posted on March 13, 2020 11:34
Over the past few weeks the world, as we know it, has changed:
- It is estimated that at least 40% of the global population will eventually contract COVID-19
- The stock market (S&P 500) is down 16.1% year to date (up from yesterday’s low of negative 23.2%)
- The US will most certainly go into a recession
Unlike prior recessions of the past 30 years, this crisis did not start in the financial or housing markets. This is a global health crisis with dramatic financial and economic implications. In addition, given the runway needed for readiness of testing and vaccines, we need to be prepared for an indefinite period of disruption. As business leaders, we need to treat the cause and not the symptoms. This will be hard to do. We need to understand that this is a permanent transformation, not just a short- to medium-term continuity of operations problem.
As illustrated above, without protective measures, this health crisis will quickly overwhelm the capacity of our healthcare system. With protective measures, it may be possible for the current healthcare system to meet demand (i.e., slowing the spread) and/or while ultimately increasing capacity. At this point, it is clear that any Federal, state, or local government intervention that occurs will not be enough to slow the spread of COVID-19, by itself. Therefore, to minimize the business impact, it is up to us, as business leaders to step up and slow the spread amongst our employees, customers, and society.
What this means is that as business leaders, we can have a measurable and direct impact on the spread of COVID-19 and its affects on our employees and customers. It is our responsibility to do so. And we can achieve this while also doing right for our business’ bottom lines and minimize the COVID-19 business impact and that of the forthcoming recession.
What can we do now as business leaders?
1) Integrate distance working into the mainstream
- Social distancing: Ensure constant productivity, regardless of time-shifting and location-shifting.
- School closures: Employees need flexibility in work schedule to ensure caring for families as school closures continue.
- Workforce tooling: Creating an atmosphere or environment of accountability and collaboration and providing the appropriate tools to support the disbursed work environment.
- Workforce participation: To continue to get done the day-to-day business and drive earnings, firms need to continue to maximize workforce participation while meeting the changing environment.
- Customer interaction: Driving communication campaigns to encourage customer-facing teams and customers to accept remote and automated customer interaction.
2) Embrace artificial intelligence (“AI”) in everyday workflow
- Enhance productivity: To drive productivity in uncertain economic times, integration of existing AI tools into broader series of workflows to enhance top-line business capabilities, driving.
- Reduce Cost: The utilization of existing AI tools can enable cost reduction while further enhancing productivity.
- Minimize person-to-person contacts: AI tools are mainstream in consumer product industries (i.e., Apple and Google Home). Utilizing similar capabilities in the business environment can minimize person-to-person contact while enhancing customer service – especially during high-demand times like we are experiencing (have you tried to call an airline or bank recently?)
3) Enhance policies and controls from regulatory-focused to risk-focused geared for the 2020’s
- Assess operational risk disruptions: During prior financial crises, regulators stepped in to evaluate systemic risk impacts. Although there are new regulations in place, such as the “Request for Assurance of Operational Preparedness Relating to the Outbreak of the Novel Coronavirus” (and I expect more), businesses need to self-assess the true and relevant business impacts and utilize real-time monitoring and controls. We need to look at this as a business risk mitigation activity and not a compliance exercise.
- Assess business and market risk: Optimize portfolio composition and risk return profiles for impacted products, sectors, and companies
- Minimize the impact of credit deterioration: Review and enhance credit risk identification and loan work out capabilities. Due to enhanced AI and machine learning capabilities, we now have capabilities to do this proactively and should begin immediately – before this becomes a problem.
How do we get started in making change today?
- Get uncomfortable: Some industries, such as technology, have embraced remote working and the integration of AI for over 20 years. But for the rest of the world, these are new concepts and will take some getting used to as business leaders get uncomfortable.
- Embrace business transformation: At an academic level, we have known that business needed to embrace these changes. But at a practical level, the business-as-usual scenario has dominated. Those emerging from this crisis as successful leaders will embrace this as an opportunity to step up and embrace these transformational aspects.
- Act Quickly: The exponential nature of the spread of COVID-19 requires us all to act quickly. The transformations that are required are not new or unproven – but I believe that it is a fear of the underlying reasons of the changes (in this case COVID-19) that leads to the denial that comes across as a fear of change. We have no choice but to act quickly – if not for the well-being of our employees then for the certain business impact of inaction.
What can we do differently as business leaders?
- Embrace Outsourcing: Smart outsourcing is an opportunity to transition employees to environments that are more conducive to remote work environments, utilizing advanced IT and AI tools, while both saving costs and increasing customer service.
- Establish remote workforce: In addition to outsourcing, providing existing employees the IT and AI tools to work smarter while working safer will result in increase productivity that will yield bottom line results.
- Integrate AI: AI is nothing new but it has been slow to adopt into everyday work processes. By integrating AI into both customer-facing and back-office processes, businesses can yield cost savings, increase employee satisfaction, and enhance customer experience.
- Review Risk and Controls framework: Historically operational and financial risk and controls have been geared toward financial market driven issues and traditional continuity of operations remediations. Businesses should be prepared for a longer-term impact of this health crises and adjust their controls horizon scanning appropriately.
In future blogs over the coming days, my colleagues and I will detail specific actions that can be used to create an operational risk roadmap for COVID-19-related transformation readiness. Please feel free to engage in the dialogue. There will be no easy answers but through solid ideation and rapid action -- we can make a difference.