Operating through volatility: Five pillars to manage business continuity

The human impacts of the conflict are profound and multi-faceted. Since February 24, a staggering total of eight million people have become displaced¹⁸ — with 3.4 million moving to Poland alone.¹⁹ Taking action can help those in need, while creating goodwill.

For companies, their people are the lifeblood of their organization, and are often the face of the company to customers, partners and the community at large. By establishing and maintaining a consistent method of communicating with their people, leaders can foster transparency and create a sense of stability with employees. This might include intentional and open lines of communication around issues such as separation and creating ways for employees to help. Areas of focus and actions to consider include:

• Employee care and consideration: Create initiatives that aid employees affected by the conflict. Consider the different types of support employees may require depending on their location, role and how they are impacted by the current situation. Create opportunities for employees to help as well, whether that means providing a way for them to make charitable donations or to support pro bono work related to the crisis.
• Communications: Create transparent communications to employees, especially those affected directly by the conflict. And with early and initial communications likely already established, continue to put a “people first” lens on these communications to ensure all people are supported over time, especially given the ongoing war and resulting direct or indirect impacts to employees.
• Separation/shutdown plans: Build frameworks to ensure separation and shutdown events are consistent and fair to employees across regions.
• Workforce location/sizing /cost: Re-evaluate where work takes place across your global footprint. Find the right cost models and workforce sizes to drive value at lowest risk.
• Recruiting and employment: There may be opportunities to employ and train displaced individuals due to geopolitical conflict.

Nearly all C-suite leaders acknowledge that geopolitical conditions and related economic conflict risks are impacting their company’s current strategy and investment decisions.²⁰ More than 80% of them say these decisions are also impacted by the uncertainties of other major disruptions including the continuing pandemic and its fallout, cybersecurity risks, supply chain challenges and inflationary pressures.²¹ Faced with the war and its immediate and longer-term impacts, evaluating key dimensions of the business and strategy will enable leaders to gain visibility and insight into areas around risk exposure, financial flexibility and overall resiliency. Areas of focus and actions to consider include:

• Visibility into exposure: Determine your exposure in impacted countries as it relates to critical areas of business, such as customers, assets, tools, investors and financials. This visibility is essential to creating mitigation plans. Data and scenario planning can be used to help determine this risk.
• Planning and execution: Assess whether to exit or remain in a region and create plans on how to:
• Evaluate the mid to long term implications of shutting down or selling the business
• Communicate and articulate the rationale for these decisions internally and externally
• Manage timelines and impacts from these decisions
• Agility and reactivity: Consider how to drive process agility to respond to volatility in areas such as:
• Inflationary pressure
• Annual operations planning deviation
• Intelligent revenue growth management/pricing
• Foreign exchange fluctuations
• Shared service management
• Real estate footprint
• Employee retention
• Global resiliency: Build a financial strategy for long-term growth that accounts for changing demographics and geographies, policy shifts that may open or limit access to profit pools, and operational considerations like safe harbors and partner relations.
• Shareholder value: Aim to ensure strong profitability despite disruption. This may require reducing operating costs. It’s critical to make decisions that deliver positive financial value to shareholders in the short term as they, too, navigate crises.

When planning for continuity, hedging against increased cyberattacks is not a one-time consideration. Recent Accenture research found that companies faced an average of 270 attacks in 2021, which was a 31% increase over 2020.²² And since the start of the war, there’s been an exponential increase in cyberthreat activity.²³ Impacts to the business are vast, with the costs of a breach having the potential to extend for years and include expenses such as lost data, customers and revenue.²⁴ Areas of focus and actions to consider include:

• Cyberattacks: Ensure your systems can withstand cyberattacks and retaliation for decisions related to exiting or continuing operations. Other considerations:
• Employee lockouts from systems
• Maintenance plans during shutdown
• Tactical planning: Determine steps to protect or disable systems, permanently or temporarily, for regions or groups of employees as necessary.
• Intellectual property: Establish protocols and security to protect intellectual property.
• Data: Secure data in affected countries and align on how to treat data from affected customers, partners, etc., allowing for geographic restrictions as needed.
• Technology costs: Identify areas of energy and resource intensity in technology operations and data centers. Plan your transition to longer-term, lower-cost, more price-stable sources of energy, such as renewables.
• System availability: Ensure your systems are running and hardened in growth regions to support the business where needed.

According to recent estimates, the economic losses due to supply chain disruptions in the Eurozone could total €112.7 billion, or 0.9% of GDP.²⁵ Over time, the cost of supply chain disruption in the Eurozone from 2022-2023 could total €242 billion in an ongoing war scenario or €920 billion in a protracted scenario.²⁶ Identifying and mitigating supply risks is critical to operations. You may need to revise plans and forecasts to alleviate cost pressures. Areas of focus and actions to consider include:

• Sources of supply: Determine which suppliers are impacted by the conflict or by your decisions to exit. Which alternative sources are now practical? Identify them and pivot your operations.
• Inflation and costs: Adjust plans and forecasts to reflect new demand and supply realities. Consider the costs of supply, operations and exit transitions.
• Physical assets: Determine steps to retrieve disable, dispose of or abandon physical assets in impacted countries.
• Sustaining operations in the interim: Plan to support customers and their logistics and fulfillment operations across the transition period, from decision point to full exit. Ensuring the right mix of “structural” and “dynamic” visibility into supply chains is important to enhance resilience and supply chain performance; a digital twin solution can help sustain operations throughout.

Engaging with your ecosystem is an important but often overlooked element of continuity planning and risk mitigation. Fewer than 40% of executives involved more external (suppliers, partners, customers, etc.) and internal stakeholders in these efforts.²⁷ Conversely, nearly 80% of companies with the most mature operations expected to expand their ecosystem strategies,²⁸ thus creating the benefits of greater alignment during both normal well as crisis operations. More broadly, aligning your customers and partners on values and decisions and focusing on the broader ecosystem responsibility is a foundational step. Operating outside these values can create reputational risk or result in the loss of critical ecosystem partners. Areas of focus and actions to consider include:

• Proactive ecosystem engagement: Hold transparent discussions with key customers and partners about the situation and operational decisions, including exits, pricing, commercial strategies and more.
• Dealing with disparate strategies: Identify customers (specifically in business-to-business relationships) and partners who decide to operate differently in impacted regions. For instance, Company A may be exiting the region, while Company B is staying. The ecosystem must decide how to move forward, preserving or ending relationships as necessary.
• Rebuilding our societies: Consider your obligation to rebuild the societies in which you and your people work and live. In a world focused on societal impact, there is a need to rebuild your surrounding ecosystems and demonstrate goodwill.
• Employee engagement: Adopt a holistic and broad-ranging view of employee and ecosystem engagement through a sustainable leadership and organization program.