Leaders across business and government are reevaluating the status quo and evaluating lessons learned as we emerge from the initial Covid-19 lockdown phase. They will make strategic decisions that will have long-term impacts and outlive the pandemic. What have we learned and what should they consider when reevaluating preparedness overall and supply chain decisions in particular? I recently spoke with Mami Mizutori, Special Representative of the UN Secretary-General for Disaster Risk Reduction, and FM Global Executive Vice President and CFO Kevin Ingram, to gain their perspectives on a post Covid-19 world.
“We are living in a multi-hazard world where risk is systemic and disaster impacts are cascading, often in unpredictable ways,” says Mizutori. “Disaster preparedness, action on climate and cyber risk, and pandemic preparedness, all require good governance and political will and commitment to invest in making the world a safer place. If the benefits of investing in disaster prevention were truly realized, we would not be facing the enormous costs now.”
Leaders must employ a multi-hazard strategy when planning for the future. That strategic planning process needs to include risk management as well as address risk holistically.
Mizutori recommends that policymakers must make resilience a priority when trying to encourage a strong business climate. “Just as ‘austerity’ was the buzz-word of the recovery from the 2008 financial crisis, ‘resilience’ must become the moving force behind the post-Covid-19 recovery,” she says. “Policymakers need to take multiple and connected risks into consideration when planning for the resilience of their economies. As most national disaster management agencies around the world have learned, the traditional hazard-by-hazard approach does not work anymore.”
In fact, the 2020 FM Global Resilience Index, a ranking of countries by their national level of business resilience, urges leaders to remember that conventional business risks like natural disasters, cyberattacks, and political upheaval continue to threaten operations and overall business value in the Covid-19 era. These other risks should not be ignored when planning for a world altered by the pandemic. How can business leaders use this information as they try to make decisions about for example, shoring up their existing supply chains or considering reshoring?
First, be sure to document and act on lessons learned from Covid-19 response. According to Ingram, “companies have short memories.” Highlighting the particular importance of lesson learned “from a supply chain perspective,” Ingram urges companies to “make a concerted effort to mitigate and address those things today.”
“When you come back to business,” he says, “you will be focused on market share and bringing back your client base and everything else. You'll lose sight of the lessons that you learned during the pandemic.” The next time you're going to think about it,” he warns is “when we have the second wave of this crisis before the vaccine comes. You're going to wish you would've done something.”
Business leaders have an obligation to consider whether their business growth strategies are properly accounting for risk. When analyzing future outlook, it’s crucial to be realistic and not just rely on the possibility that everything will align according to the most optimistic scenarios.
According to Ingram, “as you're looking at what happened, take the rose-colored glasses off. And be very self-aware as to what happened, what caused those events to happen and what the opportunities are to mitigate those things going forward.” He adds that “companies that do that well are the ones that tend to be successful organizations. I think that'll continue to be the case as they move forward.”
Ultimately, resilience is not something that companies gain by accident, but rather by choice. “Choose to be resilient and use all the information that's at your fingertips to help you become as resilient as you possibly can,” urges Ingram. “Because the one thing we've learned through this pandemic is that the more resilient your organization is, the more successful you're going to be.”
Like Ingram, Mizutori is also concerned that organizations, myopically focused on the pandemic, may be blindsided when another hazard hits them. “In a world where extreme weather events have doubled over the last twenty years, national disaster management agencies are now faced with the dual challenge of responding to such events against a backdrop of the spread of a highly contagious disease,” she says.
Given this challenging risk landscape, do Ingram and Mizutori think the pandemic will encourage the deglobalization of supply chains?
According to Ingram, there’s been much conversation about whether globalized supply chains make sense. Some companies may choose to rework their strategies on their own or national governments may consider compelling them to do so. “I think these companies are going to look at whether we need to bring our supply chains more to a regional basis because of all the issues with shipping product. When China shut down, there were companies that couldn't ship product because there were no containers. Container ships were either sitting somewhere else or we couldn't get containers for companies that were still producing product to ship it.”
Mizutori encourages the community to consider that risks remain no matter where your supply chain leads. “Whether or not deglobalization becomes the global trend is yet to be seen,” she says “but from the perspective of disaster risk reduction, no matter how much you shorten your supply chain geographically, there will always exist many other drivers of risk, not least the climate emergency. So, unless measures to mitigate risk are taken holistically by governments both national and local and the private sector, it will not be enough to maintain business continuity.”
Countries that respond well to the pandemic and show their resilience may gain the opportunity to attract more business. Some countries have long invested in designing, building and maintaining resilient systems to support their people and improve their ability to withstand a variety of shocks. Will others follow their example, or will businesses and communities continue to be buffeted by predictable hazards? Will leaders finally recognize that resilience is both a necessity and a competitive advantage? That really would be the start of something new.
About the Author
I am the president and CEO of Disaster Recovery Institute International (DRI), where I help organizations prepare for and recover from disasters both natural and manmade. Through DRI and as an adjunct professor at New York University, I have worked with the public, private and nonprofit sectors for over a decade and across five continents to promote resilience and sustainability. I have traveled to and given speeches on crisis management and business risk in 45-plus countries, have appeared on CNBC, Bloomberg, MSNBC and Fox, and served as an expert source for Associated Press, BBC, USA Today, LA Times, SiriusXM, Quartz and more. I actively seek exciting challenges and explore opportunities posed by new ideas and disruptive technologies. On a personal note, I’m a third-culture kid, which has made me adaptable to change and complexity, as well as an avid reader, which helps me process the world with perspective and humor
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