Tuesday 30 March 2021 8:00 am

Future pandemics? Stress tests and preparedness plans must be core part of businesses' strategy

Lord Toby Harris is chair of the National Preparedness Commission

No one in the business world saw Covid-19 coming. There had, of course, been warnings about pandemics.  Some businesses were better prepared than others, but very few imagined it would really happen or what it would be like in practice.  

But now we do know and we have seen the impact on people’s health, on the economy and on society. So, in the future there will be no excuses for being unprepared.  However, the next crisis will not be the same as this one, and we all need to be ready for the unexpected.

In the last 12 months, businesses have had to reinvent themselves in ways few would have thought possible.  Entire workforces have been sent home. Bricks and mortar companies have had to shift online and create new ways of selling their products and services.  A few organisations have thrived, but many have struggled and some have not survived.

Hindsight is a wonderful thing.  It is easy to attribute blame and focus on what could have been avoided or managed more effectively.

However, it is more useful to look ahead and learn from the experiences of the last year. Cranfield University, in partnership with the National Preparedness Commission, which I chair, and Deloitte, have today published landmark research that looks at how businesses responded to Covid-19, so as to identify how businesses can make themselves more resilient to future challenges.

Researchers spoke to over fifty senior leaders of FTSE 100 companies, multi-nationals and major infrastructure organisations – many of them household names.  These in-depth interviews, roundtables and focus groups found that most companies – at best – struggled through the pandemic and were ill-prepared for the disruption it caused.

Those that coped best were the ones that already understood what was most important to their customers and therefore what were the most essential things to continue to deliver as the crisis unfolded.  These businesses had examined in advance alternative ways of delivering those services that mattered the most.  They had developed the ability to cope under pressure no matter what. 

The key was to have stress-tested the organisation for possible disruption whatever the type of threat. Normal operation is not possible in a pandemic, nor in a major cyberattack, a flood or a prolonged power failure.  The organisation has to be able to adapt quickly and continue to deliver what is most important.

This was the lesson learned by the financial services sector from the financial crisis of 2008. The regulatory framework now pushes for better resilience across the sector, where financial impact thresholds are set and stress-tested against severe, but plausible, scenarios. This approach, now applied to all aspects of the sector’s operations, has meant that financial services have become much more mature in their approach to resilience. This operational preparedness allowed them to cope with the disruption caused by the pandemic, but also adapt at speed to new and essential requirements, such as the disbursement of government backed loans.

The truth is that this sort of approach is now needed across all sectors.  Every business needs to strengthen its resilience – particularly as the threat landscape is becoming ever more complex and volatile.  The latest National Risk Register issued by the Government a few weeks ago maps 38 major risks facing the country, including environmental hazards, major accidents, malicious attacks, risks arising overseas, and animal and human diseases.  And then there are the long-term challenges as we respond to climate change and the net zero agenda, the impact of demographic change and inequalities at home and around the world.

Dreadful though the experience of Covid-19 has been, it has been a wake-up call to business leaders and to Whitehall to act strategically to strengthen resilience and to embrace ‘futures thinking’.  This means not being fixated on individual threats, but instead look at how we can develop the flexibility and agility to cope with the unimaginable and the unexpected.  Our focus must be on what matters most – whether it is to our customers or society at large – and how our preparedness can ensure that those essentials are protected.

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