Building Resilience and Mitigating Risk
One thing is for certain: The COVID-19 pandemic has prompted us all to think, act and prepare differently. The crisis has affected nearly everything — including how we work, bank and do business.
One thing is for certain: The COVID-19 pandemic has prompted us all to think, act and prepare differently. The crisis has affected nearly everything — including how we work, bank and do business.
Anticipate a shift in consumer behavior
The pandemic accelerated consumer use of e-commerce and other digital services. But how much of this change is permanent? While most customers will likely keep their new digital habits, some may revert to their former ways. Regardless, retail, e-commerce, commercial real estate, banking and many other industries must continue to consider both their brick-and-mortar and digital presence and prepare for continued disruption.
Technology will continue to take center stage
For many industries, remote work will continue in varying capacities. Larger manufacturers that lost critical production time when workers couldn’t be on site may invest more heavily in robotics and automation, while more in-person call centers could shift to remote operations.
The focus on liquidity is changing
While some companies have a renewed focus on ensuring that they have liquidity to address challenges and ongoing uncertainty, other companies may have excess cash on hand and are ready to consider other options, including M&A.
Why is resilience so important?
Resilience defines a company’s ability to absorb stress, recover and thrive in changing circumstances. It is especially important now because the business environment today is more dynamic and unpredictable due to outside stressors — from the pandemic and accelerated technological changes, to the global economy and broader social issues. In the short run, a crisis requires a tactical response, but long-term, companies have a unique opportunity to accelerate transformational change by revisiting their business models to build greater resilience.
Assess risks and find advantages in adversity
Do not only mitigate risk or damage or restore what was; rather, aim to embrace change and adversities, adjust to new realities and look for growth opportunities.
Protect yourself from fraud
With increased reliance on digital technology, cyber crime threats continue to rise. Cybersecurity is a vital component of a modern business model, and it is important to partner with experts who can provide sophisticated measures to prevent and manage risk. Learn more about FNB’s fraud mitigation products, including cyber liability insurance to defend against losses if a breach does occur, in the “Manage Risk” and “Combat Fraud” sections in the Business Knowledge Center.
Minimize uncertainty where you can
The historically low rates experienced in 2020 should eventually increase. Consider implementing an interest rate hedging strategy to lock in a fixed rate for your financing — enabling you to take advantage of favorable rates while adding certainty to your long-term expense.
Take steps to prevent supply chain disruption
Greater control and flexibility with your supply chain will ease domestic and global economic challenges. Diversify your supply chain sources and manage your inventory, logistics and transportation so you have a steady flow of materials, regardless of geographic restrictions or shutdowns. Adjust your product mix to meet demand and optimize production with people and technologies to adapt to any necessary changes.
Grow and diversify your customer base
Customer differentiation can mitigate risks and provide greater flexibility and additional financial stability. Diversification also fosters innovation, which could lead to new products or services and additional revenue streams.
Build or strengthen your digital platform
Provide a digital experience that allows customers to conveniently shop or purchase products and services without having to go to a physical location, store or supplier.
Value diversity
Resilience depends on being able to generate alternative ways of reacting to situations, which in turn depends on the ability to see and respond with fresh eyes and diverse perspectives.
