Crisis guidelines

The coronavirus (COVID-19) has gripped the world and poses new business challenges for companies and their decision makers. Thinking in terms of scenarios and an integrated emergency and crisis management are essential.

What must be done now?

In the face of such a surprising and unprecedented situation, management must quickly change its focus in order to ensure the company’s ability to continue as a going concern. The focus is on protecting employees, the value chain and liquidity.

It is crucial to have a realistic view of the level of threat in crisis management. In order to maintain this, information must be obtained externally and internally on an ongoing basis and, above all, in a structured manner. It is worth allocating sufficient resources to this task.

Thinking in scenarios, a multidisciplinary approach and the development of different options for action for each problem are crucial in business continuity planning and emergency and crisis management. Prompt monitoring also plays a decisive role here in order to be able to act quickly, effectively and in particular at an early stage if the situation deteriorates.

What impact can the coronavirus have on your company?

The way businesses, policymakers and society deal with the pandemic can have a variety of effects. In our view, the following areas are primarily affected: corporate governance, finance, employees, supply chain and logistics, production, customers and customer service, legal and communication.

The following points should be taken into account (list not exhaustive):

  • In addition to management with overall responsibility and management with operational responsibility, we recommend that a multidisciplinary crisis team be set up to support management.
  • The heavy additional burden on company management must be taken into account by making extra substitution arrangements and systematic work policies.
  • Clear and timely communication and responsibilities are essential to allow employees to focus on maintaining the core business.
  • Introduce reporting structures so that work can be carried out effectively and efficiently even while working at home.

  • This requires the ongoing analysis of short-term liquidity and early identification of potential bottlenecks by implementing rolling short-term liquidity planning (known as 13-week liquidity planning)
  • Identify and implement liquidity improvement measures
    • Apply for government funding (further information can be found here)
    • Apply for deferral of tax (further information can be found here)
    • Make cost reductions, in particular apply for short-time working allowance (further information can be found here)
    • Increase credit limits
    • Optimise net assets
  • Update medium-term planning on an ongoing basis, conduct scenario and sensitivity analyses (known as stress tests) of the current budget, apply for the correct amount of subsidies, among other options (further information can be found here)
  • Constantly review and identify restructuring measures and implement them on a staggered basis
  • Check maturities of financial obligations and monitor financial covenants, keep financial creditors updated (waivers, standstill, etc.)
  • Monitor key operating figures as early warning indicators (e.g. order backlog, cancellations, capacity utilisation, etc.)

  • The health of employees is of utmost priority
  • Introduce working remotely and establish reporting structures
  • Assess and if necessary introduce short-time working (further information can be found here)

  • Analyse and perform root cause analysis of supply chain disruptions
  • Check status of suppliers and sub-suppliers
  • Check and prioritise all orders
  • Identify alternative suppliers
  • Define stabilisation measures

  • Analyse potential production downtimes
  • Update production planning
  • Check for potential production stops

  • Assess affected customer groups
  • Check customer responses in terms of different scenarios
  • Analyse pricing and, if applicable, introduce discounts and update methods of payment

  • Review supplier agreements, production orders, customer agreements, etc.
  • Check agreements for force majeure clause
  • Check management’s liability risks (further information can be found here)
  • Review and, if necessary, amend the general terms and conditions
  • Check insurance policies (e.g. epidemic insurance)
  • Ensure and review compliance with all labour and employment laws and instructions from the authorities

  • Keep employees informed in order to preserve a sense of calm
  • Prepare and carry out internal and external communication measures.
  • Introduce reporting structures so that work can be carried out effectively and efficiently even while working at home
  • Draw up communication concept for the event that there are disruptions to supply or production losses