There are many risk management tools to help manage a crisis but are they used when the crisis hits? And does it matter?

Necessity Is The Mother of Invention

If you weren’t across capacity management techniques and terminology three months ago, you’re certainly getting up to speed now. Whether it’s:

  • Flattening the curve to ease the demand for ICU beds,
  • Waiting patiently in lengthy queues at supermarkets for household essentials only to be confronted by aisle after aisle of empty shelves,
  • Struggling with bandwidth as your team meeting takes twice as long waiting for people to connect, or
  • Hanging up after listening to the contact centre on-hold message telling you they are experiencing unprecedented demand, but your call is important, and they’ll get back to you as soon as possible.

This is not normal!

These unusual effects, of course, can be directly attributed to the coronavirus pandemic, which has driven an extraordinary spike in demand for some goods and services and a catastrophic collapse in demand for others. Supply chains and support teams are struggling to cope.

There are many, many questions being asked, such as did we act fast enough and could we have been better prepared? Rather than straying into geo-political territory and issues of data transparency, political messaging etc, my focus is on organisational preparedness and specifically questions around two common tools widely used by organisations to manage events like this pandemic:

  • Business Continuity Planning (BCP): BCP is at the heart of operational risk management. Organisations spend countless hours identifying critical processes, concocting potential scenarios, answering “what-if” type questions, identifying mitigants and possible courses of action and then running simulations to test their efficacy.
  • Range-Response Curve: Any BCP event is ultimately a capacity management event. The event triggers a sudden change in demand and capacity needs to be adjusted. The range-response curve is a very powerful tool in this regard. In simple terms it plots how long it will take to adjust capacity. For example, most teams would be able to accommodate an increase/decrease in demand of 2-3% almost immediately. Accommodating a doubling of demand, however, is something entirely different and might take many months, if not longer, by the time new premises have been secured and fitted out, additional staff recruited etc. Its usefulness comes in asking these questions ahead of time. If demand did double how quickly could we scale up? This type of exercise forces operational leaders to think about their processes at a very fundamental level, well beyond the incremental.

But when the crisis hits, do crisis management committees read from the playbook in a calm and structured way or do they make it up on the fly? While I acknowledge that every crisis is different in some way, the comprehensive planning and options that have been carefully considered in peacetime seem to get lost in the fog of war. Actions that, according to the range-response curve, should take months to execute are concluded within days, if not hours.

Ask how long it would take to setup 90% of the workforce to work from home in normal times and the answer will invariably be many months and with a significant price tag attached for a large organisation. However, come the crisis and the workforce are zooming into video conferences from the comfort of their spare room/kitchen bench within 1-2 weeks!

The impact of the pandemic in both human and economic terms is almost unfathomable, but even in these early stages the adaptability, tenacity and resilience of organisations and the people that work within them is quite remarkable.

And this is the paradox. If we throw the playbook out of the window when the crisis hit and rely on the ingenuity of our people in the moment, why did we spend so much time on it in the first place? If we can do in two weeks what we spent hours mulling over before arriving at a six-month timetable, why bother creating the six-month timetable in the first place?

My answer is that, while the playbook may not be followed to the letter, the thinking that went into writing it seeps into the organisational sub-conscious and decisions that appear to be made on the fly are based on a deep consideration of the consequences.

And that is enough justification to continue planning and preparation. We might not be able to predict when the black swans will appear, but we can improve our ability to respond rapidly. The lessons from this crisis must not be lost and should form the basis of updating the playbook for the next crisis, with a focus on two key questions

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Necessity Is The Mother of Invention

There are many risk management tools to help manage a crisis but are they used when the crisis hits? And does it matter?