Lessons from the Battlefield
The staff in our office would give up Christmas to never hear the words "pandemic", "COVID" or "Corona" ever again. Every business in the world has been affected by recent times in some way or the other. For some it has meant irreparable loss, for others, there have been opportunities. Most will still be feeling the effects of the pandemic for months and years to come. However, one thing rings true, what doesn't break us, makes us stronger. Even in these very testing times, there is an opportunity for every single person to assess the effects the pandemic had on their professional lives and to apply strategies to mitigate their risk in future. We as a practice have certainly done so and we would love to share some of our observations.
Lesson 1: Compliance fundamentals never change
It takes a risk management practice to get giddy about compliance. Although there are still many concerns about the responses of South African government to the risk and threat of the pandemic, it did, however, offer South Africans "a dummy's guide to compliance". For the first time in perhaps many people's lives, "risk management" and "categorisation" became a household language. What we learnt from global regulatory approach was that irrespective of the type of risk faced, the fundamental steps in the academics of compliance, and specifically risk management, remain the same, namely:
- Identify the risk. In the case of COVID - this is easy. The risk that an oxygen eating virus will wipe out the population.
- Categorise the risk by consequence and probability (for example, what is the likely consequence of the virus spreading versus the probability of it doing so if no mitigation or preventions are put in place). Most studies will agree that it was at least probable that our hospitals would not have been prepared for the increased inflow of COVID cases and many more fatalities would have been caused had no lockdown taken place.
- Develop mitigation tools to reduce consequence and probability. Lockdown is an excellent example of a mitigation tool that was aimed at reducing the probability of the virus spreading to the wider populace.
- Assign the oversight of monitoring of the mitigation tools. South Africa deployed the military and additional police contingent to monitor and enforce compliance with lockdown rules. A good confirmation that having a plan is no use if there isn't someone responsible to see it through
- Review the risk management process. We are looking forward to South Africa reviewing the strategies they took with COVID-19. When we are addressing unknown or risks that are not easily quantifiable, the natural response is to over mitigate. Unfortunately, mitigation has its own cost and in the case of South Africa, much of the criticism is that the risk strategies were too dear for what they were aimed at preventing.
Lesson 2: If you can't work from home, you need to make a plan.
There are certainly certain industries that are severely restricted in the ability to offer services remotely. A virtual cupcake just doesn't taste the same and we are probably still a couple of years away from remote nanosurgery.
Many of our practices' clients, however, are in the professional advice and management services. Historically these were industries built around the personal touch. Clients placed their assets and trust with a person recommended to them by a friend. An individual you invited over for lunch and played a round of golf with. Whilst we most certainly don't want to discourage our clients from promoting and establishing healthy professional personal relationships with their clients it was evident over the lockdown period that those of our clients who had made strong investments in technology and support infrastructure were least affected by the effects of business restrictions. It would be wise for organisations to review which areas of their business were most affected by the lockdown and to invest in ways to limit those effects in the future or to at least build up a reserve to carry the business through similar times. We may never see a pandemic again, but trade restrictions take many forms and may very well impact business during its lifetime
Most businesses that could continue trade realised how effective their staff could actually be whilst operating remotely. Having experienced this, perhaps now is the time for businesses to restructure their operations. Imagine how many more shared work opportunities could be given to employees if they could operate remotely and the saving in infrastructure could possibly mean for the business.
Lesson 3: Nurture and invest in the core of your business.
One of our hardest lessons has been to let go of those endeavours that are pipe dreams and to take stock of the economic core. Whilst every business needs to pursue new services and offerings to keep it current, being aware of which services are fundamental to the financial survival of the organisation is vital when it comes to strategically applying risk tools. Developing, managing and protecting service offerings have a cost. Unfortunately, most businesses also have a limited amount of resources. Applying those resources right across every sector of the business often leave the strategies thin at best. Identify core offerings, assess which risks could possibly threaten those core sources of income and prioritise developing the most effective mitigation tools your organisation can afford to protect those sources.
Lesson 4: Re-invent your business
Although we have just preached the protection of core business, we have also discovered over the lockdown period that there were many processes in our business that, with a little tweaking, could be enhanced enough so that they attract a segment of the market previously undeveloped or could offer our services in such a way to clients that it helped us reduce cost and increased efficiency.
There are many such opportunities in the market today. In the financial services sector, for example, we are expecting to see a surge in the number of "automated advice" applications submitted to the Registrar. Automated advice was finally defined under the Financial Services Act by the introduction of the term in Board Notice 194 of 2017. The term introduces the process whereby advice is rendered to clients through an electronic medium that uses algorithms and technology without the direct involvement of a natural person. Although financial service providers will need to invest in infrastructure and technology and possibly partner with persons experienced in the development and oversight of such processes, the possibilities of being authorised to render advice in such a manner may very well become the future for many providers whose product offerings are simple enough to reduce to an automated service and for whom large scale distribution is crucial. If your organisation is a smaller Financial Services Provider (FSP), it may never be feasible to render advice in this manner, but unfortunately, the introduction of this model by providers could threaten the livelihood of the advisor. It is therefore vital for even these organisations to take a fresh approach to their business and to reinvent the ways in which they bring their expertise to the market.
We cannot control the future. As much as we never wish to experience another pandemic, we have no assurance that we won't. We can, however, control our reaction to events around us. Today is the day to assess your position and to plan for the future. Please understand that this is not a discussion or debate on how effective these fundamentals were applied. It is purely a practical application of the academics.