In the turbulent waters of today’s business landscape, the resilience of a company’s board of directors is often tested by unforeseen crises. From global pandemics to economic downturns, the ability to navigate these storms with agility and foresight is paramount.
Experts concede that optimising crisis management and business continuity planning helps to fortify board resilience. With the right strategic insights, boards can steer their organisations through adversity and emerge stronger on the other side.
According to PWC in its publication, “The Critical Role of Internal Audit – Business Continuity and Crisis Management,” August 2, 2023, “business continuity refers to a company’s ability to maintain its essential functions and to continue to deliver products or services during or following a crisis, thus minimising the potentially adverse impacts on stakeholders and operations. Crisis management is closely intertwined with this and relates to the process of responding to and recovering from a crisis effectively. A well-designed crisis management plan is an integral part of an organisation’s overall business continuity strategy.”
Investopedia notes that crisis management refers to the identification of a threat to an organisation and its stakeholders in order to mount an effective response to it.
Take the COVID-19 Pandemic. The onset of the COVID-19 pandemic in early 2020 blindsided businesses worldwide. As governments closed borders and shut down the economy, boards were forced to swiftly adapt to remote work setups, supply chain disruptions, and volatile market conditions. Companies with robust crisis management protocols in place, such as Amazon and Microsoft, demonstrated resilience by pivoting operations, prioritising employee safety, and innovating new solutions to meet changing consumer needs.
In Nigeria, companies such as Polaris Bank, Dangote and Cadbury displayed resilience by swiftly implementing remote work policies, enhancing digital capabilities, and prioritising employee safety through stringent health protocols. Boards played a pivotal role in guiding strategic decision-making, ensuring business continuity, and fostering innovation to adapt to rapidly evolving circumstances.
Consider also the security challenges that were prevalent in the Niger Delta in the recent past. These security challenges, including militancy, oil theft, and kidnapping for ransom, posed significant threats to businesses operating in the Niger Delta region. Oil and gas companies like Shell Nigeria and TotalEnergies demonstrated resilience by collaborating with local communities, investing in security infrastructure, and diversifying operations to mitigate risks and ensure continuity of production in the face of security threats.
Security challenges can equally be high-profile cybersecurity breaches, such as the ransomware attack on Colonial Pipeline in the US in 2021. Following the ransomware attack, the Guardian reported that the firm was forced to ‘shut down 5,500 miles of pipeline, which carries 45 per cent of the US east coast’s fuel supplies and travels through 14 southern and eastern US states, after the breach of its computer networks.’
With panic buying, fuel scarcity sprang up across some states with long queues at filling stations. The Financial Times later reported that Colonial Pipeline paid a $5m ransom in bitcoin.
Surfshark, a cybersecurity firm, reported that data breach incidences in Nigeria increased by 64 per cent in Q1 of 2023, reaching 82,000 cases, up from 50,000 recorded in Q4 2022.
The colonial incident underscored the importance of proactive crisis preparedness. Boards that prioritise security risk assessments, whether physical or cyber, invest in advanced threat detection technologies and establish clear incident response protocols to mitigate the impact of security threats, safeguard sensitive data and preserve both reputation and trust.
In some instances, there may be incidents of natural disasters. In many parts of the world, they have to deal with hurricanes, earthquakes, and other natural disasters that can wreak havoc on businesses, disrupting supply chains, damaging infrastructure, and jeopardising continuity of operations.
Flooding is easily the most common and recurring disaster in Nigeria. While damage and losses recorded during the 2012 flood disaster were severe, the 2022 floods, which were on a multidimensional scale, had more devastating effects. The 2022 floods displaced over 1.4 million people, killed over 603 people, and injured more than 2,400 people. It left about 82,035 houses and 332,327 hectares of land damaged (Wikipedia).
Organisations like MTN Nigeria demonstrated resilience by leveraging partnerships, diversifying supplier networks, and implementing robust disaster recovery plans to curtail downtime and ensure swift recovery in the face of adversity.
Recommended reading: Surviving in an uncertain business world
What actionable steps must boards now take to improve resilience?
Firstly, boards should conduct comprehensive risk assessments to identify potential threats and vulnerabilities. By developing scenario-based contingency plans, boards can anticipate and mitigate the impact of crises on their organisations, ensuring timely and effective response strategies. This will promote and establish a culture of agile decision-making.
Secondly, transparent communication with stakeholders, including employees, customers, investors, and regulators, is paramount during times of crisis. Boards should prioritise stakeholder engagement, providing regular updates and reassurance to build trust and confidence in the organisation’s ability to weather the storm. It should also solicit feedback to address concerns and build resilience through collaboration and collective action.
In addition, embracing digital technologies and innovation can enhance organisational resilience in the face of crisis. Boards should invest in robust IT infrastructure, cybersecurity measures, and digital transformation initiatives to facilitate remote work, secure data management, and agile decision-making, enabling continuity of operations in challenging environments.
Furthermore, given the incredible rate at which diseases spread due to global connections, boards should prioritise investment in health and safety measures to protect employees and ensure business continuity. This includes implementing robust health protocols, providing access to healthcare resources, and promoting employee wellness initiatives to safeguard workforce resilience.
The ability of a board to optimise crisis management and business continuity planning is vital for fostering organisational resilience in an increasingly volatile world. By learning from past experiences, embracing proactive risk mitigation strategies, and fostering a culture of innovation and adaptability, boards can effectively navigate crises, protect shareholder value, and position their companies for long-term success.
As stewards of their organisations, boards must remain vigilant, agile, and forward-thinking, continuously striving to enhance resilience and ensure a brighter, more resilient future for all stakeholders.
Chioma Mordi
About The Society for Corporate Governance Nigeria
SCGN is a registered not-for-profit organisation committed to the development of corporate governance best practices in Nigeria. Today, the Society is the foremost institution committed to the development and promotion of corporate governance best practices in Nigeria. for more information, please email info@corpgovernigeria.org
Click SCGN-CALENDAR-22.pdf (corpgovnigeria.org) for our 2024 training calender
