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3 Risk Management Guidelines for this Stage of Covid-19 Crisis

Published By

Rick Nason, Ph.D.

Published By

Omer Livvarcin, Ph.D.

Last week we posted some risk management suggestions on how to manage in the initial stages of the COVID crisis. (https://www.linkedin.com/pulse/covid-19-pandemic-8-common-sense-risk-management-omer-livvarcin/.) It has been a busy week! We have arrived at a fuller appreciation of a new reality that most of us have not totally figured out and an uncertain as to how long it is going to last. Furthermore, it is a totally open question as to what is going to emerge from the crisis when it does eventually conclude.

Despite all of this, the reality is that there is a need to keep on managing as the pandemic continues. Management cannot simply stop and wait out the pandemic. We need to keep on leading in the face of risks and in the face of uncertainty. As we age in this COVID crisis, it is also helpful to let our risk thinking evolve as we need to move from the initial crisis management mode to deal with our current reality. To that end, we offer the following three short-term risk management guidelines, as well as an additional consideration.

1. Assess the Situation

The first step is to assess the situation concerning your organization. The assessment should start with a separation of known facts from conjectures. The situation is evolving, and furthermore, it is evolving in paradigm-shifting ways. While pandemics have occurred before, this is the first in our social media networked world. Information is coming fast and furious, but so is gossip, half-truths and outright false information. Management based on false assumptions, information or conjecture, is not helpful. While much is still uncertain, it is prudent to explicitly acknowledge the uncertainty and make decisions accordingly.
As we pointed out in our book, Risk Management for Nonprofit Organizations, it is also critical to assess what issues are complicated and which are complex. The COVID crisis forces management to deal with both types of issues, but it is absolutely essential to realize that complex issues can not be dealt with as if they were complicated. Unintended consequences from not understanding the difference between complicated problems and complex situations can make things much worse.

2. Assess Resources and Demand

The next step is to assess the resources. This includes not only supply and financial resources but also human resources. Social distancing means that staff, volunteers, advisors and Board members are not as available to help as needed. Furthermore, COVID induced stress has strained the mental energies of all involved.
A concept from finance called the “burn rate” might be a useful metric to consider. The burn rate calculates how long a company can last without making any sales whatsoever based on the cash on hand. It might be helpful for an organization to calculate a burn rate on not only their financial resources but also how long they can survive in the current situation given their supplies, their infrastructure and especially their available human resources.
This burn rate calculation should be done, realizing that the demand equation for the organization’s services has likely changed as well. Some parts of demand will have fallen dramatically, while other demands have risen significantly. Resources likely need to be redeployed for the duration of the current context.

3. Short Term vs Long Term

As the initial confusion has subsided – or at least a bit – it is helpful to refine objectives and the operating mode for the duration of the crisis. We believe it is useful to first focus on the immediate term of getting through the current situation and separate that planning from the longer-term plan that will be needed to deal with the changed situation after the pandemic has subsided.
Doing a pre-mortem for the time period at the end of the pandemic might be very helpful. A pre-mortem, another risk management tactic that we highlighted in Risk Management for Nonprofit Organizations, is where you look ahead to a specific period of time (such as the end of the current pandemic) and ask the hypothetical question, “assuming we missed our objectives, what were the most likely causes”. Going to the future, and looking backwards, can sometimes stimulate better risk management strategies than trying to look forward. This is especially true when in paradigm-shifting situations such as now. When you do your pre-mortem, just be sure to create scenarios where you missed your objectives on the upside as well. There will be opportunities to take advantage of, and a positively focused pre-mortem is helpful to prepare an organization to take advantage of them.

An Additional Consideration

Finally, we suggest that you use the COVID crisis as a time to “try stuff”. Do some small experiments in how your organization operates. Try some new delivery modes or unique strategies. As the saying goes, never waste a crisis as an opportunity to implement new thinking.

Rick Nason and Omer Livvarcin are co-authors of the book “Risk Management for Non-Profits”, published by Business Experts Press. Omer is also the founder of Charify.ca and Vectors Group. Rick is also author of “It’s Not Complicated: The Art and Science of Complexity in Management”, published by University of Toronto Press.

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