There has never been anything quite like the Covid-19 Pandemic in recent memory. In the past few months, it has moved from the city of Wuhan, China, to take centre stage globally, devastating lives in its path, and causing unprecedented disruption to economies, regions and continents. The speed at which it has travelled has caught many countries on the back foot, and their respective health authorities have been scrambling to get this deadly virus under control. More than two million worldwide are reported to be infected, and although China initially bore the brunt of fatalities, Spain, Italy and the US have since overtaken it in terms of sad statistics.

“Covid-19 is first and foremost a humanitarian challenge,” said Ramesh Pillai, Chairman of the IERP, at the Institute’s first online Tea Talk on 10th April 2020.

“It is a global challenge with many implications for governments and health authorities. Victims and their families need support, and the increasing numbers of infections all over the world may well drive hospitals into overload.” Hundreds of thousands are suffering from the disease itself as well as the fallout from the pandemic, even as authorities institute measures such as social distancing, lockdowns, and in some cases, total quarantine.

Governments are taking measures that seem to be working; “flatten the curve” has become a buzzphrase that everyone is now familiar with, in the hope that the steep trajectory of increasing infections will level off and give struggling health services time to draw breath before throwing themselves back into the fray. Needless to say, with such a devastating impact on so many countries in such a short time, the implications of Covid-19 to the global economy are staggering. Nobody knows how long this particular disruption will last, and whether it will recur. There is no cure for the virus as yet, and none is expected to be available for at least another 12 to 18 months.

Banks, financial institutions and the stock market are in a state of flux but as in any crisis, the priority is to safeguard human life and livelihoods. This means that it is imperative to curb infections, treat all those who need it, and find a cure for the virus. In the meantime, people need to be supported as their livelihoods have taken a direct hit but they need to get back to work as quickly and safely as possible. Having taken the first major hit, China is slowly getting itself back on track and restarting its economy. There are signs that the curve may indeed be flattening but business leaders and risk managers must ask themselves how long the disruption will last, how deep it will be, and what it will take to recover.

There are no straight answers; there is no business sector which has not felt the impact of the pandemic. “Commercial aerospace, for instance, has been hit hard by fixed costs amid rapidly falling demand,” Ramesh said. “Whole fleets have been grounded, aircraft sales have declined, orders cancelled. There will likely be little or no demand for travel in 2020 even if movement control orders are lifted.” Air and travel will suffer because the summer season, when most hotels and airlines are busiest, will see everyone staying at home, as travel restrictions will be in effect for at least six months.

“International travel may not recover for 18 to 24 months,” he added.

Oil prices, which have hit an all-time low due to oversupply, will not be helping economies either. Demand for cars will decline in the post-Pandemic period, depressing the automotive industry as consumers’ shaken confidence sees them holding on to their money. Any impact has a domino effect; the insurance industry, which underwrites businesses that fail, will feel the fallout as well. Analysts expect GDP growth overall to return to pre-Pandemic levels only within two or three years not only because of shaken consumer confidence but also because of adjustments to working conditions such as remote working that will involve less travel.

Faced with the unprecedented turbulent economic environment and business disruptions brought on by Covid-19, there are still areas which risk managers can work on, to strengthen their organisations against the challenges that lie ahead. “They need to think and act across five horizons: resolve, resilience, return, reimagination and reform,” Ramesh said, adding that organisations must first resolve to address the immediate challenges that confront them, and manage resiliency issues such as cash management and the knock-on effects of the lockdown. They should create a plan to return the business to operations as quickly as possible, and reimagine what the business will look like, post-Pandemic, he said, and be aware that reforms may be instituted once things return to normal.

With a task of this magnitude, organisations can no longer rely on small units to undertake the management of risk; collaborating and managing these five areas will require the remodelling of the organisation into a nerve center that consolidates all actions of the teams which will handle the reworked structure of the firm, going forward. It will need a “Team of Teams” approach because the issues related to Covid-19 will not disappear when the virus infections recede. In fact, analysts expect the issues, and the challenges emanating from these, to increase as the world counts the real cost of the Pandemic; the issues will become more numerous and complicated.

As countries gradually recover, and businesses go back to “normal” it will become evident that the new normal is very different from what we were used to as the “old” normal. “Risk managers will need to think ahead and anticipate the changes so as to be ahead of everyone else,” Ramesh said, explaining that the nerve center will out of necessity be agile and flexible, capable of thinking ahead, planning and strategising for a range of issues and scenarios, and of offering solutions to the subsequent problems which arise. In essence, the nerve center will look at how to respond to issues facing the organisation.

It will look at the strategy for the firm, going forward, and what resources will be required to get things going, and mitigate the risks that have arisen in the wake of the disruption. The “Team of Teams” may take on the form of different groups which do due diligence, discover facts and glean information; and those that make decisions on how to move forward. One team may look at the present, while another considers the future. This will be necessary to spot future opportunities and decide on the course of action to be taken. There will also be a need for close, regular communication between the two.

The current situation is chaotic, and it is easy to see only threats, but there are opportunities as well, Ramesh said. “Not every company is equally adversely affected,” he said, remarking that some countries too were worse off than others. Suggesting a practical way forward, he said that the nerve center should strive to plan ahead so as to be able to offer quick responses to rapidly-changing scenarios. “Have a realistic idea of where you are in relation to everything else, and imagine what the future of your organisation will be,” he advised. “Then use these scenarios to develop the direction for the firm. Strategise for the different scenarios, and set points at which plans and actions must kick in, for them to be effective, and to mitigate the risks faced by your firm.”