Business & Economy

Thursday, 11 June 2020 10:54

Decision making crucial to navigating through times of uncertainty

Written by 

Opinion by Andrea Guffanti of risk consultants and insurance brokerage, Aon

The impact of COVID-19 is unprecedented. Most countries were not ready to deal with an event of this magnitude and most businesses could not have anticipated the social and economic upheaval that the pandemic has inflicted.

In 2019’s Aon Global Risk Management Survey, the number one risk according to Risk Managers globally was seen as the risk of an economic slowdown to their business, closely followed by damage to reputation/brand and accelerated rates of change in market factors. Pandemic risk rated a lowly 60th place. How that risk perception will have changed.

No going back

As our Aon report Decision Making in Complex & Volatile Times: Keys to Managing COVID-19finds, “For many business leaders COVID-19 will be the most disruptive, world-changing event in living memory.” One thing is clear from this pandemic: there will be no going back to how the world was before COVID-19. For example, we’re seeing fundamental changes in consumer behaviour that are likely to continue long after the global health emergency ends.

Businesses will have to adapt to meet the changed demand from their buyers, but will also have to take a fresh look at how they organise themselves, how their workforce operates, and at their critical vulnerabilities such as the supply chains that have been found wanting during this crisis.

Dealing effectively with this disruption and ongoing uncertainty means that decision-making has become more important than ever for business leaders. But it must be decision-making firmly rooted in genuine insight, knowledge and a structured response framework that will, as Aon’s report says, “guide decision-making and shore up vulnerabilities while identifying opportunities to make the organisation more agile and resilient for the future.”

A framework approach

One approach is to use Aon’s Black Swan Decision Framework which can help leaders process the information they receive and make the decisions that need to in a crisis. Containing several components such as the need for first steps like the creation of a crisis team, to the undertaking of regular situation assessments, and the development of a problem-solving approach, this framework also contains some key advice around the critical nature of clear, concise and transparent communication to meet the needs of an organisation’s stakeholders from employees to clients, suppliers and the regulator. As a leader, communication is more important now than ever.

React and respond, recover and reshape

With the Black Swan Decision Framework in place, businesses can implement a Crisis Management Model to provide leaders with the structure and flexibility they need to respond effectively. This includes three distinct timeframes: react and respond; recover; and, reshape. The reshape stage in particular, reflects the need for leaders to get their businesses ready for a different future than they may have been expecting pre-pandemic.

The final element drawn from Aon’sDecision Making in Complex & Volatile Times report are considerations around Business Impact Actions and Priorities. This stage looks at the five key areas of: protecting people and assets; protecting the balance sheet; maintaining or increasing revenue; managing costs, and revisiting business strategy. By focusing on the insights and data from each of these areas, leaders and their teams will ultimately be in a much better position to make the right decisions.

Moving back towards growth

It’s that ability to get the decision-making right that will be critical both now and in the longer term. Leadership, communication and action are vital, and these frameworks will help give organisations and businesses the best chance of both getting through the immediate crisis and moving beyond the pandemic by protecting their people, assets, and balance sheets, and ultimately thinking about how they can grow the business once again.

Read the full report and find out how Aon’s Decision Making in Complex & Volatile Times: Keys to Managing COVID-19 can help your business.

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