The Journal The Authority on Global Business in Japan

While we headed into 2020 with optimism for business, the year started with the rapid spread of the novel coronavirus. As Covid-19 made its way around the globe, the World Health Organization declared a pandemic on March 11.

Some sovereign states responded with measures to curb the outbreak. These have ranged from travel bans, mass quarantine, and lockdowns of entire cities. These steps have affected businesses in many ways. Some have seen a decline in demand for their goods and services. Others have strug­gled with an increase in demand that they can no longer meet.

Industries adversely affected include manufacturing, tourism, leisure, and aviation. Hospitals and traders of masks, sanitary products, and other personal protective equipment could not accommodate the sudden increase in the demand for their goods and services.

RETHINK
The pandemic has disrupted operations to such an extent that many companies are reconsid­ering their business continuity and sustainability plans.

Were companies prepared for this pandemic? Mostly, they were not. According to a survey by global research and advisory company Gartner, Inc., only 12 percent of more than 1,500 respon­­dents believe their businesses were highly prepared for the impact of coronavirus, and just two percent think their business can continue as normal. This highlights the huge range of businesses that could be affected by the outbreak.

For the professional services industry, one of the measures that is commonly in place is telecommuting. Accounting and law firms can easily adopt a telecommuting policy, because accountants and lawyers have laptops that give them the flexibility to work anywhere.

Some companies, however, have had a hard time imple­menting remote work arrangements—especially business process outsourcing companies that rely on desktop com­puters as workstations. Some rushed to acquire laptops to continue operations, a move that entails additional costs. Had the pandemic been considered in the business conti­nuity plan, such a need may have been avoided.

To prepare for the next pandemic or disaster, it is important that companies revisit their plans. A good business continuity plan provides a comprehensive guide in a worst-case scenario and should at least include:

Enumeration of resources and how they can be utilized in relation to the company’s action plans
Impact analysis which enumerates possible threats and their corresponding impact on operations
Benchmarks that provide resilience insights, normally including yields such as the maximum tolerable period of disruption, maximum tolerable downtime, and others that would provide relevant information
Assessment of preparedness
How core operations can continue while the company is undertaking business continuity measures

Considering the going concern assumption of the company, it is favorable to have a business continuity plan as part of the risk man­agement process. In times of adversity, a company that has a good business continuity plan will still enjoy profits, while those that don’t plummet into bankruptcy.




Harold Young
is a secondee to the Tokyo office of Grant Thornton Japan. He previously worked at Punongbayan & Araullo GT in the Philippines, where he was involved in financial statements audits for the real estate, manufacturing, and business process outsourcing industries.

 

For more information, please contact Grant Thornton Japan at info@jp.gt.com

In times of adversity, a company that has a good business continuity plan will still enjoy profits, while those that don’t plummet into bankruptcy.