Boards should take the lead on COVID-19 impact to organisations
Tuesday, 10 March 2020
The COVID-19 emergency has prompted much media coverage, panic in some quarters and severe market falls. At a time like this, it is vital that organisations act rationally, says Parmi Natesan CEO: Institute of Directors in South Africa (IoDSA).
“Boards are responsible for developing strategy and ensuring an organisation is sustainable. An unfolding global emergency like this is not the time to formulate a new strategy. Like all crises, this one will pass and a steady hand is what is needed,” she says. “Boards must offer rational leadership that builds on their existing strategy to steer the organisation through these choppy waters.”
Ms Natesan advises boards to consider the following points in responding to the crisis:
- Potential impact on the organisation’s ability to function. While the COVID-19 emergency may not have an immediate impact on the organisation, it is important to look at the possible medium and long-term effects. Among these could be the impacts on the organisation’s extended supply chain and thus its ability to achieve its goals. These impacts could be - difficulty in accessing products or components, or employee absenteeism. Boards should look at what their core products or services are and what the critical dependencies are.
As part of this analysis, the board should consider the impact on the six capitals—Human, Financial, Social and Relationship, Manufactured, Intellectual and Natural—that every organisation depends on.
“Every organisation and industry sector has its own characteristics, and so the impacts of a global health pandemic such as this one will be unique,” Ms Natesan comments.
- Assess the business continuity plan. Once the potential impact of the emergency on the organisation’s ability to function have been established, the board should assess whether the business continuity plan is able to mitigate the risks sufficiently, or whether it needs to be adjusted.
- Update the risk register. If the risk posed by this emergency is deemed strategic, the risk register should be updated and mitigating controls put in place.
- Develop a crisis communication plan. An organisation’s ability to recover when any risk materialises is hugely dependent on how it communicates with stakeholders. To be effective, crisis communications need to be well planned in advance.
“Risks do materialise, and when they do, boards should resist the opportunity to make snap decisions based on saturation and often exaggerated media coverage. This is the time to make sure that the existing strategies are fit for purpose, and then to act in line with them,” Ms Natesan concludes.