Coronavirus Presents Life and Death Choices at the Speed of Risk

Short of world war, the coronavirus (COVID-19) and its impact on business and the everyday life of virtually everyone on Earth is arguably the greatest global risk we have seen in modern history.

Its rapid emergence and spread has created imminent health and economic threats, shutting down commerce in large parts of the world and creating havoc in financial markets. Productivity has screeched to a halt in many quarters and governments are queuing up billions of dollars to help cover health costs and bolster struggling companies and individuals.

Most experts no longer express concerns about the prospects of a recession; some same it has already arrived, as “most of the engines that keep the global economy aloft have simultaneously sputtered to a halt,” according to a discouraging report in the New York Times.

Shockingly, the most astounding aspect of this dynamic global threat is that it was not on anyone’s radar just three short months ago.

COVID-19 was unexpected, though strains of coronaviruses have caused epidemics twice this century: SARS in 2003 and MERS in 2012. But, in those cases, the number of infections was significantly smaller, never exceeding 10,000 confirmed cases. In contrast, the number of confirmed COVID-19 cases topped 100,000 earlier this month and is now exceeds 200,000, with the number of deaths in the thousands and growing.

I have written extensively in my blog – ChambersontheProfession.org – about organizations operating at the speed of risk. COVID-19 tests that concept to its extremes.

Executives and entrepreneurs around the world are being pressed to make decisions affecting not only their organizations, but the health and safety of their employees. According to a survey by Willis Towers Watson in mid-February, most of the 158 respondents said then that they are taking specific action to protect employees. That included 47% who said they would cancel attendance at planned conferences for North American employees in certain countries. Travel restrictions and venue closings since have made such corporate decisions moot. Employees are now locked down, with millions who can work doing so remotely amid recommended and, in some places, mandatory “social distancing.” Streets in large and small towns alike resemble ghost towns.

PwC’s 2019 Annual Corporate Directors Survey reflects the unforeseen nature of the outbreak. The report had no mention of any health-related risks. My guess is that there was not even a remote contemplation of a COVID-type epidemic when PwC did its survey.

But PwC’s report does provides significant insights into how boards view risks. Indeed, one part of the survey focused specifically on crisis management and business continuity. However, the focus of the question was on crisis management oversight relating to cyberattacks, natural disasters, and financial fraud allegations.

The positive news is that the survey found strong board interest on the issue. From the report:

“Almost all directors (96%) say they have discussed management’s plan to respond to a major crisis, a 12 point increase since 2018. Directors are also increasingly engaging in what have traditionally been less common activities, including creating a written escalation policy and participating in tabletop exercises. These efforts can provide directors with some of the concrete tools they would need in a crisis situation.”

That finding paints a picture of organizations that are increasingly prepared for managing crises. So, why has the impact of coronavirus been so unexpected and dramatic? The answer aligns closely with what I call "the speed of risk.

In my most recent book, the “The Speed of Risk,” I reflected on the dramatic changes in how threats emerge and mature in the modern risk landscape. Organizations that undertake risk assessments only once a year – which is too often the norm – cannot respond appropriately and quickly enough to dynamic threats that can emerge overnight.

As PwC’s report showed, risk events that trigger crisis management responses have typically revolved around cybersecurity breaches, corporate scandal induced by toxic cultures, and natural disasters.

However, the new awareness of and commitment to nimble risk management has never been tested by a threat that has so many facets. Prolonged uncertainty about containing the outbreak, and the disease’s ultimate impact on productivity and business transactions, is showing clearly how a medical crisis – or any crisis – can quickly evolve into a global economic one.