To date, the number of documented cases of COVID-19 globally exceeds 1,300,000 with close to 300 cases in Nigeria. In a bid to control the spread of the virus, President Muhammadu Buhari implemented a total lockdown of businesses, international airports, borders, schools and places of worship from 11 pm on Monday, 30th March 2020 in Lagos and Ogun States as well as the Federal Capital Territory, Abuja for at least two weeks – in the first instance.
As governments all around the world struggle to grapple with the pandemic, the question how organisations can effectively respond is critical to their survival. To survive (and thrive) during a crisis or economic downturn, businesses require strong, decisive leadership and the appropriate agility to adapt to rapidly evolving scenarios in order to ensure the safety of their workforce, comply with relevant laws, take steps to preserve their brands and ensure continuity of operations.
Historically, many businesses have developed Business Continuity Plans (BCP) to address situations where business premises, systems, equipment or products suffer sudden damage (fire, flood, earthquake or other disaster) breakdown or breach (cyberattack). The BCP would typically work with the assumption that, at least a few employees can return to their work sites shortly after the incident and data retrieved from a data recovery site as appropriate. However, as the COVID-19 outbreak has shown us, physical access to employees and work sites, which are two critical elements for business recovery, may become limited for a long period of time.
In order to enable businesses effectively respond to unexpected disruptions as has been brought on by the Covid-19 pandemic, a BCP should incorporate the following elements:
Work policy modification: Modifying work policies is recommended in order to provide some flexibility to normal working conditions. Some of the modifications include: Enable effective working from home by ensuring appropriate work tools, network connectivity, remote and controlled access to central file server; Use of video and audio conferences (zoom has become everybody’s favorite); Reduce the number of people in the workplace through work scheduling in essential services.
Financial impact and liquidity: The immediate, near-term and long-term financial impact (including the ability to meet obligations) of the COVID-19 pandemic should be reviewed within the context of the related impact of the extreme volatility in the financial markets. The need to seek moratorium or renegotiate the terms of existing debt arrangements should be considered.
Key person risks and emergency succession plans: It will be useful to consider whether an up-to-date succession plan is in place that identifies a person who can step in immediately as interim CEO in the event that the CEO contracts COVID-19 and the need to implement similar plans for other key roles.
Remuneration and incentives: The BCP will need to look at the best and worst-case scenarios of the impact on the organisation’s income and consequently its ability to meet salary obligations to employees. It should also consider whether incentive plans need to be reworked considering the circumstances, to ensure that appropriate behaviors are encouraged. It would be prudent to delay setting incentive goals until there is more clarity as to how long the crisis will subsist or build in flexibility with respect to set goals.
Information security: During a crisis, the number of phishing scams and other cyberattacks have the potential to significantly spike and many employees working remotely can pose increased data security risks. As such, appropriate data security and cybersecurity controls as well as an effective cyber risk communication strategy should be built into the BCP.
The BCP then has to be monitored, accessed and adapted on an ongoing basis until the crisis situation abates.
COVID-19 represents a real life (albeit surreal) crisis for every Board of Directors. Whilst Executive Management bears the day-to-day responsibility for managing the corporation’s response to the pandemic, the Board needs to provide leadership by reviewing and approving the BCP, monitor and assess Management’s implementation of the same and provide additional guidance as appropriate. Staying well-informed of developments – global and local – as they impact the corporation is critical to the Board’s ability to respond appropriately.
Specifically, the Board should focus on the following:
Health and safety: Current health authority advice aims to reduce the rate of the spread of infection. The Board should ensure that Management has put in place measures to ensure compliance with Covid-19 protocols and thereby protect the health and safety of employees (and their families), customers, business partners and the public at large.
Evaluate management’s internal communication plan: The Board should ensure that there is robust and effective information flow from Management. As part of a BCP, Management will need to implement a communication plan that addresses employee and other stakeholder concerns. The Board should ensure that this plan is rolled out in a comprehensive, coordinated and timely manner, and that it is regularly evaluated and adapted to meet the pace of developments. In times of crisis, it is best to over communicate. Management should provide periodic updates to employees as they will be nervous and will want to understand the impact on the business, their job security and their personal safety. The Board should require periodic updates in this regard.
Planning for long term disruption: While many organisations have activated BCPs, it is equally important for Boards to consider long term impacts of this disruption to creating value, budgets, supply chain management, and future workforce requirements.
Shareholder relations: The Board will need to continue to ensure communication with, and stay attuned to the concerns of significant Shareholders, while monitoring for changes in stock ownership. Furthermore, the Board should decide how to best communicate the organization’s crisis response to Shareholders.
Force majeure: The Board should consider the organization’s contractual obligations, liabilities and other exposure and should pay attention to force majeure clauses that could be triggered by the pandemic.
Delineation of responsibilities: It is important for there to be clarity with respect to the respective responsibilities of the Board and Management during a crisis. It is therefore useful to review the Delegation of Authority Matrix or the Board Charter to vary the extent of the Board’s delegation of authority to Management if required.
As significant as the current crisis is, it may well be an opportunity for the Company to test the veracity of its value proposition and the resilience of Board, Management and staff. It is imperative for the Board, working with Management to identify opportunities likely to emerge from the crisis that are aligned with the Company’s strategy. Once the crisis abates, an assessment of the Company’s handling of the situation, lessons learnt and actionable ideas for improvement should be the focus of the Board.
Bisi Adeyemi
Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comment(s) and reaction(s) to [email protected]. For more articles, kindly download the DCSL Knowledge Hub via this link – https://www.dcsl.com.ng/index/
