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Building a resiliententerprise– Now, Nextand BeyondA framework for navigating COVID 19
April 2020
Building a resilient enterprise– Now, Next and BeyondPage 2
2
01A worldin crisis
Contents Shiftinggears
02Now, Nextand Beyond
03Navigatingthis crisis
04
Building a resilient enterprise– Now, Next and BeyondPage 3
“The world is facing the worst economic fallout since the great depression”- Kristalina Georgieva, IMF Chief
# Estimates based on multiple sources: Bloomberg, UNCTAD, WEF, WTO & ILO.
The Covid-19 pandemicand the subsequentlockdown has dealt asevere blow to analready-stressed globaleconomy
The suddenness,spread, and severity ofthe pandemic across theglobe has pushedcountries andinstitutions intouncharted territories
200+ countries,areas or territorieswith Covid-19 cases
3 b peopleunder lockdown or1/3rd of the world’s
population
Globalunemployment
levels at an alltime high
2-3%contraction of
global GDP
Simultaneous
double digit dipin global supply and
demand
170 countriesto experience negative
per capita incomegrowth in 2020-21
~2500+government
pronouncements tomanage the crisis
Significantdecline predictedfor global trade in
2020-21
Building a resilient enterprise– Now, Next and BeyondPage 4# Multiple sources: Oxford, Bloomberg, Reuters & RBI.
Significant dip in GDPgrowth while India
continues to be amongthe fastest growingeconomies globally
Substantial erosion ofinvestor wealth due toflight of foreign capital
Adverse impact on fiscaldeficit due to dual impact of
fiscal stimulus and lowerrevenue collections
Macroeconomic impact India’s response – economic recovery tocommence with graded relaxation of
lockdown from April 20th ► Travel and Tourism► Trading and logistics► Automotive► Construction and
Real estate► Energy
► Financial Services► Retail► Education► Healthcare
► Non-essential FMCG► IT services
► Pharmaceuticals► Essential FMCG► Online businesses► Telecom
Stringent national lockdownStringency Index (100=strictest)
100 90.595.2 71.4 66.7
Covid-19 will have significant implications for an already stressed economy
Current sectoral impact
Hig
hLo
wSe
veri
ty o
f Im
pact
~$ 2.9 trillionIndian
economy
Healthcare
Monetary
Industry
Fiscal
Economic stimulus ofINR 1.7 trillion
Food security measuresfor poor
Direct cash transfers
Nationallockdown
Govt. to bear employeeprovident fund
contributions
Extension of dates forfiling financial results
Accelerated payment ofgovernment dues to small
/ medium industries
CRR cut to release INR~1.4 trillion liquidity
Repo rate reduced tohistorical low of 4.4%
Moratorium on loanpayments
INR 150 billion allocated toaugment healthcare
Government-sponsoredinsurance cover for allhealthcare workers
600+ dedicated hospitals,100K+ isolation beds
Building a resilient enterprise– Now, Next and BeyondPage 5
GD
P
time
“V-shaped”
time
GD
P “See-Saw”
time
GD
P
“L-shaped”
► Contingent on a vaccine / effective treatment by Q2’20, and nil strain mutation
► Aided by government stimulus, pent-up demand unleashed
► World economies stage a recovery to pre-crisis levels
► Deeper and pervasive recession, followed by a slowerrecovery and likely deflation
► Higher public deficit levels due to stimulus programs
► Protracted weak demand and global value chain disruptions
► Higher capital outflows and currency depreciation
“New Normal”
Recoverywith upsand downs
Pessimistic scenario► Prolonged mobility restrictions reinforced due to lack of effective treatments
► Increased fiscal and inflationary pressures due to even higher stimulus programs
► Flight of capital and foreign exchange depreciation
► Personal, business and (potentially) sovereign defaults
The path to recovery for India: a prolonged “see-saw” shaped recovery looksmost likely, leading to a “new normal”
Markets
Industries
Societies
Most likely scenario
Optimistic scenario
Building a resilient enterprise– Now, Next and BeyondPage 6
6
01A worldin crisis
Contents Shiftinggears
02Now, Nextand Beyond
03Navigatingthis crisis
04
Building a resilient enterprise– Now, Next and BeyondPage 7
Or…
Companybehaviour
Socialimpact
Globalisation
Trends
Personalrelation-
ships
Work/life
Growth
Openness totechnology
Consump-tive
behavior
Solidarity
Environment
Interactionwith com-petitors
Interactionwith
suppliers
Interactionwith
businesspartners
Interactionwith
customers
From… To…
Back tonormal ?
Qualityeconomy
Currentnormal Interaction
withGovt
The “New Normal”- changing companies, markets and societies – may mark a shiftto a “Quality economy”
?
► Clean► Connectivity► Community► Creativity► Conscientious
Building a resilient enterprise– Now, Next and BeyondPage 8
“Quality economy“ - key drivers of the shift
Environment
Learnings from theinvoluntary positive
impact on theenvironment?
Will this createbusiness
opportunity?
Solidarity
Will social distancingbecome a norm ?
Will there be room forcharitable business
models?
Consumption
Will we consume moresustainably, having felt
scarcity for the firsttime in decades?
Technology
Will we embracetechnology as a meansto a resilient society?
Globalization
Will there beprotectionism?
Will we reduce businessand leisure travel?
Financing / Cash flows
Will fitness and health getprioritized?
Work/Life
Will we balance wealthaccretion with better
quality of life?
Are virtualheadquarters a viable
future?
Will there be variablecontracts with
partners/ suppliers?
Cost structures
How to plan with a greatersafety net?
How to strengthen workingcapital management?
How to diversify siteportfolio risk?
Will productionbe localized?
How to ensure continuity?
How to digitalize further?
Is this a significant shift insales channels?
Supply chain Demand
Building a resilient enterprise– Now, Next and BeyondPage 9
“Quality economy“ - stakeholder relationships are likely to get redefined
Employees
How to….
► drive engagementfor a virtualworkforce?
► reskill myworkforce?
► improve employeecare and financialwell being?
► measure effectiveperformanceinstead ofefficiency?
Customer Suppliers BusinessPartners Competitors Government
Do we….
► know customerswell enough?
► enhancedigitisation?
► improve our socialpositioning?
► need to increasecloseness and buildloyalty?
What is the….
► risk in my portfolio?
► opportunity for riskdiversification?► Geographical
► Contractual
► right balance on risksharing?
► optimum decisionon own versus buy?
How can we….
► increase sharing ofinformation?
► help each other?
► mitigate risk bycooperatingdifferently?
► increaseengagement withcapital providers?
What are the….
► areas of commoninterest?
► opportunities toshare cost and risk?
► issues that canbenefit from jointlobbying?
How can….
► we enhance co-creation withgovernment for thelarger good?
► social developmentbe institutionalised?
► countries partner toavoid a recurrenceand pandemic-proofthe world?
Building a resilient enterprise– Now, Next and BeyondPage 10
Industries will experience astep-change in digitalization,
flexibilization and resilienceconsiderations
“Quality economy“ – megatrends for business enterprises
Market roles shallincreasingly be based on
trust and shared risk
Employee and consumerbehavior will change
irrevocably
MarketsIndustries Societies
CleanHeighten response topublic health,sustainability andenvironmental solutions
ConnectivityAcceleration towardsvirtual connectivity anddigital transformation
CreativityInnovate towards moresustainable, flexible andprofitable businesssolutions
ConscientiousIncreased responsibility tobalance fiscal, operationaland organizationaldecision-making
CommunityRe-imagine relationshipbuilding at a global andhyper-local level
M E G A T R E N D S
5C’s of Quality Economy
Building a resilient enterprise– Now, Next and BeyondPage 11
11
01A Worldin crisis
Contents Shiftinggears
02Now, Nextand Beyond
03Navigatingthis crisis
04
Building a resilient enterprise– Now, Next and BeyondPage 12
Market Volatility Earnings Impact Potential Global Recession Recovery New normal
Provide an immediateresponse to the crisis byprotecting staff. Optimizecash and costs to withstanda prolonged disruption dueto lockdowns
To protect the well-being of all stakeholders, support critical operations and restore market confidence, the C-suitemust consider an adaptive response across 3 time horizons
1 2 3N o w N e x t B e y o n d
Address liquiditychallenges and develop aresponse plan to returnbusiness to original levels.Reassure stakeholders torestore market confidence
Fundamentally change theoperating model andprepare for sustainablegrowth. Engage with allstakeholders to ensure thesuccess of your vision
How will you respond to this “New Normal“?
Building a resilient enterprise– Now, Next and BeyondPage 13
Most likely Scenario – “The See -Saw” recovery
Und
erly
ing
scen
ario
assu
mpt
ion
Core
them
es
Enterprises will need to respond swiftly to adapt to the “New Normal“ – Now, Next andBeyond
NOW NEXT BEYOND
► Securefinancial stability
► Continueoperations
► Protectemployees
Adapt operations Increase resilience ReframeContinue► Achieve lower and more agile cost base► Increase workforce flexibility► Optimize supply chain – mitigate geo-risk, enhance agility► Maximize digital customer access► Enhance digitalization, automation, back up with cyber
security► Revisit capital sources & allocation► Adapt risk management to the new situation
► Seize new growthopportunities
► Re-imagine relationships► Re-think new business
solutions► Apply new balance to decision
making► Fully digital enterprise
► Fix supply chain► Re-start production► Ensure customer
access► Reduce cost short-term► Augment cash flows► Streamline structures,
portfolio, footprint
Shock Re-Start Continued crisis and slow recovery New normal
Employees – Keep employees informed, motivated, committed and trained
Customers – Focus on brand perception and provide two-way communication loop
Capital providers – Proactive and transparent communications
Government – Monitor regulatory changes and adapt accordingly
Business Partners (including Competitors and Suppliers) – Understand full ecosystem impacts and recovery options
Stak
ehol
ders
Building a resilient enterprise– Now, Next and BeyondPage 14
14
01A worldin crisis
Contents Shiftinggears
02Now, Nextand Beyond
03Navigatingthis crisis
04
Building a resilient enterprise– Now, Next and BeyondPage 15
How you respond NOW will significantly define your company and brand?
Create cross-functional crisismanagementcentre
Assess Covid-19impact onorganisatIonvalue chain
Supportcommunitiesto fight thepandemic
Build a digitalfront on priorityfor some sectors
Risk and resilience► Conduct risk scenario
based impactassessment
► Continuously adapt riskappetite
► Empower crisismanagement task force
Cybersecurity► Facilitate remote access
for all stakeholders► Conduct threat hunting
and application testing► Prioritise cyber
investments
Regulatory complianceand controls► Assess business impact of
regulatory changes► Establish alternate
processes for effectiveoperation
► Align the activities of IAfunction to enable supportto business
Customerand brand► Re-baseline customer
segments► Expand network capacity
for higher demand► Enhance digital resources
for sales and service
► Identify and prioritisecritical resources
► Communicate to andengage the workforce
► Manage employeewellness
Finance, structuringand stimulus► Evaluate options to move
cash in a tax efficientmanner
► Reassess overall cashrequirements and mitigateworking capital blockages
► Accelerate govt/taxreceivables
Business and operating model► Prioritise product portfolio in line with
existing constraints► Contactless order taking and deliveries► Evaluate alternate revenue streams
► Strengthen BCP especially for criticalbusiness systems
► Augment IT team’s capacity► Provide cloud infrastructure based digital
tools to enable remote working and manageproductivity
Technology
C O N S I D E R A T I O N S
A C T I O N S
F O C U S A R E A S
Conservecash andcontaincosts
Keep pacewith growingregulations
Continuityof criticalservices
Talent andworkforce
Safety of allstakeholders
Building a resilient enterprise– Now, Next and BeyondPage 16
How will you restart your business and pivot to what comes NEXT?
C O N S I D E R A T I O N S
A C T I O N S
F O C U S A R E A S
Adaptiveand
resilientoperations
Flexibalizeworkforce
Identify andmanage all
emerging risks
Lower andagile cost
base
Risk and resilience► Continuously monitor and
mitigate emerging risks► Refresh risk appetite and
risk responses with thenew normal
► Develop a holisticapproach fororganization-wide effortsto manage such risks
Cybersecurity► Adopt next-gen Identity
and access management► Migrate to Zero / Lean
Trust Assessmentmethodology
► Enhance Cybermonitoring of enterpriseassets
► Conduct regulatoryscenario impact analysis
► Evaluate alternate methodsof testing
► Reimagine the InternalAudit function and scope
Customerand brand► Strengthen direct to
customer channels andshore up digital paymentcapabilities
► Align marketing spends inline with channel strategy
► Prepare for recoverycampaigns
► Define innovativeperformancemeasurement
► Focus on productivity► Build flexible manpower
and compensation models
Finance, structuringand stimulus► Revisit capital structures
and allocation► Reset viable “new normal”
financial baseline i.e. B/Sand P&L
► Enhance engagement withcapital providers
Business and operating model► Evaluate inorganic growth opportunities► Re-imagine commercial/cost structures
and risk sharing models with suppliers/customers as per the new activity levels
► Rationalise product/service offerings inline with demand
► Support business in enhancing digitalsolutions
► Augment capacity of digital platformsthough cloud
► Support BYOD for onboarding allstakeholders
Technology
Talent andworkforce
Regulatory complianceand controls
Build multiplescenarios/ modelsbasis impactassessment
Prepare a comprehensiverestart plan – demand,employees, customersoperations and capitalproviders
Revise policies,procedures andbusiness practices
Building a resilient enterprise– Now, Next and BeyondPage 17
Can you reframe the future BEYOND this crisis?
C O N S I D E R A T I O N S
A C T I O N S
F O C U S A R E A S
Reframeenterprise
Identify newrevenuestreams
Become afully digitalenterprise
Enhancestakeholder trust Risk and resilience
► Setting up an earlywarning system
► Digital transformation forback to front resilience
► Regular testing of end toend business recovery
Cybersecurity► Use analytics for Real-
Time and In-line threats► Automate cyber
security operations► Focus on data
governanceencompassing ‘Privacy& Trust by Design’
► Optimize and rationalizekey controls
► Automate compliancemonitoring and reporting
► Digitize internal auditoperating model
Customerand brand► Reposition brands in line
with revised portfolio► Leverage emerging
technologies to delivervirtual customer experience
► Re-imagine “ digital only“sales and service models
► Define and transition tonew people operatingmodel
► Institutionalize digitalways of working
► Prepare contingencyplans
Finance, structuringand stimulus► Reset Financial
Expectations► Implement long-term
operating and legalstructures
► Increase financial resilience
Business and operating model► Innovate towards more sustainable,
flexible and profitable business solutions► Activation of new organic / inorganic
portfolio► Create re-lapse strategies to manage “
see-saw” economic recovery
► Overall review and re-baselining of digitaland technology strategy
► Review and restart on-hold projects andalign them to growth initiatives
► Cross skilling of resources and leveragingGIG economy to make up for capacity gap
Technology
Talent andworkforce
Regulatory complianceand controls
Re-imagine yourbusiness forlong termsustainability
Gear your businessmodel and decisionframework towards 5Csof the ‘Quality Economy’
Rebuild andstrengthen trustacross valuechain ecosystem
Drive the change andcommunicate your visionacross stakeholders atglobal and hyperlocal level
Building a resilient enterprise– Now, Next and BeyondPage 18
Let’s navigate through this crisisIllustrative C–Suite sectoral response worksheet
Priorities across Now and Next Horizon
Digital Customeraccess
Risk Managementadjustments
Workforceflexibility
Cost Structureflexibility
Re-engineering ofSupplyChain
Digitalization &Automation
Re-engineeringofSupplyChain
Cost cutting +structuraladaptions
Sales Disruptions
Priorities across Beyond HorizonEnterprisefocus areas
EnterpriseOwner Supply Chain
DisruptionsBusinessandoperatingmodel
CEOCOOCFO
Customer andbrand
CMOCDOCOO
Talent andworkforce
CEOCHRO
CROCFO
Regulatorycomplianceand controls
CDOCSOCTO
Cybersecurity
COOCRO
Risk andresilience
Financing ,structuringandstimulus
CFO
Technology
Building a resilient enterpriseNow, Next and Beyond
Releasing shortly our sectoral Point of View(PoV) on navigating COVID 19
CTOCOO
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