By Enrique Victor D. Pampolina
THE IMPOSITION of the Luzon-wide Enhanced Community Quarantine (ECQ) on March 16 took almost all businesses by surprise, particularly those enterprises that never seriously pursued or developed some form of emergency response plan or a business continuity plan. While on lockdown, most businesses ended up learning about “business continuity” the hard way while others were just unprepared, without any idea of how to even partially resume business.
Business continuity is the capability of an organization to bounce back and continue at least its most essential or critical activities after a disruptive event. This capability is typically prepared and documented by management in advance in a written plan, which is then cascaded, tested, and rehearsed within the organization.
The core of any Business Continuity Plan (BCP) is the identification of what constitutes an organization’s most essential and critical activities, referred to technically as “mission critical activities.” Mission critical activities are the most important business activities of the organization that need to be restored immediately and continued even partially, as it would impact the very survival, brand, and reputation of the company.
Some businesses instinctively found out in the first few weeks of ECQ that activating their sales function is a mission critical activity to ensure some steady cash inflow that would allow them to pay for their regular expenses, including workers’ wages. Payroll was also deemed another mission critical function for companies, as it is essential to ensure continued distribution of pay amongst workers and employees who will support the limited sales function.
Unfortunately, a number of businesses were still unable to operate for weeks and even months after the ECQ because they were unprepared as to how to restore or identify which part of their operations needed to be prioritized. While a number of these businesses did resume some of their operations after months of lockdown, some weren’t able to pivot well and ended up closing shop permanently weeks thereafter.
The COVID-19 pandemic is a unique, challenging, and evolving crisis. But truth be told, this pandemic is a unique disruptive event, so much so that even seasoned business continuity and crisis management practitioners have had a hard time coping. Add to that, this will remain an evolving crisis until an effective vaccine is developed and distributed.
In a Deloitte global survey conducted last April amongst C-suite executives, particularly those with responsibility for crisis management and business continuity planning, it was noted that only 16% of the respondents felt that their response plans worked well.
And the following were the three main drivers why these senior executives felt their plans were poor responses to the pandemic:
1. The extreme lockdown or quarantine scenario where all employees were ordered to stay home, shifting to home-based work which took weeks or months for some companies to implement, was just unprecedented.
2. Few plans anticipated a pandemic scenario with a lot of health safety unknowns and uncertainty, raising heightened fear even for the most seasoned crisis management proponents. Some companies were likewise unclear if they needed to apply their emergency response plan, crisis management, or business continuity plans.
3. Unprepared technology capacity and flexibility, with firms struggling to supply well-secured home-based network access to their employees.
How then do we learn, cope, and build a Business Continuity Management (BCM) system and plan amidst an ongoing crisis?
It is never too late to institute a BCM system and mentality even in the middle of an evolving health crisis. Companies without any emergency response or business continuity plan should still reassess and draft a document that would cover the organization’s key mission-critical functions or activities, focusing on three to four functions only. Once these activities are identified, an assessment of the recovery of company assets (equipment or employees) related to the functions must commence.
This crisis is also a time for companies with established BCM plans to revisit the applicability and practicality of these plans and adjust the same given what they’ve already learned during the ongoing pandemic.
The shift from a scenario-based to asset-based BCM methodology in drafting business continuity plans is one of the key lessons of this ongoing crisis. Companies had a hard time activating their BCP because a pandemic was a scenario they never expected or anticipated in their plans. Most Philippine companies have prepared for the Big One earthquake, strong typhoons, or cyber-attack scenarios, so when the pandemic hit, they were unsure if they should even activate their existing plans.
Asset-based planning looks at a company’s assets using the BETH3 concept: i.e., the company’s Building, Equipment, Technology, Human Resources, and 3rd parties. Using this methodology, a company will be prepared to recover its assets regardless of the disruptive event or scenario.
In the context of the coronavirus pandemic, the Building was surely affected because work shifted from typical office buildings to employees’ homes. Equipment and Technology were also impacted given that equipment needed to be distributed so that mission critical employees could work and secure network connections could be established to allow for the new work-from-home setup. Moreover, Human Resources had to be deployed differently since most Filipinos were on lockdown. A team splitting or skeletal force arrangement had to be adopted.
So with asset-based planning, while activating the BCP is triggered by a specific crisis scenario, the recovery measures are not specific to the said scenario but on the company’s assets that are greatly impacted by the event.
While we are still in this evolving crisis, companies and organizations are better off re-instituting their BCM systems even with the shifting situation on the ground. More than just documenting these essential plans, it is the readiness mentality that BCM systems inspire in organizations that is most valuable, not to mention crucial in such an unpredictable landscape.
Enrique Victor ‘Jet’ D. Pampolina is a Risk Advisory Partner, specializing in enterprise-wide risk management and business continuity planning, at Navarro Amper & Co., a member of the Deloitte Asia Pacific Network. Deloitte Asia Pacific Limited is a company limited by guarantee and a member firm of Deloitte Touche Tohmatsu Limited. Members of Deloitte Asia Pacific Limited and their related entities, each of which are separate and independent legal entities, provide services from more than 100 cities across the region, including Auckland, Bangkok, Beijing, Hanoi, Ho Chi Minh City, Hong Kong, Jakarta, Kuala Lumpur, Manila, Melbourne, Osaka, Shanghai, Singapore, Sydney, Taipei, Tokyo, and Yangon.
