The current coronavirus pandemic has caused one of the most turbulent economic climates in decades. By mid-March, the Dow Jones had fallen 19 points and the FTSE has fallen 33 points.
The crisis has already seen the collapse of commercial airline Flybe, while other large corporations seem on the brink of collapse. The biggest impact, it’s believed, will be on small-to-medium enterprises.
“When you have any kind of company, you have a risk,” explains Stella Despoudi, professor in operations and supply chain management at Aston Business School.
It may have been hard to foresee the impact that coronavirus would have, failure, in these times of crisis, often comes down to lack of preparation.
Here are some top tips on how best to prepare for a crisis:
1. Identify warning signals
It’s easy to spot crises when they’ve already happened. Whether these are financial crashes, cybersecurity attacks, or even natural disasters, hindsight is useful at seeing the full impact.
But what’s not so easy is being able to predict how widespread or impactful the disaster will be in the first instance. Not every crisis will be catastrophic, but it’s equally important to treat each potential threat as though it may unfold into a disaster.
“Companies need to constantly monitor internal and external signals to promote early detection of the signs of a crisis, and deal with it before it emerges,” insists Pavel Albores, director of the Centre for Research into Safety and Security (CRISIS) at Aston Business School.
CRISIS conducts sophisticated research into why crises and disasters happen, and how to respond to them. Part of this is multi-disciplinary, multimethodology analysis of safety and security issues, including what early warning signals might indicate a crisis.
Aston aims to impart this knowledge to students this fall, launching their new MSc in Crisis and Disaster Management, a response to the demand from businesses to have better trained professionals who are able to coordinate their response to disasters.
2. Assess the threat to your business
Hundreds of crises—small or large—happen every single day. But not every one will affect your business. It’s important that companies take the time to consider the impact that a crisis will have on their three Ps—products, people, and processes.
“In terms of products, it could be product or service failures, misuse, or damage to the consumers,” Pavel explains.
“In terms of people, it could be unethical behaviour, industrial action or lack of training.”
“In terms of processes, there could be disruptions to the supply chain, whether by natural or manmade causes, financial crises or overdependence on one customer or supplier.”
This can demonstrate to businesses different steps they can take to shield their company, such as diversifying their supply chain to ensure they aren’t over reliant on a single geographic location.
3. Create a crisis management plan
You’ve identified what the various early warning signals, and you’ve identified what the potential risk might be to your business, but what next?
Businesses have to create crisis management or contingency plan, so they know the effective steps to take in order to shield their business from a crisis. This is the most important step, Pavel believes, to weathering a disaster.
The MSc is designed to give students the tools to build a crisis management plan at a business. This incorporates modules on decision-making, ethics in a crisis, and crisis technology and analytics, to ensure that students have a variety of perspectives and information for the plans they are building.
There are some important lessons to be learned from the coronavirus outbreak with regards to what a plan should aim to do.
“Plans need to be based around developing skills and behaviours to deal with a crisis, rather than focusing on a single, narrow scenario. The COVID-19 crisis is probably something that very few people would have predicted, let alone plan for,” Pavel insists.
4. Practice implementing the plan
Practicing your plan is just as important as having it in the first place.
“Organisations that have a crisis management plan and practice it regularly are better prepared to respond to disasters,” Pavel insists.
Aston students can use simulation modelling software to recreate how disasters unfold, and how they can properly implement a crisis management plan in practice. It’s the perfect opportunity to see the impact of decision making, without the risk of doing it in reality.
More than anything, these simulations can teach students an important lesson about how to respond.
“Decisions need to be taken in a calm, measured manner,” Pavel says.
The MSc in crisis and disaster management is a response to a growing demand from a variety of sectors, including businesses, non-profits, and even governmental organizations.
Overall, it hopes to cater to this demand from organizations to be better prepared in times of crisis.
“This plans to equip the right people with the skills and competencies that they need to respond to this kind of event,” Stella insists.