The COVID-19 Pandemic has ravaged the world affecting operations of all companies in one way or the other. As is evident, most companies, especially in the tourism, transport and service industries, have completely shut down. This serves as a reminder that Companies should have robust strategies and Business Continuity Plans (BCP) to cushion them through such shocks in line with the best Corporate Governance practices. In Kenya, listed Companies are required to have these plans in place but for private companies, there is no requirement and thus the role is left for the Board of Directors to spearhead.
In the past three years, through governance audits conducted by Scribe Services on several issuers of securities in Kenya, we have realized that Boards have taken deliberate steps to manage succession planning, sustainability, human resource development, risk management and BCPs. All these are in line with the desire to keep the companies running even in the face of disasters which many at times are unforeseeable. However, the effectiveness of these strategies has been tested by the COVID-19 pandemic and it has been realized that most of these plans were not nearly as robust.
Human resource is the most important arm of an organization. The COVID-19 pandemic has affected employees most since contact with other people including their colleagues is restricted thereby requiring them to work from home. The lack of preparedness notably in the lack of training, unavailability of infrastructure to monitor performance, lack of strategies to protect employees from the pandemic and lack of compensation strategies raises a lot of concern in human resource management in this period.
Cyber exposure is a major risk to corporates as employees work from home. Use of unsecured internet connections, access to the main office server from remote locations and leaving computers unattended at all times may lead to exposure by intruders. Due to the dynamic environment and the ever-evolving technology, this may be very difficult to control but also could lead to major losses. Exposure of customer and internal company information to third parties could lead to litigation, loss of business, unfair competition, among other losses.
Financial management implications are very dire to companies who do not have the requisite capital to manage them through the crisis. Since many companies will not be dependent on your services during crisis period and clients may not pay up in time, cash flow deficiencies may arise at such time. Lending institutions may also be reluctant to offer an advancement of additional capital during the period. We recommend that companies should have additional capital that can drive the company for at least a 1-year period.
As we keep our hope and continue to fight the COVID-19 pandemic, there are great lessons to learn from the current crisis. Some of these lessons are working from remote locations, data protection, financial planning and sustainability, human resource planning and client engagement.