Mar 18, 2020
Provided By BDO Alliance, USA
A Checklist for Organizational Leaders
On March 11, the World Health Organization (WHO) declared the novel coronavirus (COVID-19) outbreak a pandemic, with numerous countries—including China, the Czech Republic, Hong Kong, Italy, Slovakia and the U.S.—announcing travel restrictions and social distancing measures.
Beyond the immense impacts the outbreak is having on public health, the pandemic directly impacts economic activity and poses unique challenges to businesses across industries because of its potentially compounding and unpredictable consequences.
With massive quarantines, travel restrictions and factory shutdowns, companies are struggling to quantify potential exposure. Attempting to mitigate potential losses from an unknown number of variables is daunting, especially when the situation is changing daily. Business owners and risk managers will face not only tactical execution and recovery challenges, but also the prospect of navigating a lengthy insurance claim process.
Understanding how to determine and capture lost revenue and income stemming from this unpredictable outbreak is critical to minimize financial implications. To do that, business leaders must determine their infectious disease risk profile:
Here are the key questions organizational leaders need to ask to evaluate their risk profile and the corresponding action items to navigate the ongoing outbreak:
1) How prepared is my organization? What does “prepared” look like to our organization?
- Conduct a business continuity risk assessment to identify potential internal operational, financial and market risks; determine direct and indirect impacts; and generate an action plan. Third-party vulnerabilities should be incorporated into action plans.
- Identify a response team to lead ongoing crisis management efforts, coordinating with appropriate federal, state and local authorities. These efforts should include regular communication to internal and external stakeholders.
- Communicate with internal and external stakeholders—as well as their surrounding communities—about what coronavirus is and key protective measures people can employ. Leveraging information from WHO’s dedicated public advice page is a good place to start.
2) What are our organization’s capabilities, strengths and weaknesses, including across the supply chain? Which third-party risks do we have, and where are they concentrated?
- Build scenario models to determine ways to mitigate any additional risks to your supply chain, working closely with your suppliers.
- Insulate your supply chain from disruption. Identify ways to diversify your supply chain if possible and assess the cost-benefit of maintaining duplicate facilities or routes on an ongoing basis.
- Create a backup plan. Identify alternate sources should your primary source of supply be unable to deliver on services.
3) Have we clearly communicated to our workforce what steps they should take and how they should respond to different scenarios identified?
- Evaluate work-from-home arrangements and options for remote meetings and videoconferencing. Employees working remotely, meanwhile, will need secure remote access to necessary files and services, likely using a VPN, as well as collaboration tools including instant-messaging apps, project management platforms and shared documents.
- Review remote working policies and guidelines. Remote workers should only use their work computers and not their personal computers, and managers should be trained on how to be virtual leaders by setting clear expectations and emphasizing regular communication.
- Review policies for paid time off, sick leave and short-term disability. Employees should be reassured that they will not be penalized for taking sick leave, and they should not come into the workplace while sick because they are worried about losing out on income. Policies for payment if the workplace is temporarily closed or employees are furloughed will also need to be reviewed and clarified.
4) What is our organization’s insurance coverage, and do we have funds to support this crisis? Does your organization have coverage for an insurance claim?
- Evaluate your insurance coverage for business interruptions. Identify the impact from civil authority and ingress/egress coverage, service interruption, supply chain interruptions, loss mitigation, and extra expenses like increased logistics and redistribution costs, higher costs related to workforce disruption as well as shifting productions to potentially higher-cost locations, and others.
- Establish milestones for claim recovery. Resources are likely going to be stretched thin for the foreseeable future. It is important to create milestones and hold all members — from the adjusting team to internal stakeholders — accountable for achieving those goals.
5) How can this threat unfold and evolve, and what scenarios do we need to consider for our organization?
- Regularly monitor announcements from the WHO and the Centers for Disease Control and Prevention to determine other potential impacts that could be coming down the pike for your organization.
- Establish various versions of your enterprise risk plan that can be adapted to help mitigate risk should other waves of the outbreak take place, taking into consideration where they might unfold.
- Consider accounting implications and total tax liability changes. For example, COVID-19 could complicate how businesses comply with Current Expected Credit Losses (CECL) accounting given the complication to forecasting credit losses. Total tax liability, meanwhile, could be impacted in several ways depending on individual circumstances and the actions taken by national and local governments.
Following this checklist can better enable you to make informed operational and strategic decisions while balancing the risks inherent to an infectious disease pandemic. Beyond that, you can use the intel gained from your self-evaluation to build your capabilities over time and support the business case for future investments in resiliency.
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Mar 18, 2020
Amid the growing cases of coronavirus (CODVID-19), many state governments including Ohio and Michigan have instituted a mandatory shutdown of all bars and restaurants leaving many operators scrambling to figure out how to stay afloat. More recently, dental offices, spas, gyms and other businesses have been forced to close their doors to promote “social distancing.” Here are tips for staying healthy—and staying in business—during this unprecedented period:
Communication is Key
It is essential to communicate the latest information and advisories from your local state health departments to your team of employees. Make sure preventative measures such as sanitization, hand washing, and employee sick leave is conveyed and well understood. If your employees are able to work from home, remember to keep open lines of communication—check in regularly and communicate frequently; this applies to both the client and internal team members.
Many owners are communicating reassuring messages to their customers, providing confidence in their understanding of the severity of the virus. Make sure your customers know you are taking the proper steps to maintain a healthy work environment to protect not only your employees but your consumers as well.
Apply for a Small Business Loan
The SBA will work directly with state Governors to provide targeted, low-interest loans to small businesses and non-profits that have been severely impacted by the Coronavirus (COVID-19). The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. Find more information on the SBA’s Economic Injury Disaster Loans here.
Dust off your business continuity plan
The objective of the business continuity plan (BCP) is to help a business to efficiently return to normal activities after a major incident that directly affects operations. Items to consider, if not already done so include:
- Establish an Emergency Action Plan (EAP) and team
- Have the EAP team assess the situation and agree to an appropriate action plan based on demand, available supplies, and available labor
- Implement appropriate prevention methods and procedures to reduce risk
- Have management staff review and take appropriate action regarding sick-leave absences unique to a pandemic, including policies that define when a previously ill person is no longer infectious and can return to work
- Work closely with the local health department to monitor the situation and to deploy appropriate control measures
- Identify backups for each job position and alternate manufacturing sites in pandemic response planning
Shift your marketing strategy
Don’t stop marketing your business, instead now is the time to be creative. For example, if you are a restaurant, try to experiment with different third-party delivery providers or encourage customers to find any way to receive your product such as curbside pick-up. Compromised populations, such as senior citizens can benefit from meal delivery. If you have a restaurant app, consider providing a meal deal for a family. Thinking outside the box will ultimately help you stay afloat during this highly volatile time.
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