Covid-19 and business continuity

The novel Coronavirus epidemic has had a profound impact on our public and private life. Out of the blue, a Black Swan event has changed our perspectives and disrupted entire economies and systems and the emergency has undoubtedly encouraged us to reflect on an important issue: unpredictability. The unexpected lurks in the shadows and can trigger huge change that we are not ready for.
Companies have been at the forefront of this battle with the invisible enemy as the pandemic has impacted all their processes (transport, procurement of raw materials, sales, etc.). This begs the question: can we prepare for the unexpected? There is no clear answer as the number of possibilities we should prepare for is infinite but an important tool that can help us is business continuity management.

The Business Continuity Institute defines business continuity as that managerial area of expertise aimed at developing and improving a company’s organisational resilience.
In short, a company’s ability to continue to operate, carry out its usual activities and production under critical conditions, thanks to its ability to anticipate potential threats and deploy the necessary counter measures.

Whether they be internal or external issues or incidents, every company should have an action plan to head off significant slow-downs or even stoppages in its operations. It should prepare a business continuity plan (BCP) to deal with any crisis situations.

The BCP is a procedural manual to identify threats and solutions so as to be able to mitigate risks and intervene when adverse events occur. The objective of intervention is to minimise the damage caused by a stoppage and to ensure a return to how things were before the crisis as quickly as possible.

The outbreak of Covid-19 has been catastrophic for many companies who have had to come to grips with an unpredictable external event.
What have been the main challenges faced by companies and how have they tried or managed to overcome them?
The restrictions imposed by the public health emergency have affected all aspects of business. Transportation of goods and the procurement of raw materials became problematic. Regional, national and international blocks and various restrictions made these processes more difficult and even impossible at times. Indeed, when the epidemic reached Italy, border closures and controls between the EU member states multiplied, despite the fact that the Schengen Treaty, which provides for the free circulation of people and goods among the member states, had not been formally suspended. Confetra (the Italian General Confederation of Transport and Logistics) figures show that the average volumes transported in the first two months of 2020 contracted between 35% and 45%. The air freight business was impacted similarly with its volumes plummeting by between 40% and 50% in March.

Raw materials were also heavily affected by the emergency situation. Nearly all the commodities used in all production processes experienced significant devaluation and demand for oil dropped, especially in Asia and China.
Sales of goods also declined with ISTAT (the Italian National Institute of Statistics) figures for April showing that retail sales shrank by 26.3%.

In a crisis such as a global pandemic, it is the ability to reinvent yourself and the courage to try something new that makes the difference. A marker of a company’s resilience is its ability to have a medium to long-term vision. Fears about the pandemic held back some companies while others took the opportunity to innovate, proactively responding to the situation by exploiting the options offered by digital society.
What are the main strategies companies have adopted to combat the crisis?
E-commerce. Many companies have moved to a digital platform to offset the drop in sales at their physical stores. E-commerce has taken off since the lockdown, which prevented people from visiting stores in-person. According to the Italian E-Commerce Consortium, online purchasers now number 29 million and the related purchases are expected to grow by 55% by year end. The sector that has benefited the most from this trend is undoubtedly the delivery sector, with an upturn in its business of 19%.

Another strategy adopted by companies is to encourage e-payments. Even those sectors traditionally linked to cash payments have moved to digital payments to bolster sales in a period where safety measures impede physical interaction. Sumup Observatory (a mobile payment company) figures show that local retail shops have recorded a 60% increase in e-transactions.

Webinars and live events. Many companies have increased their use of this type of communication to stay in touch with their customers. Specifically, the #RestartItalia survey, carried out by Wwworkers.it together with Tree, showed that 42% of respondents have changed their sales and communication channels during the pandemic with 87% focused on social media as their first choice, 32% on streamed live videos and 16% on YouTube videos.

Delivery. After their sale, products now also need to be delivered. During the public health emergency and especially during the lockdown, many micro companies started to offer delivery services, sometimes from scratch. According to the GoDaddy cloud platform, 19% of the micro companies began providing an online or telephone delivery service.

Covid-19’s outbreak brought with it issues that had once seemed remote but required immediate management. The public health emergency has become a catalyst and accelerator of change. These months have been and continue to be fertile soil for experimentation and innovation.

Technological development is a part of innovation. Technology has proven its value in managing the crisis and data analysis and tracing and Artificial Intelligence are just two examples of essential tools deployed to deal with the pandemic. In addition to the public health situation, many companies and sectors have overcome their resistance to change and left behind technological immaturity. Numerous companies have rolled out digitalisation plans that include the introduction of digital environments, remote work platforms and the large-scale digitalisation of internal processes.
The public health emergency has highlighted the issue of the environment and the need for a sustainable economic system. The concept of a circular economy is now firmly on governments’ agendas and companies have aligned their practices accordingly, giving more importance to green marketing.
The evidence showing how a virus can spread throughout the world making society vulnerable has made us all more aware of the importance of good health and encouraged us to rethink our life styles, health and safety. Conscious companies have captured these new trends: for example, the food industry has increased the production of alternatives to meat to respond to the higher consumption of vegetable-based products.