Market Analysis South East Europe

Market Analysis South East Europe

During covid-19 pandemic, over 16,000 people tested positive in South East Europe. However, market analysis for South East Europe shows a slowdown in the SEE economies. Those heavily rely on trade with investments from European countries, especially Germany and Italy. Unemployment in the SEE economies may rise again and labour market conditions may deteriorate further, as a significant share of the workforce lives abroad (between 20-25% of the population).

Moreover, within the domestic markets SMEs, manufacturing and tourism sectors will be among the most affected. Some SEE governments have already introduced stimulus packages. As an example, the government in Croatia raised support from HRK 3 250 per worker to HRK 4 000.

All SEE economies have closed their borders crossings to the movement of people while allowing the flow of goods and medical equipment. Due to the lockdown measures, educational systems in the SEE region have started conducting classes remotely. The lockdown also affected cafes, restaurants, and retail store, as well as large-scale cultural events. These measures have triggered a rapid expansion of e-commerce services in the SEE. That triggered many firms to seek new ways to conduct business during the crisis.

Furthermore, a covid-19 pandemic is taking a heavy toll on the economy which will affect South East Eruope. In this market analysis, South East Europe is leading to much lower economic growth compared to other European countries.

Economic impact: Market analysis South East Europe

 

First and far most affected due to the covid-19 pandemic will be domestic supply. Although macroeconomic policies can aid the recovery of demand, they can not completely offset the economic consequences.

Summer season for tourism is not looking good either. Albania and Montenegro tourism revenues exceed 20% of GDP.

Third, exports across the region will fall due to depressed demand, as well as disruptions in value chains. Moreover, the manufacturing sectors contribute most to their economies in terms of value-added and employment.

Source: World Bank Data from the OECD report

 

The contributions of foreign direct investment (FDI) to the Western Balkan economies were relatively sizeable over the last years. With FDI investments over the past years, we could see more economic growth and job creation. See the chart below-showing investments for South East Europe region. Romania shows growth in FDI investments with a net flow of over 7 billion US$ in 2018.

Source: World Development Indicators

 

The economic slowdown will also come at a bad time for Albania and Croatia, as both economies have been recently hit by earthquakes. No argue that this will add an additional burden to already stretched budgets to counter the coronavirus outbreak.

Unemployment in SEE region

 

In South East Europe there is a constant outflow of human capital. According to available data from the United Nations, in 2019 there were almost 4.6 million people living abroad from the five Western Balkan economies. In particular, young, skilled workers seek job opportunities outside the region. Also, many health professionals leave for Western EU countries and Switzerland.

Moreover, in the context of current covid-19 crisis, two thirds of people have no prior experience with teleworking. On average, only about one third of individuals aged 25 to 64 with high formal education have at least once worked from home in 2018.

All Western Balkan economies have taken measures to limit physical interaction, and the workplace was the first focus of those measures. Existing regulations have already been relaxed and new options for teleworking have been introduced.

What to expect for SMEs?

 

In the Western Balkans, over 99% of all firms make up SMEs, which generate around 65% of total business sector value-added. SME’s account for 73% of total business sector employment according to OECD.

There are only few implications on how covid-19 could impact on financial losses for SMEs. However, we can only assume that the reduced customer demand will lead to cash -flow problems.

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Vrijeme je da gradimo

Svaka zapadna institucija je bila nepripremljena usred koronavirus pandemije. Taj monumentalni neuspjeh institucionalne efektivnosti će se odjekivati skroz do kraja ovoga desetljeća, međutim nije pre rano da se zapitamo zašto, i što bi trebali učiniti po tom pitanju....

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Market Analysis South East Europe

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The economic impact of covid-19 in Croatia

The economic impact of covid-19 in Croatia

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The economic impact of covid-19 in Croatia

The economic impact of covid-19 in Croatia

The covid-19 in Croatia according to assessment of the health system is tackling the health issue. As of 4 May, the infection curve seems to be flattening. With a decrease in new cases compared to previous weeks. The Government has stated that the epidemiologic situation is under control. Data in this report is gathered from the OECD Croatia covid-19 report and official resources.

Croatia’s unemployment rate edged down to 8.6 percent in March of 2020 from 8.9 percent in the March of 2019. The number of unemployed people decreased by 2.340 thousand to 143,461. In February, the jobless rate was lower at 8.3 percent. See the chart below of unemployment in Croatia.

 

Croatia unemployment rate

Source: Trading Economics

 

Official data suggests an increase in registered unemployment for the first time since 2013. Due to market instability, the HRK/EUR exchange rate depreciated. As of 27 April, the Croatian Kuna has regained some of its lost value.

Source: European Central Bank

 

Investor panic did damage to the Croatian financial market, as the Zagreb Stock Exchange’s indicator, Crobex, lost over 32% of its value from 19 February to 19 March. The Crobex resumed growth the following two weeks, possibly due to investor confidence in Government measures and their ability to limit economic damage.

Government measures during covid-19 in Croatia

 

Croatia as part of many European countries introduced to the public measures due to the covid-19. Moreover, on 16 March, the Government closed all educational institutions. Distance learning for primary education is delivered through public service broadcasts. Primary education is expected to partially resume as of 11 May.

The covid-19 in Croatia will leave an impact on how people will act in the new normal. Further on, Croatia announced new restriction measures to the public on 24 March and introduced a ban on travel between cities.

As of 20 April, restrictions on movement inside individual counties have been lifted for most counties. The government plans to begin easing the restrictions in three phases. As of 27 April, businesses selling goods and services may reopen as long as they are not inside shopping malls.

As of 4 May, service industries may reopen, including those that involve close human contact. Country-wide public transportation and domestic air traffic are expected to reopen on 11 May.

In addition to supporting measures, on 20 March, the Croatian National Bank (CNB) adjusted its regulatory framework and monitoring activities in order to support the liquidity of financial institutions.

Monetary and fiscal measures for the covid-19 in Croatia

 

On 17 March, the Government announced measures of a combined worth of over HRK 30 billion (around EUR 3.9 billion) to support the economy is coping with the effects of the pandemic.

Also, the Government has promised interest-free loans to local organs and other public bodies whose revenue will be affected by the delay in payments.

The Government set up dedicated accounts for the collection of donations and the start of a campaign to assist with relief efforts related to the Zagreb earthquake (Together for Zagreb), and the COVID-19 pandemic (Croatia Against Coronavirus).

One additional fiscal measure to support firms, Employment Agency has made available special subsidies to employers. These include salaries of full-time and part-time workers in accommodation, food and beverage,
transportation and storage and other sectors in which workers are prevented from attending work due to confinement measures.

The Government increased this support from HRK 3 250 per worker to HRK 4 000.

Within the April package, the Government announced an exemption on payment of income tax and contributions for entrepreneurs with an annual income of less than HRK 7.5 million (representing 93% of firms).

The overview

 

Prior to covid-19 in Croatia, GDP growth was accelerating, with a growth rate of 2.9 in 2019 (after a slight slowdown from 2017 to 2018). Unemployment was low, registering at 6.1% in January 2020. At the end of 2019, the Government budget ran a surplus of 0.9% GDP.

Croatia’s economy strongly relies on the tourism sector, which represents around 20% of GDP. This could bring economic difficulties as the tourism industry is suffering worldwide as a result of the pandemic. Efforts to support both firms and employees in the sector Government recently announced. Difficulties related to reduced export of goods are also expected.

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The economic impact on e-commerce

The economic impact on e-commerce

As the COVID-19 changes buying behaviour, the economic impact on e-commerce could be longlasting. As people come to terms with their new living situations, their buying behaviour has adapted to suit their needs. While panic buying may have slowed in some countries, consumers continue to stock up on supplies, or “pandemic pantry products”.

Although grocery shopping has received higher demand, the Adobe digital economy index data shows that electronics, home and gardening are also influential due to the online economy. See the charts below.

Source: Adobe Digital Economy Index

Demand for groceries has been increasing slightly in recent years, driving online price up by 4.6%. Moreover, plunging TV prices and wider 4K availability have boosted online purchase power over past years. As for the home and gardening, prices have been steadily deflating, but they still rise in early summer as demand increases for outdoor furnishing.

Meanwhile, consumers are experiencing out of stock pages as the supply chains are impacted. The products that receive higher demand due to the COVID-19 impact from January to March, include:

1. Virus protection category products like hand sanitizers, gloves, masks, and anti-bacterial sprays surged 807%

2. Over-the-counter drug purchases increased by 217% for cold, flu, and pain relievers

3. Toilet paper online sales spiked by 231%

4. Non-perishable, canned goods and other shelf-stable food sales increased by 87%

Looking ahead, the economic impact on e-commerce caused changes in shopping and buying behaviour.

“Quick turnaround shopping happens when you think something it is going to go out of stock, like on Black Friday,”

Tamara Gaffney, VP of Decision Strategy at Quantum Metric in an interview with Retail TouchPoints

She also shared that no matter what category you look at, regardless of if you think that matters right now, is seeing online growth.

The covid-19 outbreak in France

Moreover, an interesting increase in online sales is showed in online pharmacies. The latest statistic report from Statista shows e-commerce activity development after the covid-19 outbreak in France.

Source: Statista

The statistic shows the activity of online commerce after the outbreak of the coronavirus (Covid-19) in France in March 2020, in terms of transaction and traffic rate development. Hotel websites showed a fall of about 9% in transactions and around 8% in website traffic rate between February 16 and 23, 2020. Online pharmacies had increased their traffic by 15.3% and their transaction rate by around 2%.

Demand in supply chains: impact on e-commerce

While it was easy to predict the rise in online shopping and demand for e-commerce in the supply chain, the retailers may be facing pressure. Officially the world’s largest retailer, Amazon has announced it can no longer keep up with consumer demand. As a result, it will be delaying the delivery of non-essential items, or in some cases not taking orders for non-essentials at all.

That said, the pressure that economic e-commerce demand from online shopper posed will have consequences on small retailers. Many don’t have the large supply chains that Amazon has and therefore could experience delayed in shipping.

In fact, in early March, 20% of shoppers already had had an e-Commerce delivery delayed or cancelled due to coronavirus, according to ShipStation.

No matter if you are a small or large business with well-organized supply chains, you should keep your communication transparent. If you want a good long term relationship with your customers, be honest and transparent with the possible shipping delays.

Although you can’t virtualize a warehouse worker, you can use digital communication and the process between supplier and retailer.

Change in Grocery E-commerce

Higher demand in grocery online shopping has had a meaningful impact on e-commerce. There are some implications that the changes in consumer behaviour will be lasting. Moreover, the most profound change in consumer behaviour is happening in grocery e-commerce.

Statistic of e-commerce per category
Source: Statista

The recent research from Statista shows the e-commerce share of total retail revenue in the United States as of February 2020, sorted by product category. According to the findings, food and beverage segment accounting for 3.2% of total retail sales. This is at the moment the fastest-growing e-commerce category.

Grocery e-commerce has had huge momentum behind it—even prior to much of the US population social distancing and staying home—with last year representing an obvious inflexion point. According to TABS Analytics from e-Marketer, internet users jumped from 38% in 2018 to 56% in 2019, while the percentage of those who regularly ordered groceries online spiked from 17% to 37%.

Online grocery shopping behaviours-impact on e-commerce
Source: Figure from eMarketer

While retailers are still facing the problem of higher demand and managing the logistics, the operations such as click and collect helped propel the behaviour forward. The example of Walmart’s click and collect is just one out of many groceries chains.

What started as simply making a purchase eventually progressed to buying in new categories, purchasing high-ticket items, and shopping and buying via mobile. Every time these behaviours crystallized for a new set of consumers, it permanently shifted their online buying habits. Supply chains demand had a rather positive impact on e-commerce.

Takeaways

Although online buyers will eventually go back to buying in stores, buying behaviour could easily for some shift to e-commerce. At least one out of five grocery online shoppers could stay online.

The economic impact on e-commerce is widely caused by impulsive buying behaviour while staying in the midset of fear on “something will be out of stock.”

Make sure to properly prepare your logistics and supply chains for higher demand in supplies. If you can not deliver, be transparent and share this information with your customers and workers.

The question that remains is will the buying behaviour change for good?

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Covid-19 advice for the U.S. private equity firms

Covid-19 advice for the U.S. private equity firms

The Covid-19 crisis continues to impact the global economy in unprecedented ways. Shelter-in-place orders and non-essential business closures around the world have disrupted operations across all sectors. All of that has caused a major dislocation with the private equity firms and private equity industry. This pandemic and the ensuing economic fallout raises a mix of pressing concerns and complex legal issues for private equity sponsors and their portfolio company management teams. In addition, the Covid-19 epidemic may also present private equity sponsors with unique and urgent opportunities to deploy capital. We will provide you with a short overview of the US private equity market in this article.

For most private equity sponsors and their portfolio companies, the effects of the Covid-19 shockwave became the new normal. Moreover, while many are still sorting through the everyday challenges, new strategies are emerging to help portfolio companies. During the Great Depression, the highest rate of unemployment in the United States was 24.9%. In the past few weeks, Federal Reserve Bank of St. Louis President James Bullard warned that Covid-19 could cause the US unemployment rate during the second quarter to hit 30% because of workplace shutdowns. That said, they also forecasted a 50% drop in GDP over that same period.

Some policymakers expect the pandemic to impact the US economy deep into the second quarter. Implying what the United States might expect over this period, during the first two months of 2020, China saw home sales shrink by 33%, construction drop by 25%, retail sales fall by almost 20% and factory output drop by double digits. The US economy was at the tail end of one of the longest economic expansions in its history.

The new area for Private Equity firms

In the weeks just before the coronavirus outbreak in the United States, economist Joel Naroff stated, “Going into any potential coronavirus slowdown, the economy is in good shape.” However, there is still a reason to believe that the impact in the United States of Covid-19 could be severe.

While many portfolio companies are undoubtedly at risk as the economy slows, the government had a quick response. That said, private equity firms should move ahead quickly.

Federal Relief

The federal government and many states have announced changes in tax filing and payment dates in response to the Covid-19 pandemic. That includes the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The government announced in the US Senate on March 27, 2020. Tax relief is of interest to private equity funds and their portfolio companies. A $2.2 trillion stimulus package that, among other things, expands relief options available to certain US small businesses through the Small Business Administration (the SBA).

The CARES Act also provides for a loan and loan guarantee program intended to help distressed businesses that do not qualify for small business relief. That includes a program specifically designed for mid-sized businesses with between 500 and 10,000 employees.

Eligible “small businesses” include the self-employed and any business that meets the applicable small business size standard for its industry. It also includes any other business with 500 employees or fewer, based on the company’s NAICS Code.

Bear in mind, however, that all of these funding programs remain subject to further guidance. For more information visit the SBA website.

Economic Stabilization Program

In addition to the PPP Loan and the expansion of the EID Loan Program, the CARES Act also provides for $454 billion in financing to banks and other lenders that make direct loans or guarantees to certain eligible business impacted by Covid-19. However, the CARES Act does not fully establish, the precise mechanics of applying for relief under the CESA.

Moreover, an eligible business can participate in the CESA program if it is created and organized in the US. The business should also have significant operations and a majority of its employees located in the US. Nevertheless, this program should show proven losses as a result of Covid-19.

As mentioned before, the program of the CARES Act is designed for mid-sized companies with 500-10,000 employees. However, the CARES Act requires that any such loans to mid-sized borrowers would feature annualized interest rates no higher than 2% per annum. It also requires that for the first 6 months of financing under the program, no principal or interest is due.

US employment law considerations

Any private equity sponsor or portfolio company considering layoffs or across-the-board wage reductions in response to Covid-19 should first consult with counsel. That is to understand all of its contractual and statutory obligations with respect to any such action. Those businesses retaining their workforce should consider the expansion of paid sick leave. They should also consider the FMLA under the Families First Coronavirus Response Act.

The legislation will enable employers to keep their employees on their payrolls, while at the same time ensuring that employees are not forced to choose between their paychecks and the public health measures needed to combat the virus. Generally speaking, where a company has more than 50 but less than 500 employees, it is a “covered employer” for the purposes of the FFCRA.

Employees may use their 2-week emergency paid sick leave before paid FMLA leave begins. FFCRA also prohibits covered employers from changing their paid leave policies to avoid compliance.

Private equity firms material contracts

In addition to actively managing portfolio companies cash to maximize liquidity, portfolio management teams should undertake the review. Besides, where possible, drawing on available lines of credit to build a cash position for a sustained period of disruption to normal operations. That said, it is crucial to review the complex’s material contracts. That is to better understand their current insurance coverage and potential legal exposure. Also, it is important to identify efficient breach opportunities to back out of (or delay payments under) contractual commitments to preserve their liquidity.

In assessing their material contracts, companies should take particular note of force majeure provisions. That should also trigger other affirmative defences to non-performance such as impossibility and frustration of purpose.

Summary

Beyond the immediate challenges, the crisis poses to business and the economy. The crisis will inevitably present opportunities for private equity firms to help advance economic recovery. Unless there is a prolonged pause on economic activity, the outlook for the private equity industry remains positive. Based on industry data, private equity funds continue to sit on record levels of committed capital (estimated at $2 trillion, with over $700 billion of that in buyout funds).

Although it is too soon to predict what deal terms will look like in a post-Covid-19 world, there are early indications.  In a very short time, Covid-19-related issues have moved quickly into M&A agreements. References to pandemic-related impacts have already appeared in MAE definitions, representations and warranties.  Representations and warranties insurance providers have also moved quickly to exclude coverage for Covid-19-related matters. We can keep monitoring and analysing the latest data available to better understand future indications.

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COVID-19 Leadership Advice

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People look to leadership advice during uncertain times and a situation like covid-19. Moreover, when looking at uncertain times like this, a confident and calm leader is more appreciated now than ever before. Psychologists’ research points to several ways that leaders can improve their communication skills to maximize trust and minimize stress and anxiety. People look for a leader that can: manage stress, share information with empathy and optimism, use credibility to build trust, and be transparent.

All in all, transparent communication is the foundation of the company culture. Some of the company giants have stated in a recent article that they find optimism by helping each other. The sooner you move to a work from home environment, the better. If you have the infrastructure and technology in place, the transition will be smooth.

What’s the best thing you can do for your employees?

This is the best time for leaders to step up and do what’s right to protect employees. Every leader needs daily updates about the state of the marketplace. During the time of remote work, key players need to have online meetings and work the plan. Moreover, instill commercial urgency in the front line.

In the meantime, keep in touch with your customers. If you can help your most loyal customers with solutions that make the difference, you will become closer once the emergency is over.

During the emergency, leverage the purpose of your company and have leaders engage with staff frequently. Address your people’s panic and fear head-on. Be honest, be transparent, and convey that you share their concerns, but remind them that you will all get through this as one strong team.

Your financial strategy should be to preserve cash above all. Build reserves and postpone expensive projects.

Post-COVID-19 changes

CEOs should also start planning for the future after the outbreak. Although we know that the world will be different, we can not predict exact outcomes. However, you can create assumptions based on economic data and position your company. Europe and the US talk about “flattening the curve,” slowing the rate of infection instead of eliminating it. In the meantime, China is showing a V-shaped recovery. Will consumers return to their old behavior patterns such as retail shopping, going to events or will they stay online.

Depending on how long the outbreak lasts, and how severe its impact is, long-term changes are likely. Will B2B customers change their buying patterns to exclusively online purchasing? How will supply chains operate, and with what new safeguards? No one knows what the future holds, but companies can keep aksing critical long questions.

Our advice to you is to keep your employees safe in work from home environment. The one clear thing is that without employees, you don’t have a company. That said, keep your employees and your company safe during a covid-19 crisis.

Managing Uncertainty

The key to managing uncertainty is adequate preparation and writing a comprehensive continuity plan. The company should get ready to react quickly as the economy changes. That alone makes a big difference for growth-stage companies. Done right, a company can prosper and even emerge stronger. According to Pitchbook, the point is to ensure self-sustainability if future capital raises don’t come to fruition.

Moreover, transparency is incredibly important to your employees. Well-prepared companies can potentially thrive in a downturn. For one, they can be more aggressive in acquiring struggling assets at a lower price and applying their own successful experience to transform those businesses. The opportunity for better-prepared organizations to take market share from struggling competitors is another means of strengthening a company’s position during a downturn.

In the end, don’t wait to take the necessary steps to overcome the crisis. Once this is over, you might become stronger and more prepared for the future. True leaders will learn from this and keep working together with their employees, even after the emergency time is over.

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What is new normal after COVID-19?

After China re-opened for business, uncertainty remains unsolved for companies. However, the prediction for the future looks a lot like the past economic crisis. Are we ever going back to normal after COVID-19? All in all, the answer is not that simple, for many businesses, this will become a new way of operating.

Coronavirus outbreak caused another level of doing business. The question is what is the new normal? Will this mean that people could not go to the shops without keeping the social distance, or will the coronavirus fear fade away. The reality is that consumer behavior is changing fundamentally, and so much else is changing, and the question is, “will it go back?”

If you think about a lot of what’s happened in the last few years, some of it’s going to be reinforced. The remote work has now been given a boost, and it’s hard to see that it will go back to where it was before.

What is the meaning of the new normal?

In the context of COVID-19, the new normal means the prospect of slow growth for many years. In addition, the COVID-19 pandemic has rapidly changed how we live, work, and learn. Managing in this new era will be different – and much will rest on how willing CEOs and their executive teams are to stray from their comfort zone and challenge their traditional ways.

As we put out statements about impacts on supply chains and demand, we don’t mention people. In reality, we’re experiencing a human health emergency. Moreover, companies and governments can do better than just to talk about profits and the market.

As a company leader, ask yourself “What’s the best thing you can do for your employees?”

To go virtual is the easiest for some organizations, but it gets more complicated for jobs that can’t go remotely. Can companies provide some emergency pay for workers as the economy slows or at least ask for government grants and loans to do so?

Ecommerce boom during COVID-19

A lot of companies are seeking to find a way to maintain business online. The one sector that we see keeps recruiting is retail business and warehouses. They still need people as the demand for food products is rising.

On the other hand, coronavirus will change the way products reach consumers. The more emphasis will be on safety and control, rather than efficiency.

E-commerce has boomed as consumers worldwide practice social distancing and self-quarantining (by choice or by government mandate), leading e-tailers and marketplaces like Amazon to amp up their supply chains to cope with increased demand. There are many examples of successful businesses that started an e-commerce website online.

The most important thing about moving your business online and having an e-commerce website is knowing how to scale your product. Selling online products or services is just one of the solutions to your business strategy.

Meanwhile, some retailers are witnessing an increase in online demand of between 150 and 500 percent. There is no better option than to start the digitalization process for your business. In these uncertain times, no one can predict how long will COVID-19 last and what are the consequences. You should keep on doing what you know the best and try to adapt to a new normal.

Establish a continuity plan

Moreover, according to Greg Milligan at Harney Partners, as a business owner, you need to establish your business cash position. Furthermore, an integrated profit and loss model for scenario testing is necessary for longer-term planning. Developing various scenarios can help you understand and estimate the impacts on your business and develop a continuity plan around the scenario.

A business continuity plan is the outline of procedures to prevent damage, maintain productivity, and recover in the event of a national emergency or disaster.

To understand what continuity plan looks like, consider interviewing other colleagues and ask for advice from professionals. On the other hand, business hibernation can be a better strategic option to conserve cash and position your business for a return to the market when macroeconomic conditions allow. Anticipate viable adjustments to make as you settle into the new normal, post coronavirus world.

During any time of crisis, open communication on a predictable schedule is essential to a successful outcome. Your employees or stakeholders deserve accurate and timely information about your business.

How do you write a continuity plan?

Every business needs a plan to maintain business continuity. Even if it’s a small business, you need to effectively have a plan when disaster strikes to avoid business disruption.

Many people think a disaster recovery plan is the same as a business continuity plan. However, a DR plan focuses mainly on restoring IT infrastructure and operations after a crisis. It’s just one part of a complete business continuity plan, as a continuity plan looks at the continuity of the entire organization.

Because restoring IT is critical for most companies, numerous disaster recovery solutions are available. You can rely on IT to implement those solutions. But what about the rest of your business functions? Your company’s future depends on your people and processes.

If you are able to handle any incident effectively, this will have a positive effect on your company’s reputation. Besides, this can have a positive impact on your market value and it can increase customer confidence.

If your organization doesn’t have a continuity plan in place, start by assessing your business process. Determine which areas are vulnerable, and the potential losses if those processes go down for a day, a few days or a week.

Next, develop a plan. This involves six general steps:

Identify the scope of the plan.

Identify key business areas.

Identify critical functions.

Identify dependencies between various business areas and functions.

Determine acceptable downtime for each critical function.

Create a plan to maintain operations.

You start with testing your business continuity plan and understand if it works. However, controlled testing is a more comfortable way to find out what are the gaps.

How to test your continuity plan?

Many organizations test a business continuity plan two to four times a year. The schedule depends on your type of organization, the amount of turnover of key personnel, and the number of business processes. It also depends on IT changes that have occurred since the last round of testing. Standard tests include table-top exercises, structured walk-throughs, and simulations.

A table-top exercise usually occurs in a conference room with the team reading the plan and finding possible gaps. In a structured walk-through, each team member walks through his or her elements of the plan in detail to identify gaps.

In a structured walk-through, each team member walks through his or her elements of the plan in detail to identify gaps. In the end, there is a disaster simulation testing that is quite involved and performed annually.

For this test, create an environment that will reflect an actual disaster incident. The purpose of the test is to find out if you can carry out key business functions during the crisis.

In the end, make sure to review the business continuity plan in the future. As new technologies evolve, the plan needs to get renewed and updated.

We’re all in this together

One of the lessons we’ve learned from countries that are ahead in terms of dealing with this is that it’s not so easy to bring a business back if you haven’t got employees. We must understand that we’re all connected. The pendulum has been swinging in recent years to an “every person for themselves” attitude. Pure nationalism is honestly dangerous in the face of borderless issues like climate change, resource overuse, and, yes, pandemics. 

There are overlaps and dependencies between all our biggest issues. As the planet warms, the seasons will lengthen and geographic ranges will expand for many dangerous diseases. When we talked about the importance of incorporating ESG into your investment strategy, we emphasized environmental concerns in the world.

To sum up, we don’t know yet how the new reality will look like. What we know is that companies should learn how to adapt to the new way of work online. There are numerous ways you can move your business online. That way, your company will adapt quickly and be ready for the time things start to pick up.

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