Want to increase or at least maintain turnover during a crisis? Navigate any crisis successfully with resilience!

We recently wrote about resilience in the supply chains of industrial companies. But what about the topic of resilience within companies in general? What do you need to bear in mind to be as resilient as possible? In short: (unfortunately) simply making supply chains more resilient is not enough. A resilient business adapts to its environment consistently across all areas. You’re probably wondering how you’re supposed to do that? I’d like to illustrate this using the example of the well-known service provider Uber, which managed to increase its turnover even during the pandemic.

How does a company in the passenger transport sector manage this during a pandemic when hardly anyone is leaving their home? Uber observed, analysed and understood its environment. What do people need when they can’t leave their homes? Exactly – food. So Uber responded to the pandemic with Uber Eats, transporting food rather than people from A to B. The aim, therefore, is to know your environment inside out, to observe it and to spot changes as early as possible so that you can react to them.

Resilience is the ability to manage crises. In this context, flexibility takes precedence over stability. This means that a successful response to crises does not consist of returning to the starting point, but rather of adapting to new conditions faster and better than others. A centralised risk management system helps you to closely monitor and understand your environment.

The centralised risk management system

A centralised risk management (RM) system analyses and assesses all risks, whether they are inherent risks (such as natural disasters) or speculative risks (risks arising from business activities). This ensures that the environment in which your business operates is continuously assessed. It is important to take into account both positive risks (e.g. increases in profit) and negative risks (e.g. loss of customers). A risk management (RM) system is based on a number of models, methods, standards and laws. These comprise various building blocks for an RM system, with risk identification, risk assessment and risk treatment being common to all models. Let us take a closer look at these building blocks:

Risk identification, as the name suggests, serves to identify risks (both positive and negative). There are already many methods available for this purpose. There are basic risk management catalogues; you can consult experts, run workshops with staff, etc. The aim, however, is always for everyone to identify the risks in their own area and to discuss these risks critically in order to identify potential developments and uncover any interdependencies.

In risk assessment, all identified risks are evaluated on the basis of criteria defined in advance. The most common method is the risk matrix (see figure), which uses probability of occurrence and severity of damage as assessment criteria. All risks are categorised here. Naturally, positive risks should also be categorised in a matrix. Once identification and assessment are complete, the next step is risk treatment.

Risk treatment comprises planning measures and implementing them. This may include, amongst other things, accepting the risk, i.e. taking no action either to prevent it or to address it. However, you can also reduce the risk through targeted measures; this would be a further approach to treating a risk.

Risk management: the case of Uber

As previously described, Uber has managed to increase its turnover during the pandemic. Using this example, we will take a closer look at risk management.

• Identification: There is a risk that people will no longer use the ride-hailing service as frequently due to the pandemic and the associated lockdowns, quarantines, cancelled events, etc. However, as this constitutes Uber’s core business, it poses a risk to the company.
• Assessment: Before the pandemic, the probability of this occurring was probably not very high; nevertheless, the severity of the loss would have been very high, as the passenger transport service is the company’s main source of income. If passenger transport were to cease, the company would be under threat. It is therefore a very high risk.
• Action: Uber has decided to diversify its services. Uber no longer focuses exclusively on passenger transport, but is expanding its services to include the delivery of groceries and meals.

This example once again highlights that a company can emerge from a crisis stronger, more successful and more resilient. However, do not wait until a crisis or risk actually arises before taking action. Act early to ensure you are more resilient than your competitors.