The following is an excerpt from our Navigating and Looking Ahead in Times of Crisis: Questions for the (hybrid) Boardroom publication, which gives directors and corporate leaders valuable insight into key risk management considerations. Read the full publication.

In the wake of the COVID-19 pandemic, the outbreak of the war in Ukraine triggered a fresh series of crises and disruptions for boards and corporate leaders to address. While the immediate risk management focus is on navigating the most pressing, short-term priorities, it’s critical to take time to look back on lessons learned from the crisis in order for companies to emerge stronger, better and more resilient in the long term.

Asking the right questions and astute planning are critical. This article, while not meant to be exhaustive, is a sample of key risk management topics and issues with respect to fundamental long-term challenges.

Do Not Waste a Good Crisis: Looking Back to Plan Ahead

There are lessons to be learned in the wake of any crisis. To make sure you make the most of the opportunity, here are some issues to consider:

• In responding to the impact of the crisis, what was done well and what has been managed poorly by our organization? What could have been done differently? What went right? What went wrong?
• How did the crisis management and business continuity plans respond and adapt to external factors such as any competitor or coordinated industry-wide responses? What can be improved?
• How did our board perform? Did we make the right decisions? Did we have the right information to make these decisions?
• Did we properly engage with our stakeholders and with the financial markets? Do we need to change how we engage with them?
• How did our management perform? Did the crisis reveal weaknesses or succession plan flaws we must address?
• Do we have a good understanding of how our markets and customers have changed? Are there new risks and new opportunities that have evolved as a result of the crisis? What about our competitors? Where are they?
• How healthy is our company culture? How much did it suffer and what needs to be done to restore or improve it?
• Are there lessons to be learned in terms of the speed and efficacy of management decisions made in the pandemic context which can serve as an inspiration with regard to our ability to be faster and more efficient in matters not related to the pandemic?

Fundamental Strategic Issues

Recent events have notably reaffirmed the position of the US as an indispensable leader of the free world as the world is redefining itself by new political blocks. We have entered a period of massive government intervention, through “industrial policies” motivated by the push back against China and the imperatives of climate change.

• Do we have a clear understanding of the impact of these global trends and which ones will have an impact on our business?
• What are the fundamental changes that have been brought to bear on the investment thesis that drives our business and how must the basic strategy be adjusted or rethought?
• Has the crisis presented any opportunities or challenges unique to our industry or organization and how can we leverage or overcome these? Must we explore strategic acquisitions or divestitures?
• What are the long-term impacts of the global rises in energy costs for our business, our industry and our competitors? Are there new challenges or opportunities to be identified? How can we cope with the impacts of these increased costs in the future?
• What are the strategic opportunities of onshoring? Can our business benefit from onshoring from a cost, regulation, supply chain or political perspective? What are the potential long-term effects of the new protectionism measures around the world on our business, including with regard to the Inflation Reduction Act in the United States and similar upcoming legislation in Europe? Have we witnessed trends of onshoring in our industry or from our competitors and how will this impact our business in the long term?
• Should we consider robotics or automation as a long-term solution for the labour-shortage?

Stakeholder Relations and Licence to Operate

In distrusting times, a business’s capacity to strengthen and generate trust will ensure its social licence to operate:

• Do we have a good sense of how we are perceived by our stakeholders and whether our license to operate is robust or eroding?
• What are our shareholders focused on? Has their focus changed and does it align with our strategy and business plan? How are we communicating our ongoing commitment to the long-term viability of our organization and its potential to create sustained value?
• Are we prepared to face an accelerated focus on ESG and energy transition? Do we have adequate information, tools and procedures to “walk the talk”?
• Are we or our operations impacted by indigenous reconciliation? Do we have the right level of engagement and strategy to partner with First Nations in this rapidly shifting environment?
• Will our shareholders be supportive of our organization helping to 'share the burden' and support the wider community rather than focussing on pure corporate and shareholder profits?
• As we reimagine our appetite for risk, capital allocation, processes and supply chains, will our stakeholders support the potentially resulting new cost structures? How will we maintain competitiveness as we reshape our business?
• Are all key stakeholders, including regulators, adequately updated on any significant changes to our organization?

Unlike the financial crisis of 2009, the current crisis and economic uncertainty were triggered by the pandemic and more recently by an acceleration of the shifting geopolitical climate. Boards need to understand these shifts, foreseeable trends and the impact they will have on markets and stakeholders in order to set their organizations up for success moving forward.

Our Strategic Advisors Group assists clients with strategic problems that arise at the intersection of commercial mandates and government policy or regulations. We bring together experienced legal practitioners with seasoned professionals who have significant public service, political, and issues management experience at both the federal and provincial levels of government to ensure you receive holistic, pragmatic advice that will help you gain and maintain a competitive edge. Please reach out to any of the authors if you have any questions.