This past month, the world has been on alert because of the Coronavirus. The first outbreak of the virus occurred in early December 2019, in the province of Wuhan, located in China.
This problem has impacted several sectors of the industry, including B2B market. Countless companies are lost, looking for a plan B to maintain their supply chains active, in an attempt to ensure that their businesses are not harmed by the shortage. However, many of them are facing import problems and numerous delays due to global caution in the Coronavirus scenario.
In this time of adversity, where things often do not happen as we expect, we understand the importance of doing the right thing. business risk management.
Coronavirus in Brazil and the World
On February 26th, it was confirmed that first case of Coronavirus in Brazil. The case involves a person who came from Italy to São Paulo, and is now in home isolation.
In the world, besides China, others 46 countries, spread across five continents, have already registered confirmed cases of Coronavirus. Greece, Georgia, Norway and Pakistan also recognized the first cases of the virus on the 26th.
Coronavirus, risk management and the B2B market
No business is untouchable. Threats are inherent to all and when we talk about risks, there are those that we can predict and avoid, and those that simply happen and force us to act quickly so that the impacts on business and society are minimal.
Therefore, it is necessary to have a Contingency plan whenever something unexpected happens.
The classic 5-step methodology includes the following steps:
- Leak: risk mapping.
- Qualitative analysis: definition of the level of importance of each risk and the probability of it occurring.
- Quantitative analysis: assessment of the impacts and effects caused by risks.
- Response planning: definition of actions in case of threat occurrence to minimize the effects.
- Real Time: monitoring prevention processes to ensure they are being implemented.
In the case of the Coronavirus, we have seen that the risk had not even been mapped. We have had other international epidemics, even with a higher fatality rate than the current one, but they did not cause the imbalance in the global economy as we are seeing now. The effects of current crisis have been caused more by the panic generated than by the infection itself.
In this scenario, it is necessary to revisit the 5 steps of risk management, not only looking at the primary risk of people becoming infected, but also the secondary risks in the supply chain and the global economy.
O proper planning responses should include alternative sources of supply and inventory levels, also considering a possible drop in demand for the companies' products or services.
The biggest difficulty today, given the uncertainties, is to carry out the quantitative analysis which determines the potential impacts and effects on the business.
In any case, it is necessary to develop some scenarios for the action planning and facing the crisis.
Coronavirus and its impacts on the VUCA World
The Coronavirus crisis in the world reinforces the VUCA concept, an acronym that was created in the late 90s, in the post-Cold War era, to explain various adverse situations in the military universe.
Today, commonly used in business, the term aims to elucidate the moment we are going through, marked by speed, unpredictability, transformation and different points of view about the same fact.
The VUCA world is fluid and uncertain and only knowledge can allow organizations to keep up with so many changes.
This world crisis reinforces the importance of putting into practice concepts that are already widespread in the market, but still little applied.
It is important that companies seek alignment between discourse and practice, that is, establish risk management plans, and are coherent, transparent and effective.
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