/Resolutions
Monitoring
11
Goal-oriented management principlesto effectively manage corporate crises. Particularly in times of crisis, employee management and communication become top priority.
Employees' Health: Recognize you have asymmetric
information vs. your team / employees.
Operations: Have a Plan B to ensure all operations can
continue across all levels.
Financial Planning: Run scenario planning, reduce
discretionary spending, and assess liquidity/cash.
Customers: Ramp up customer dialogue to understand
new challenges and how you can be part of the
solution.
Communications: Focus on communications across
internal and external audiences.
Strategic Opportunities: Prepare for opportunities
(acquisitions, talent); activists/sponsors are ramping
up on public situations.
LEADERSHIP PRIORITIESEffective leadership during crises
32
15
4
Feedback Loop
Analysis/situational awareness
Possibilities for action
Situation assessment
Decisions/Resolutions
Monitoring
12
COVID-19: PRIORITIZED CHECK-LIST 1/2
1. Designate an executive response leader and cross-functional team with experience across the organization.
2. Evaluate your current state plans and incorporate elements of a crisis response plan
3. Map your internal and external stakeholders and information source.
CRISIS MANAGEMENT1. Establish processes and protocols to capture
current state of employees’ locations and work-related travel.
2. Develop business contingency plans for your employees, beginning with emergency health protocols such as sanitization, quarantine and evacuation, as well as healthcare access.
3. Define which functions must remain onsite and the protocols for remote working. Determine technology infrastructure and controls needed to support remote working at scale.
4. Define working assumptions for how changes in the external environment such as customer, pricing, and supply chain impact business, financial, and headcount planning.
WORKFORCE1. Host a working session with supply chain
functional areas to review risks and disruption and determine a mitigation plan.
2. Identify and implement changes to enhance your business continuity plans to better address the threats posed by COVID-19.
3. Determine whether alternative sources already exist in the current supplier base. If not, work to identify alternative sources, including locations.
4. Evaluate the supply pipeline, including intended destinations, and estimate when capacity may be available.
5. Identify key scenarios to evaluate those that are specific to COVID-19, such as supply disruption (including longevity), demand spikes and price impacts.
OPERATIONS AND SUPPLY CHAIN
13 Source: PWC, Reactions to the Economic Impact of COVID-19, March 2020
COVID-19: PRIORITIZED CHECK-LIST 2/2
1. Determine your cash sources and needs for the next 90 days.
2. Identify a team to address the impact on each area of accounting operations and financial reporting.
3. Discuss with the disclosure committee any relevant actions to be taken.
4. Develop a communication plan for management, the board, and audit committee.
FINANCE AND LIQUIDITY1. Identify a leader to drive an assessment of your
strategy and innovation opportunities and define objectives.
2. Conduct a high-level assessment of the impacts of COVID-19 on your customers.
3. Conduct and analyze a threat assessment and begin identifying countermeasures and improvement levers that protect growth and profitability, which might include incentives or saving measures.
4. Define working assumptions for how changes in the external environment, such as customer, pricing and supply chain impact business, financial, and headcount planning.
5. Identify current product/service innovations underway.
STRATEGY AND BRAND
14 Source: PWC, Reactions to the Economic Impact of COVID-19, March 2020
CRISIS MANAGEMENT TEAMOperational security during a crisis
A crisis management team in the company increases operational security. Stringent crisis organization is essential for coping with crises.
Crisis management is separate from day-to-day business. The tasks it requires differ according to the company's area of business and the nature of the crisis, but can include:
− Information and resource management
− Coordinating all parties involved
− Allocating tasks and responsibilities
− Status reporting
− Arranging the preparation of premises/equipment
− Emergency planning
− Developing options for action
− Making future-oriented decisions
− Structural and operational organization
− Controlling measures taken
− Press and public relations work
− Putting together information for employees,suppliers, and customers
− Summarizing and visualizing the situation
− Documenting the crisis management process15
CRISIS MANAGEMENT: PROCESS
CLARIFy Analyze Strategize/Plan Implement Steer/Monitor
Management
• Identify the corporate crisis
• Accept the crisis and consequences
• Overcome fear, anxiety, and frustration
Employees
• Overcome fear and frustration
• Understand the emotional response
• Recover motivation and willingness to perform
Management
• Review and assess the situation
• Reassess goals
• Verify resources
Employees
• Participate
• Communicate
• Be available
Management
• Plan objectives
• Train the crisis team/plan crisis workshop
• Supplier and customer evaluation
• Develop scenarios
• Map milestones and phases
• Plan resources and measures
Management
• Clarify responsibility
• Create detailed resource plan
• Allocate tasks and implement measures
• Create schedule
• Create a feeling of accomplishment
Management
• Supervise projects
• Review projections/key figures
• Lead by example
• Evaluate and adapt measures
• Create a feeling of accomplishment
• Learn from lessons
IMPLEMENT IMMEDIATE MEASURES MEASURES/ACTION
ENVIRONMENTAL RISK MANAGEMENT
PROJECT AND CONFLICT MANAGEMENT
16
CRISIS COMMUNICATION: GUIDELINES
Adaptability
Crisis management must always include the willingness to adapt and improvise.
Limit the chaos phase as much as possible
Preparing clear procedures and structures for crisis management and communication is the best way to keep the initial chaos phase as short as possible.
Risk analysis and early warning systems
Risk analysis, weakness analysis, and early warning systems based on them increase your chances of identifying latent crises and stopping them from escalating into an acute crisis.
Target groups and contacts
Define the target groups for crisis communication, including your company's own employees. Establish and maintain contacts with the press/media, appropriate consultants, and scientific experts.
17
CRISIS COMMUNICATION: GUIDELINES
Consistent information
Ensure that all those in positions of responsibility have the same level of information.
Comprehensive communication
Keep the media and stakeholders informed as comprehensively, consistently, and truthfully as possible.
The importance of social media
Social media channels are just as important as more traditional means of communication.
Protect your image
Well-prepared, transparent, and clearly structured crisis communication protects against conjecture and can prevent permanent damage to your image.
18
KEY ASPECTS OF RISK COMMUNICATIONFour principles of risk communication
Openness
This is essential to maintain a good level of trust and to safeguard your company’s reputation.
The reasons for decisions and risk assessments should be communicated clearly and in good time.
Transparency
Point out any areas of uncertainty and explain what they might mean.
Develop and publish recommendations for dealingwith such uncertainties.
Credibility and consistency
Reduce fear, anxiety, and risk perception by publishing trustworthy and credible information.
The main things are expertise, openness and honesty.
Open dialogue
The task of risk communication is to ensure dialogue in both directions and to take all interest groups into account.
Social media can be used to communicate risk and should be included in your risk management process.
19
BASIC PRINCIPLES OF CRISIS COMMUNICATION
Speed
active
early
Integrity
factual
transparent
true
Comprehensibility
brief
simple
uncomplicated
visually interesting
Consistency
uniform
coordinated
continuous
1 2 3 4
20
CRISIS COMMUNICATION STRATEGYProactive or reactive communication
The company is directly and visibly affected by the crisis
Address both direct and indirect causes and effects of the crisis
Take responsibility
Explain the basis for crisis management actions
PROACTIVE COMMUNICATIONThe company expects little public attention
Cautious information policy
Crisis as such may not even go public
Risks: Losing control of information, trust, and credibility
The media seek other sources of information
REACTive CommuniCation
21
ANALYSIS OF THE MARKET SITUATIONChecklist of basic questions to clarify the situation
1
2
3
4
5
What is the market in which the company operates and how can it be defined and marked out?
Who is involved in the sales process? What determines the behavior of this group?
Which competitors are currently active in the market?
Do public interest groups or other external stakeholdershave an impact on your company policy?
What is your company‘s current situation?What are your strengths and weaknesses? Where are the current risks?
22
GAP ANALYSISDetermining the status quo with gap analysis
Target value, i.e. revenue
PLANNING HORIZON
STRATEGIC GAP
OPERATIONAL GAP
PRESENT DAY
POTENTIAL CORE BUSINESS
CORE BUSINESS
Zeit
23
CRISIS MANAGEMENT: INCREASING LIQUIDITYImproving liquidity as a short-term goal
Increase capital stock
Short-term liquidity loan
Sell company / individual assetsCollect any open claims
Restructure debt
Standstill agreement with suppliers (deferral)
LIQUIDITYImproving liquidity
as a short-term goal
24
Shari Burk
206.669.6158
Xavier Pereira
206.319.8550
www.visionplatform.io
