COVID19 is the latest and worst adversity to global economies in recent memory. Despite the early warnings in late 2019, enterprises around the world were caught off guard. Executives could only watch helplessly as borders closed and governments enforced lock-downs that shut many businesses down worldwide.
Despite all our talents, experiences, and knowledge, we were unable to prevent COVID19. What went wrong? What can we learn from this catastrophic experience?
First, we need to realize that COVID19 is not a single once-in-a-lifetime adversity. It is only one and the latest in a series of adversities.
For example, before COVID19, there were the Australian bush-fires that razed thousands of hectares of land and caused widespread environmental damage. Before that, there was the Hong Kong protests which disrupted financial transactions in Asia-Pacific. And at the same time, there was the United Kingdom’s chaotic exit, a.k.a. Brexit, from the European Union. And let’s not forget the United States’ sudden imposition of tariffs against China which disrupted international trade.
Second, adversities are never identical. They come in different shapes, sizes, and intensities. There can be visible or invisible, tangible or intangible. Each adversity is unique, a class by itself. They can last long or go away in a day. The 2011 Japan earthquake, for example, lasted just six (6) minutes but caused damage that took months for the country to recover from.
Third, adversities can be natural like typhoons and earthquakes or they can be man-made like trade tariffs and terrorism. They can be intentionally created such as when activists blocked a railway system at Canada, causing delays in shipments. They can also be the result of business and technological innovations such as the introduction of same-day drone deliveries.
Fourth, adversities happen frequently and unpredictably, in which most are low-profile or localized. A vendor delays his deliveries. A truck heading to a customer breaks down. Public utility transport operators stage a strike such that employees couldn’t go to work. A power failure shuts down a production line. The boss gets sick on the day of an important meeting with a customer.
Fifth, how big the disruptive effect of an adversity is dependent on the vulnerability of who or what it affects. When the Pope visited Manila in 2015, the government enforced a week-long ban on cargo trucks going to and from the Manila International Container Terminal (MICT). This caused delays in unloading of imported goods from container vessels. Shipping lines and truckers experienced losses. Enterprises who were waiting for deliveries but who stocked up with buffer inventories, however, did not feel much of an impact.
We can conclude adversities are part and parcel of daily life. They occur all the time, are never identical, and come in different intensities. Enterprises, their supply chains in particular, are most vulnerable to the disruptions resulting from adversities.
Enterprises have resorted to Risk Management to mitigate adversity but judging by the results, it has been less than effective. Enterprises would need to widen the scope.
What do we need to do to address adversity?
We need to change our mindset and our approach.