What the pandemic means for the future of crisis management

13-01-2022

What the pandemic means for the future of crisis management

Hoe-Yeong Loke, research manager, Airmic

A new Airmic guide on pandemic risk addresses how organisations can stay resilient in the face of the looping nature of the COVID-19 crisis. The guide’s author outlines the key lessons that can be learnt from the pandemic so far.

The emergence of the Omicron variant has demonstrated the looping nature of the current pandemic, highlighting the importance of ongoing resilience, according to a new publication by risk management association Airmic in partnership with Control Risks. 

There will be ever newer variants of Covid-19, or even new pandemics, as human populations encroach further on other animal habitats. All this accentuates the need for risk professionals to look beyond the present Covid-19 crisis, learning the lessons, boosting preparedness, and building resilience.

The new guide, titled The Pandemic Goes Endemic, comes as political leaders are saying we need to “learn to live with Covid”. It revisits the issues surrounding pandemic crisis management for organisations that were last discussed in Airmic’s September 2020 guide New challenges, new lessons: Covid-19 pandemic and the future of crisis management, which was also produced in partnership with Control Risks.

“The pandemic highlighted the disconnect between strategic risk and operational resilience and response among organisations,” says the new guide’s author, Airmic’s research manager Hoe-Yeong Loke. “The velocity of the spread of the pandemic in early 2020 drove government decisions to shut down some parts of life and economies at a shocking pace. Many business leaders had to make decisions of strategic importance in real time, knowing that the impact on their employees and stakeholders could be extraordinary. Leaders needed to take the opportunity to pause, record and reflect on the lessons learned, but it was hard – especially in the early stages of the pandemic – to look longer term when the crisis timeline kept looping back because of the various waves of the pandemic.”

He adds that organisational resilience thinking had not been set up to manage long-term, rising-tide crises such as pandemics. 

“Long-term planning is critical here, yet the initial responses to the pandemic had been largely focused on the near term and shorter term,” he says. “It is more difficult to look long term when the crisis timeline loops back because of further waves of the pandemic, as governments and organisations have sought to move further into an economic recovery mode. With the latest Omicron wave, the looping nature of the pandemic crisis has continued to play out as feared.”

As a result, organisations are actively reviewing and changing their strategic approach to resilience, particularly along three themes: improving crisis leadership, focusing on developing people resilience, and sourcing better-quality risk intelligence.

“First, top management and risk professionals are getting used to dealing with uncertainty, allowing them to better identify opportunities and threats, and rise to the occasion,” says Loke. “They are focusing on crisis decision-making processes to ensure that ‘big’ strategic decisions are the outcome of a healthy and well-informed debate and challenge, supported by data, and not the result of knee-jerk emotional responses.

“Second, protecting people has been at the heart of the pandemic response. Going forward, people need to continue to be at the centre of organisational resilience. Employees’ ability to deal with the stresses and uncertainties of life with Covid-19 will be intimately linked to organisational performance. Employees forced to leave the business for an extended period are less likely to return, so developing and communicating assistance plans ahead of time is critical. Organisations that aid affected employees will likely find their staff return much sooner.”

Third, he notes that there is increasing appreciation of the need for robust discussions of principal risks, so that high-impact/low-probability risks such as a pandemic can be better captured. 

“Few organisations have a formal process for identifying these risks or can specify how they apply this in practice,” he says. “While the approach for these risks should be analytical, organisations are learning that they should also be creative and pragmatic, reflecting the complexity of uncertainties to secure buy-in and actionable results. Often there are no ‘right’ answers. Assessing probability is notoriously challenging for these risks and creating angst over doing this can act as a distraction.”
The report highlights that now is the time for organisations to think about any previous lack of preparedness and to change things going forward so that they are better prepared for the next pandemic wave or major crisis. 

“As the organisation looks forward, it is valuable to gain the perspective of those actively managing the crisis as well as those managing the everyday business, who are often faced with secondary effects of the crisis,” says Loke. “These discussions should be used to identify potential emerging risks as the crisis continues to unfold and slow down. Identifying the risks now, ahead of them materialising, puts the company in a great position to avoid them or at least minimise their impact.”

Resilience has become ever more important as organisations seek to protect their reputation and achieve their goals in a world of increasing volatility, uncertainty, complexity and ambiguity.

“Resilience is the ability of an organisation to absorb and adapt in a changing environment,” says Loke. “Effective resilience is founded on successful risk identification and mitigation. Workforces that have a culture of risk identification, scenario modelling and mitigation, as well as a system and culture encouraging them to ‘speak up’, are much better placed to respond to the fluidity of crises, and to embrace innovation and the potential upsides of uncertainty. Therefore, in building resilience in the midst of the continuing pandemic, organisations must be cognisant of the wider landscape of volatility and disruption, and build organisational resilience accordingly.”
As organisations look to the future, risk professionals have an important role to play in ensuring that strategy, tactics and operations are fully synchronised and mindful of unanticipated eventualities. 

“Organisations must move faster, drive innovation, and adapt to and shape their changing pandemic and post-pandemic environment,” says Loke. “The key to successful agility is for risk professionals to develop new mindsets, for their competencies to move at the same pace and for them to operate as part of an integrated and collaborative team.”

Airmic, Control Risks, COVID-19, Risk Management, Insurance, Reinsurance, Hoe-Yeong Loke, Global

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