Article

COVID-19 contingency planning: what should you do?

Covid-19 may be a "black swan" event: a sudden and unexpected shift in the status quo that will be rationalised and justified in contradictory ways as the impact is fully understood. Even before the full situation has been understood, businesses need to take action.

The current circumstances have already significantly altered the political landscape, impacting the 2020 Budget and it could well affect the EU-UK Brexit talks. A serious outbreak could be the one thing that makes Boris Johnson agree to extend talks and rule out a no deal, and even the US elections as the economic impact and the administration’s handling of an epidemic may determine Trump’s re-election.

The government has published its coronavirus action plan1, which includes a reasonable worst-case assumption that 20% of your workforce could be off work at any one time. The governor of the Bank of England said that it was reasonable to expect that economic impact in affected jurisdictions would be at least 0.25% of GDP and potentially 0.5% of GDP. Meanwhile, the OECD has warned that coronavirus situation represents the biggest risks to the global economy since the 2008 financial crisis, and with a best-case scenario of 0.5% fall in global GDP and a longer lasting and more intensive outbreak halving forecast global growth in 2020)2.

With this potential economic impact and government action plans in place, what should businesses be doing? Many large corporates have long-standing contingency plans for a pandemic and have been implementing these for many weeks. You will no doubt have taken some steps in your organisation, but here are some points to consider:

Now

Supply chain: stock and sourcing 

You may already be facing supply-chain shortages of components and goods from China and other markets where there have been factory closures. What are your alternative sources; and what is your best stock-management approach?

Your people and workplace: communicate, clean and contain

Step up premises cleaning and hygiene. Provide hand sanitiser and hand-washing instructions. Make sure people know to phone 111 and stay at home if they think they may have symptoms. Communicate and enforce a clear self-isolation policy for staff coming back from affected countries or with symptoms. Encourage working from home, if feasible. Review events with large numbers of people. And if there is an outbreak at your workplace, take immediate containment action.

Keep up to date with government advice

Businesses should ensure that they keep up to date with the situation as it changes3. And follow the Government advice for employers4.

Next

The government is advising businesses to build their own resilience by reviewing their business-continuity plans. You should identify the impact of a reasonable worst-case scenario and identify contingency plans. With functional leaders from across your organisation, analyse the effect of a serious outbreak in the UK and globally. Work through at least one scenario that assumes disruption to your workforce, distribution, supply, transport and mobility.

Look at all potential areas of impact, including:

People

Protecting and supporting your people, including the ‘now’ measures above, but also responding to concerns they may have (eg, health care and sick pay). What additional skills, information or working practices do your people need? Can your IT support home working for everyone?

Supply chains

Beyond immediate disruption now, what would more-widespread global disruption mean? How can you manage supply chains flexibly? How can you support suppliers who may face short-term cashflow difficulties?

Operations

What does this mean for project delivery or production and distribution? Are there alternative models and what does an enforced closure or transport restrictions mean for you? What would happen if you have to close your premises for a prolonged period?

Customers and markets

What will this do to demand? How will customers be affected by the immediate impact and the economic repercussions? What do customers need during this period and how can you help?

Finance

What will disruption to supply and demand do to your cashflow?

Turn all of this this into a contingency plan that identifies the risks and issues and has clear escalation and triggers for mitigation actions. If nothing else, you can make sure you are ready by managing cost and cashflow as effectively as possible and supporting flexible working.

Feel free to share examples of what have done in your organisation and any guides you found useful with us. The more we learn from each other, the quicker and more effectively we can respond.

References

  1. Coronavirus: action plan, Gov, 2020
  2. Newsroom, OECD, 2020
  3. Coronavirus (COVID-19): UK government response, Gov, 2020
  4. COVID-19: guidance for employers and businesses, Gov, 2020