Legal Tool Kit 3: Crisis Management and Business Continuity in the wake of COVID-19 – The Role of the Board


Entrepreneurship is hard, and managing your business through difficult times is even harder in the absence of a business continuity plan. A business continuity plan is a plan that sets out the processes set aside to create a system of prevention and recovery from potential threats to a company and ensures that personnel, assets and in some cases relationships are protected and able to function efficiently in the event of a disaster or a break in operations beyond the power of the Company.  The impact of the COVID-19 pandemic and the government restrictions has exposed the unpreparedness and inability of many companies to cope in a crisis. And this has got many on the corporate corridors talking about the essence and importance of a well-implemented, well-communicated and tested business continuity policy. If your response to a crisis, especially in the wake of the COVID-19 pandemic, has been reactive rather than pro-active, don’t worry because you are not alone.

Many companies have been taken unawares by this crisis. Airlines no longer fly, national borders have been indefinitely closed, industries have had to shut down due to movement restrictions placed on citizens by governments worldwide. People face increased daily health hazards and everywhere the unspoken but extremely dark cloud of doom and corporate collapse looms around us. The big question is – what can businesses do to survive?

First, they must put into motion their business continuity plan. And the board of directors must champion this process. If you’ve been following our series on Directors under the Companies Act, you would understand the importance of selecting a Board that is not only technically competent, by strategically positioned to help the Companies that they serve to not only stand in these extremely difficult times but to thrive despite the difficulties faced by the larger community.

How can the Board do this when all the Directors are limited by movement restriction? If you are a member of executive management or what is commonly known as the c-suite, reach out to your Board, reach out to your company secretary.   Amend your Board charter to allow virtual meetings, voting, and passage of resolutions and then begin to engage the Board. This is the time, more than ever, for Board members to rise as competent partners and help companies maneuver this very difficult and unchartered territory. Get them involved, pick their brains, and together work out a strategy to survive these changing times.

Preparation is key. Companies should not only prepare for crisis or disasters, but they should also always remain ready. Whatever business continuity strategy the company chooses to implement especially in these times should be holistic and run across every part of the company. Since we are focusing on the board, it is important to remind ourselves of the following: first, the board must ensure sustainable risk management and compliance to preserve the company. And the second is to execute a sustainable growth and preservation strategy for the Company. Ideally, many of these matters should have been decided, tested and implemented before the onset of any crisis or disaster. Let’s go through a few things that can be done even in this critical period:

Set the agenda for business continuity: The Board as the main strategic decision-making body of the company at the very highest level is responsible for setting the business continuity agenda, and identifying critical risk areas. This role also means setting up a sustainable business continuity plan Post COVID-19 to ensure that the company is not only ready to tackle such future hardships and disasters but also has the resources in place to adequately implement whatever business continuity policy is drawn up.

Allocation of Resources: For companies with weak or no business continuity plan before this epidemic, it is important to take a critical look at the resources at the disposal of the company and devise a strategy which uses these resources in a sustainable and cost-effective way.

It is also important to ensure that policies are implemented to manage and control identifiable and controllable risks. These risks may include the risk of breaching employee contracts, the risk of breaching supplier agreements, risk of failure to adhere to regulatory policies such as monthly and ongoing taxation obligations, social security obligations, rent costs, salary obligations and of course to make those other critical decisions that though may seem unpopular, but may be the only way for the company to survive this epidemic.

Involvement of critical contractors in the analysis of the company and implementation of a business continuity plan. These critical contractors may include lawyers, financial and budgeting experts, IT specialists, etc. These exercises could, for example, include re-allocation of budgeted expenses to include higher investment in the IT framework of the company to ensure that operations can continue. Investment in increased IT infrastructure such as laptop and video conferencing materials to help facilitate remote working and review of IT service and licensing agreements to ensure they remain valid.

Set up communication policy to ensure efficient and effective communication and agreed on recovery timelines to ensure the company does not lose the goodwill from existing clients and the business can re-position itself to remain viable.

Encourage innovation and re-evaluation: The way we do business has changed drastically. Boards need to and encourage management staff to engage employees and other stakeholders to come up with innovation options and product lines to enable the Company to stay in business. Contracts must be re-evaluated and where necessary new product lines launched to cater to the changing demand in the market.

Ensure acceptance and communication of whatever business continuity plan is implemented at all levels of the organization.

Review of agreements: I can’t stress this enough. Engage your lawyers, re-engage them and review all policies and agreements. From the most complex transaction agreements to simple tenancy agreements, employee contracts and determine contracts that may bring unforeseen future liabilities in the wake of this COVID-19 pandemic.  Do not wait for any liability or penalty from breach of contract. Boards and management must at this time, more than ever, act pro-actively to deal with risks.

Communication Strategy: In all this and especially now more than ever, communication is key. Set a communication strategy that would help you to effectively communicate with clients and employees and allocate all responsibility for execution to specific persons within the organization. Please leave no room for ambiguity. It must be clear and concise to ensure that after all this is over, the company can maintain its critical employees and also maintain client and supplier goodwill to pick itself up.

I know it sounds like it’s too late at this point to implement any of these strategies, but its never too late to act to avert an oncoming crisis and to be better prepared for the future. Now we know better, so now we can do better. If this crisis has drawn your attention to a gap in business continuity planning, it’s not too late. Plan to do better and to implement and test a sustainable and well communicated BCP Policy in the future. Every desert has an oasis. I hope you find yours and wish you success especially in these dire times.

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