A global pandemic requires your attention, but you can’t ignore ongoing risk factors that may affect your business. Cyber threats, fraud, competition, and natural disasters will not take a break during a pandemic, and criminals may even increase their attempts at breaching your security systems. The Covid-19 crisis is far from over, but given the extended duration of this crisis, conducting a stress test will highlight issues that may disrupt your business. You can do this in three stages:
1. Brainstorm every aspect of your business and list any risk that would affect these areas.
Operational (supply chain disruptions, customer health and ability to keep buying, inefficiencies in manufacturing or distribution channels)
Financial (internal controls, procedures, fraud risk; cash flow forecasting and management; sources of liquidity from debt or equity transactions)
Compliance (changing regulations with new legislation may require extra care)
Strategic (How has your market changed? Did pivots generate results?)
If you have completed a risk analysis before, this current exercise should not be a cursory glance at your last risk analysis. Changing market conditions and the drastic change in the business environment means everything now needs a fresh pair of eyes. Activities take more time to plan and re-think on how they will be accomplished.
2. Set a process for risk management and follow it.
After identifying all the risks, meet with your department heads, and for each risk identified, brainstorm ways to manage those risks. You may want to prioritize the risks identified and prepare plans for risks that have a greater likelihood of occurring. Considering that a pandemic was likely not included in previous disaster recovery plans will give you food for thought when considering revisions to your business continuity planning processes.
3. Don’t let it sit on the shelf.
Incorporate continuous improvement strategies by revisiting your plan regularly and updating. In theory, if someone had asked before the pandemic, “could your entire workforce start working at home?”; we would have answered yes, but having the steps written down may have been helpful. We did it, and we should continue to learn from the experience and improve processes that now have been put in place.
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While risk is part of operating a business, some organizations are more prepared to handle the unexpected than others. To ensure your company falls into the “more prepared” category, schedule some time to follow the process above.
The Center for Business Growth has brought together a faculty of professionals from legal, accounting, marketing, branding, sales, research, and executive peer learning disciplines. Reach out today to schedule a consultation with one or more of our experts. A multi-disciplinary approach would prove useful when dealing with abstract concepts such as a stress test.
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