With the spread of the COVID-19 pandemic, the need for stress-testing in businesses has become more apparent than ever. It has become clear that planning for natural disasters and epidemics is stressful. According to a Gartner State of the ERM Function Survey, 78% of the respondents had a specific response plan for cyber incidents. 76% of them had strategies for dealing with explosions and fires.
However, many of them are unprepared to deal with the COVID-19. Over 40% of all businesses may never reopen after a significant natural disaster.
Economic downturns can reveal the most significant shortcomings of a business strategy. Fortunately, you can take a look at your weak points and prepare to deal with them. With a proper stress test, you can assess the operation of your system functions under exceptional or unexpected circumstances. You can identify weaknesses and inefficiencies in your strategy and implementation.
Some of the most important questions to consider when evaluating your strategy include:
1. Who Is Your Main Customer?
Think about your primary customer. Choosing an essential customer for your business is the most crucial decision. It determines the number of resources you allocate and how you assign them. Even though your primary customers may change over time, you should always know them.
2. Do Your Values Consider the Needs of Employees, Shareholders, and Customers?
Thinks about your core values and how they meet the needs of your employees, customers, and shareholders. Having a good value statement is not enough. Your core values are what matter. In some companies, shareholders are the most important. In others, customers and employees are the priority. The choice depends on what is essential for your business.
3. How Do You Generate Creative Tension?
All businesses should come up with strategies to take advantage of external market pressure. Market tension can motivate your employees to get out of their comfort zone and compete. Bigger businesses often have lots of insulation, so generating creative tension is very important.
A BCM program can protect your business from the impact of both internal and external volatility. It allows your business to meet its objectives despite disruptions. A proper BCM program should address pressing issues such as: the workforce, the response and resilience of your IT operations, and the supply chain. It should cover four main components.
1. The Recovery and Continuity of Your Business
You should have a plan to recover from disruption after resilience. The program should cover all the essential business processes. Focus on promoting resilience in your workforce and recovering the work area.
2. Crisis and Emergency Management
Your business should have plans to continue coordination and communication in times of emergency. Plan to establish authority and minimize fear. With proper crisis and emergency management, you can limit damage and uncertainty.
3. Supplier Risk and Contingency Management
This factor addresses the risks that may arise from working with external parties in the delivery of goods and services. It addresses what your business may do to continue its regular operation if suppliers face business disruption.
4. IT Disaster Recovery & Service Continuity Management
Your business should plan to minimize the impact of downtime as much as possible. This is especially important for your IT systems. Both scheduled and unscheduled incidents could lead to significant losses.
The benefits of stress-testing your business cannot be overstated. You get the chance to analyze the critical aspects of your business and identify weaknesses. Stress-testing allows your business to react to sudden changes and disruptions. If you ignore it, your business may not survive the next disaster.