?? PREPARING for WORST-CASE SCENARIOS

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?? #PREPARING for #WORST-#CASE #SCENARIOS

??? The last two days I have spoken about corporate turnarounds, which tend to be fairly routine processes.

??? But "surprise" events, including major disasters, can “come out of the blue”. They are called “Black Swan Events” due to their uniqueness and surprise.

??? So companies must always “think the unthinkable” or “imagine the unimaginable” to try to conceive of “what could go wrong” that will totally disrupt their operations -- or even kill their business.

??? Time is of the essence when major disruption occurs. Companies which respond the fastest have the best chance to reduce the impact and find renewed and new growth opportunities.

??? Companies with continuity plans are much more likely to recover as a viable entity.

??? You need a Worst-Case Scenario, with detailed plans on how to anticipate it, spot it, deal with it, and recover from it, in 5 steps.

?? 1. Employee Safety

??? Ensuring employee safety and wellbeing should always be a priority, especially in case of an emergency.

? Address their concerns, openly and transparently, to reassure business (and employment) continuity.

? Embrace and/or expand hybrid and flexible work arrangements

? Reorganize and/or relocate teams, and reallocate resources.

? Review and re-establish secure employee wellbeing policies and programs.

? Reimagine “business-as-usual” to minimize any ongoing disruptions.

?? 2. Stakeholder Cooperation

??? Again, clear and transparent communications is necessary with all stakeholders.

? Customers need to be apprised of any impacts to product or service delivery, plus safety issues.

? Suppliers need to be able to manage disruptions to the supply chain.

? Creditors and investors need to be apprised, and terms renegotiated as needed.

? Risk management must engage with auditors and legal counsel about any potential exposures.

?? 3. Financial Strategy

??? Operations will be disrupted and underperform throughout any worst-case scenario.

? Perform a business impact analysis (BIA) to identify critical and non-critical business activities and functions.

? Evaluate short-term liquidity and instill cashflow discipline to stop the cash burn.

? Maintain strict discipline on working capital, especially receivables, inventory, and payables.

? Monitor direct cost escalations and their impact on product margins, intervening and renegotiating as necessary.

? Conduct financial stress tests on suppliers that may be impacted; Consider alternative supply chain options.

? Watch for covenant breaches with banks re impact of security assets on balance sheet.

?? 4. Systems and Data

??? While you may never have suffered a cybersecurity attack, it’s imperative that you be protected against threats.

? Ensure all IT infrastructure is both shock-proof, secure, and otherwise recoverable at speed.

? Define what is acceptable in terms of any data loss and disruption.

? Set levels of acceptable recovery times for each business activity and function.

?? 5. CONTINUITY PLAN

??? Evaluate how robust were the business, management team, and initiatives in facing the crisis.

? Adopt new internal guidelines based on lessons learned, plus contingency plans for future crises.

? Consider and reset assumptions.

? Develop revised plans while closely monitoring the crisis situation and its evolution.

? Review and renew Business Continuity Plan (BCP).

?? IN SUM ...

??? Again, time is of the essence when major disruption occurs. Companies which respond fastest have the best chance to reduce the impact and find renewed and new growth opportunities.

? If you need any help on this, please Message me.