This article was updated on Wednesday 18 March.
- The World Health Organization has declared COVID-19 a pandemic.
- Countries are dealing with different “disease phases” as the virus spreads.
- Businesses should ensure guidelines from the US Centers for Disease Control and Prevention and WHO are closely followed.
The World Health Organization (WHO) declared COVID-19 a pandemic on 11 March 2020. At the time of writing, there have been more than 187,000 cases of COVID-19 worldwide, resulting in more than 7,400 deaths.
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The coronavirus outbreak is undoubtedly a story of human tragedy. But it will cause significant harm to the economy, too – and the true scale of this cost has only just started to emerge.
The spread of the virus is impacting countries at different rates, with each appearing to go through a similar pattern of “disease phases”. Governments around the world are having to act quickly and decisively to protect vulnerable citizens and limit the damage to their economies.
New research published by McKinsey on 16 March outlines current perspectives on the outbreak, and what steps businesses of all shapes and sizes can take to shield themselves from long-term economic damage.
Here are 7 measures suggested by the report.
1. Protect your employees
The Centers for Disease Control and Prevention (CDC) and the WHO are updating their guidelines frequently. Businesses should ensure these are followed and that staff are aware of them. It’s also a good idea to restrict contact and non-essential travel where possible.
2. Set up a cross-functional response team
Businesses should establish a dedicated team to ensure a simple but well-managed set of processes that maximize the health and safety of colleagues and customers. This team should be led by a CEO or someone at a similar senior level. The focus of the team should be broken down into five distinct workstreams:
- Employee management and wellbeing
- Financial stress-testing and contingency planning
- Supply chain monitoring
- Marketing and sales
- Any other business
Specific goals should be outlined for each of these workstreams on a 48-hour and one-week rolling schedule. Minimum viable products should be established, with a calendar of events and milestones that constantly look six weeks ahead.
3. Test for stress, ensure liquidity and build a contingency plan
Defining scenarios can be difficult, but businesses are advised to try to identify trigger variables that will affect revenue and cost. These triggers can then be applied to established scenarios so that cash flow, profit and loss and balance sheets can be modelled.
Contingency plans can then be drafted for varying outcomes, such as portfolio optimization through divestments, cost reduction etc.
What is the World Economic Forum doing about the coronavirus outbreak?
A new strain of Coronavirus, COVID 19, is spreading around the world, causing deaths and major disruption to the global economy.
Responding to this crisis requires global cooperation among governments, international organizations and the business community, which is at the centre of the World Economic Forum’s mission as the International Organization for Public-Private Cooperation.
The Forum has created the COVID Action Platform, a global platform to convene the business community for collective action, protect people’s livelihoods and facilitate business continuity, and mobilize support for the COVID-19 response. The platform is created with the support of the World Health Organization and is open to all businesses and industry groups, as well as other stakeholders, aiming to integrate and inform joint action.
As an organization, the Forum has a track record of supporting efforts to contain epidemics. In 2017, at our Annual Meeting, the Coalition for Epidemic Preparedness Innovations (CEPI) was launched – bringing together experts from government, business, health, academia and civil society to accelerate the development of vaccines. CEPI is currently supporting the race to develop a vaccine against this strand of the coronavirus.
4. Stabilize the supply chain
Geographic areas experiencing high levels of community transition should be established, factoring in suppliers and inventory levels. In order to immediately stabilize the supply chain, businesses should then turn their attention to pre-booking rail and air freight capacity and using after-sales stock as a bridge.
For longer-term stabilization, businesses should seek to plan for consumer demand more thoroughly and make their supply network more resilient.
5. Stay “close” to customers
Businesses will need to make a concerted effort to keep customers engaged and reassured in the short term. Inventory planning, discounts and special offers will all help to incentivize current customers. For longer-term stability, firms should start assessing and targeting other market segments and identify opportunities for growth.
6. Engage in table-top “practice planning”
The research also advises that the response team get together for regular “table-top meetings” to play out various scenarios. Define activation protocols for different phases of the response. Key decision makers and workstream owners should also be identified.
7. Demonstrate purpose
Businesses of all shapes and sizes should endeavour to support efforts to contain the spread of the virus wherever possible. Demonstrating this sense of purpose will have a positive knock-on effect to colleagues, clients and the wider business community.