EY: Five strategies for businesses to lessen coronavirus impact

17 March 2020 Consulting.us 3 min. read
More news on

As Covid-19 locks down countries and strangles markets, consulting firm EY offers five ways for global companies to muffle the impact of the health crisis.

Originating in Chinese wet markets in the Wuhan province, Covid-19 has rapidly spread across the globe in a matter of weeks. The pandemic has prompted a declaration of national emergency in the US, with confirmed cases rising to 4,141 and 71 deaths as of March 16. Outside of China, Italy and Iran have been particularly hard hit by Covid-19, with 2,158 and 853 deaths, respectively.

Governments are now belatedly reacting following a failure to contain the virus – closing borders, shutting down public gatherings, shuttering schools, locking down cities, and pleading with people to stay home and practice “social distancing.” The massive restriction in movement, uncertainty, and ripples into the economy have rightfully terrified investors, sending markets into a spiral.

Consulting firm EY offered a number of ways for companies to mitigate the impact of Covid-19 in a recent report on their website.

Five strategies for businesses to lessen coronavirus impact

1) Prioritize people safety and continuous engagement

The firm recommends expanding flexible work arrangements, allowing people to work remotely if possible. Where remote work isn’t possible, companies should provide infection protections measures. Companies should also deliver regular communications that align with current health authority policies to keep employees engaged throughout the crisis.

2) Reshape strategy for business continuity

Most businesses are likely to experience significant disruption to operations and underperformance during the crisis. This includes disruption to supply chains, shifts in consumer demand, and particular sector impact on consumer and retail and travel and hospitality.

According to EY, companies should instill short-term cash flow monitoring discipline and strict discipline on working capital. They should also maintain regular contact with suppliers to identify risks.

Companies will need to also monitor direct cost escalations and the pressures impacting customers, suppliers, and contractors. Supply chain alternatives will require examination as regions remain under or enter lockdown.

Finally, firms should stress-test financial plans for multiple scenarios and revise them to stay agile. They will need to look at near-term capital raising, debt refinancing, and policy supports from the government, while considering the curtailing of non-essential expenses.

3) Communicate with relevant stakeholders

Communications are need to secure ongoing support from stakeholders during the crisis. According to EY, companies should keep customers apprised of impacts to product or service delivery, invoking “force majeure” clauses if necessary. When communicating with employees, firms have to find a balance between caution and a “business-as-usual” mindset. Regular contact with suppliers should also be maintained so parties can find alternative supply chain options in a timely manner.

4) Maximize the use of government support policies

Companies should monitor government and organizational opportunities for support, which may differ based on jurisdiction or sector. These may include tax exemptions and social insurance contribution reductions, and will evolve as the crisis worsens.

5) Build resilience in preparation for a new normal

Once firms build new strategies based on stress tests, they’ll need to execute based on revised plans, while keeping tabs on a fluid situation. If and when the outbreak is controlled, firms will want to take stock of deficiencies – including timeliness of action, lack of infrastructure, labor shortages, and other issues. This should result in new internal guidelines and contingency plans to better respond to future crises.