The world’s response to the coronavirus — businesses closing doors, employees working virtually and cities zoning off areas and restricting public gatherings — has made it clear that pandemic responses aren’t just a health issue.
Sports leagues have suspended their seasons. The tourism industry, spanning airlines, theme parks and airlines faces deep cuts due to the flight restrictions and closures. Markets have swung wildly. The response to contain the virus has hit at the core of many businesses, and will determine whether they can survive.
For boards, it’s imperative to have a strong plan in place for this and the next epidemic, as the rate of these incidences increase.
The cost of epidemics could run $23.5 trillion over the next 30 years, including the loss of economic activity, property values and human lives, according to The Wall Street Journal. The rate of infectious disease breakouts has doubled from 1940 to 1960; this century alone as seen outbreaks of SARS, MERS, Ebola, Zika and now COVID-19.
There are four key areas of risk oversight that company boards should consider when developing the pandemic response, writes Directors and Boards.
First, undertake a risk heat mapping — something you likely do already. But these heat maps should also include the potential impact of a virus outbreak. The coronavirus could become a useful test case.
Next, update business interruption plans, which should account for how the company can react if certain operations have to slow production due to an outbreak.
Third, account for the supply chain. Many U.S. companies have faced delays since the virus first grew out of Wuhan, China, a major manufacturing hub. Executives should understand their team’s strategies to circumvent such supply chain disruptions.
Finally, discuss in what situations might you need to call emergency meetings to address any fallout.
The Occupational Safety And Health Administration has a set of standards and guidance for companies looking to craft such a disaster plan, which can help your organization tighten its strategy for the next disruption.
For some organizations, the deep impact of the coronavirus may also force them to reconsider how they’re organized. While many companies use a hierarchical structure, with centralized leadership and a concentrated workforce, following the breakout of the avian flu, Nitin Nohria, now dean of Harvard Business School, argued for a networked structure. It allows for more decentralized leadership and a workforce that has more generalized skills.
With the coronavirus forcing businesses to completely change the way they operate, the benefits of a company that can run even if the office is closed seems eminently valuable.