Building a resilient enterprise– Now, Next and Beyond...digital transformation Creativity Innovate...

Building a resiliententerprise– Now, Nextand BeyondA framework for navigating COVID 19

April 2020

Building a resilient enterprise– Now, Next and BeyondPage 2

2

01A worldin crisis

Contents Shiftinggears

02Now, Nextand Beyond

03Navigatingthis crisis

04


“The world is facing the worst economic fallout since the great depression”- Kristalina Georgieva, IMF Chief

# Estimates based on multiple sources: Bloomberg, UNCTAD, WEF, WTO & ILO.

The Covid-19 pandemicand the subsequentlockdown has dealt asevere blow to analready-stressed globaleconomy

The suddenness,spread, and severity ofthe pandemic across theglobe has pushedcountries andinstitutions intouncharted territories

200+ countries,areas or territorieswith Covid-19 cases

3 b peopleunder lockdown or1/3rd of the world’s

population

Globalunemployment

levels at an alltime high

2-3%contraction of

global GDP

Simultaneous

double digit dipin global supply and

demand

170 countriesto experience negative

per capita incomegrowth in 2020-21

~2500+government

pronouncements tomanage the crisis

Significantdecline predictedfor global trade in

2020-21

Building a resilient enterprise– Now, Next and BeyondPage 4# Multiple sources: Oxford, Bloomberg, Reuters & RBI.

Significant dip in GDPgrowth while India

continues to be amongthe fastest growingeconomies globally

Substantial erosion ofinvestor wealth due toflight of foreign capital

Adverse impact on fiscaldeficit due to dual impact of

fiscal stimulus and lowerrevenue collections

Macroeconomic impact India’s response – economic recovery tocommence with graded relaxation of

lockdown from April 20th ► Travel and Tourism► Trading and logistics► Automotive► Construction and

Real estate► Energy

► Financial Services► Retail► Education► Healthcare

► Non-essential FMCG► IT services

► Pharmaceuticals► Essential FMCG► Online businesses► Telecom

Stringent national lockdownStringency Index (100=strictest)

100 90.595.2 71.4 66.7

Covid-19 will have significant implications for an already stressed economy

Current sectoral impact

Hig

hLo

wSe

veri

ty o

f Im

pact

~$ 2.9 trillionIndian

economy

Healthcare

Monetary

Industry

Fiscal

Economic stimulus ofINR 1.7 trillion

Food security measuresfor poor

Direct cash transfers

Nationallockdown

Govt. to bear employeeprovident fund

contributions

Extension of dates forfiling financial results

Accelerated payment ofgovernment dues to small

/ medium industries

CRR cut to release INR~1.4 trillion liquidity

Repo rate reduced tohistorical low of 4.4%

Moratorium on loanpayments

INR 150 billion allocated toaugment healthcare

Government-sponsoredinsurance cover for allhealthcare workers

600+ dedicated hospitals,100K+ isolation beds


GD

P

time

“V-shaped”

time

GD

P “See-Saw”

time

GD

P

“L-shaped”

► Contingent on a vaccine / effective treatment by Q2’20, and nil strain mutation

► Aided by government stimulus, pent-up demand unleashed

► World economies stage a recovery to pre-crisis levels

► Deeper and pervasive recession, followed by a slowerrecovery and likely deflation

► Higher public deficit levels due to stimulus programs

► Protracted weak demand and global value chain disruptions

► Higher capital outflows and currency depreciation

“New Normal”

Recoverywith upsand downs

Pessimistic scenario► Prolonged mobility restrictions reinforced due to lack of effective treatments

► Increased fiscal and inflationary pressures due to even higher stimulus programs

► Flight of capital and foreign exchange depreciation

► Personal, business and (potentially) sovereign defaults

The path to recovery for India: a prolonged “see-saw” shaped recovery looksmost likely, leading to a “new normal”

Markets

Industries

Societies

Most likely scenario

Optimistic scenario


6

01A worldin crisis




04


Or…

Companybehaviour

Socialimpact

Globalisation

Trends

Personalrelation-

ships

Work/life

Growth

Openness totechnology

Consump-tive

behavior

Solidarity

Environment

Interactionwith com-petitors

Interactionwith

suppliers

Interactionwith

businesspartners

Interactionwith

customers

From… To…

Back tonormal ?

Qualityeconomy

Currentnormal Interaction

withGovt

The “New Normal”- changing companies, markets and societies – may mark a shiftto a “Quality economy”

?

► Clean► Connectivity► Community► Creativity► Conscientious


“Quality economy“ - key drivers of the shift

Environment

Learnings from theinvoluntary positive

impact on theenvironment?

Will this createbusiness

opportunity?

Solidarity

Will social distancingbecome a norm ?

Will there be room forcharitable business

models?

Consumption

Will we consume moresustainably, having felt

scarcity for the firsttime in decades?

Technology

Will we embracetechnology as a meansto a resilient society?

Globalization

Will there beprotectionism?

Will we reduce businessand leisure travel?

Financing / Cash flows

Will fitness and health getprioritized?

Work/Life

Will we balance wealthaccretion with better

quality of life?

Are virtualheadquarters a viable

future?

Will there be variablecontracts with

partners/ suppliers?

Cost structures

How to plan with a greatersafety net?

How to strengthen workingcapital management?

How to diversify siteportfolio risk?

Will productionbe localized?

How to ensure continuity?

How to digitalize further?

Is this a significant shift insales channels?

Supply chain Demand


“Quality economy“ - stakeholder relationships are likely to get redefined

Employees

How to….

► drive engagementfor a virtualworkforce?

► reskill myworkforce?

► improve employeecare and financialwell being?

► measure effectiveperformanceinstead ofefficiency?

Customer Suppliers BusinessPartners Competitors Government

Do we….

► know customerswell enough?

► enhancedigitisation?

► improve our socialpositioning?

► need to increasecloseness and buildloyalty?

What is the….

► risk in my portfolio?

► opportunity for riskdiversification?► Geographical

► Contractual

► right balance on risksharing?

► optimum decisionon own versus buy?

How can we….

► increase sharing ofinformation?

► help each other?

► mitigate risk bycooperatingdifferently?

► increaseengagement withcapital providers?

What are the….

► areas of commoninterest?

► opportunities toshare cost and risk?

► issues that canbenefit from jointlobbying?

How can….

► we enhance co-creation withgovernment for thelarger good?

► social developmentbe institutionalised?

► countries partner toavoid a recurrenceand pandemic-proofthe world?


Industries will experience astep-change in digitalization,

flexibilization and resilienceconsiderations

“Quality economy“ – megatrends for business enterprises

Market roles shallincreasingly be based on

trust and shared risk

Employee and consumerbehavior will change

irrevocably

MarketsIndustries Societies

CleanHeighten response topublic health,sustainability andenvironmental solutions

ConnectivityAcceleration towardsvirtual connectivity anddigital transformation

CreativityInnovate towards moresustainable, flexible andprofitable businesssolutions

ConscientiousIncreased responsibility tobalance fiscal, operationaland organizationaldecision-making

CommunityRe-imagine relationshipbuilding at a global andhyper-local level

M E G A T R E N D S

5C’s of Quality Economy


11

01A Worldin crisis




04


Market Volatility Earnings Impact Potential Global Recession Recovery New normal

Provide an immediateresponse to the crisis byprotecting staff. Optimizecash and costs to withstanda prolonged disruption dueto lockdowns

To protect the well-being of all stakeholders, support critical operations and restore market confidence, the C-suitemust consider an adaptive response across 3 time horizons

1 2 3N o w N e x t B e y o n d

Address liquiditychallenges and develop aresponse plan to returnbusiness to original levels.Reassure stakeholders torestore market confidence

Fundamentally change theoperating model andprepare for sustainablegrowth. Engage with allstakeholders to ensure thesuccess of your vision

How will you respond to this “New Normal“?


Most likely Scenario – “The See -Saw” recovery

Und

erly

ing

scen

ario

assu

mpt

ion

Core

them

es

Enterprises will need to respond swiftly to adapt to the “New Normal“ – Now, Next andBeyond

NOW NEXT BEYOND

► Securefinancial stability

► Continueoperations

► Protectemployees

Adapt operations Increase resilience ReframeContinue► Achieve lower and more agile cost base► Increase workforce flexibility► Optimize supply chain – mitigate geo-risk, enhance agility► Maximize digital customer access► Enhance digitalization, automation, back up with cyber

security► Revisit capital sources & allocation► Adapt risk management to the new situation

► Seize new growthopportunities

► Re-imagine relationships► Re-think new business

solutions► Apply new balance to decision

making► Fully digital enterprise

► Fix supply chain► Re-start production► Ensure customer

access► Reduce cost short-term► Augment cash flows► Streamline structures,

portfolio, footprint

Shock Re-Start Continued crisis and slow recovery New normal

Employees – Keep employees informed, motivated, committed and trained

Customers – Focus on brand perception and provide two-way communication loop

Capital providers – Proactive and transparent communications

Government – Monitor regulatory changes and adapt accordingly

Business Partners (including Competitors and Suppliers) – Understand full ecosystem impacts and recovery options

Stak

ehol

ders


14

01A worldin crisis




04


How you respond NOW will significantly define your company and brand?

Create cross-functional crisismanagementcentre

Assess Covid-19impact onorganisatIonvalue chain

Supportcommunitiesto fight thepandemic

Build a digitalfront on priorityfor some sectors

Risk and resilience► Conduct risk scenario

based impactassessment

► Continuously adapt riskappetite

► Empower crisismanagement task force

Cybersecurity► Facilitate remote access

for all stakeholders► Conduct threat hunting

and application testing► Prioritise cyber

investments

Regulatory complianceand controls► Assess business impact of

regulatory changes► Establish alternate

processes for effectiveoperation

► Align the activities of IAfunction to enable supportto business

Customerand brand► Re-baseline customer

segments► Expand network capacity

for higher demand► Enhance digital resources

for sales and service

► Identify and prioritisecritical resources

► Communicate to andengage the workforce

► Manage employeewellness

Finance, structuringand stimulus► Evaluate options to move

cash in a tax efficientmanner

► Reassess overall cashrequirements and mitigateworking capital blockages

► Accelerate govt/taxreceivables

Business and operating model► Prioritise product portfolio in line with

existing constraints► Contactless order taking and deliveries► Evaluate alternate revenue streams

► Strengthen BCP especially for criticalbusiness systems

► Augment IT team’s capacity► Provide cloud infrastructure based digital

tools to enable remote working and manageproductivity

Technology

C O N S I D E R A T I O N S

A C T I O N S

F O C U S A R E A S

Conservecash andcontaincosts

Keep pacewith growingregulations

Continuityof criticalservices

Talent andworkforce

Safety of allstakeholders


How will you restart your business and pivot to what comes NEXT?


A C T I O N S

F O C U S A R E A S

Adaptiveand

resilientoperations

Flexibalizeworkforce

Identify andmanage all

emerging risks

Lower andagile cost

base

Risk and resilience► Continuously monitor and

mitigate emerging risks► Refresh risk appetite and

risk responses with thenew normal

► Develop a holisticapproach fororganization-wide effortsto manage such risks

Cybersecurity► Adopt next-gen Identity

and access management► Migrate to Zero / Lean

Trust Assessmentmethodology

► Enhance Cybermonitoring of enterpriseassets

► Conduct regulatoryscenario impact analysis

► Evaluate alternate methodsof testing

► Reimagine the InternalAudit function and scope

Customerand brand► Strengthen direct to

customer channels andshore up digital paymentcapabilities

► Align marketing spends inline with channel strategy

► Prepare for recoverycampaigns

► Define innovativeperformancemeasurement

► Focus on productivity► Build flexible manpower

and compensation models

Finance, structuringand stimulus► Revisit capital structures

and allocation► Reset viable “new normal”

financial baseline i.e. B/Sand P&L

► Enhance engagement withcapital providers

Business and operating model► Evaluate inorganic growth opportunities► Re-imagine commercial/cost structures

and risk sharing models with suppliers/customers as per the new activity levels

► Rationalise product/service offerings inline with demand

► Support business in enhancing digitalsolutions

► Augment capacity of digital platformsthough cloud

► Support BYOD for onboarding allstakeholders

Technology

Talent andworkforce

Regulatory complianceand controls

Build multiplescenarios/ modelsbasis impactassessment

Prepare a comprehensiverestart plan – demand,employees, customersoperations and capitalproviders

Revise policies,procedures andbusiness practices


Can you reframe the future BEYOND this crisis?


A C T I O N S

F O C U S A R E A S

Reframeenterprise

Identify newrevenuestreams

Become afully digitalenterprise

Enhancestakeholder trust Risk and resilience

► Setting up an earlywarning system

► Digital transformation forback to front resilience

► Regular testing of end toend business recovery

Cybersecurity► Use analytics for Real-

Time and In-line threats► Automate cyber

security operations► Focus on data

governanceencompassing ‘Privacy& Trust by Design’

► Optimize and rationalizekey controls

► Automate compliancemonitoring and reporting

► Digitize internal auditoperating model

Customerand brand► Reposition brands in line

with revised portfolio► Leverage emerging

technologies to delivervirtual customer experience

► Re-imagine “ digital only“sales and service models

► Define and transition tonew people operatingmodel

► Institutionalize digitalways of working

► Prepare contingencyplans

Finance, structuringand stimulus► Reset Financial

Expectations► Implement long-term

operating and legalstructures

► Increase financial resilience

Business and operating model► Innovate towards more sustainable,

flexible and profitable business solutions► Activation of new organic / inorganic

portfolio► Create re-lapse strategies to manage “

see-saw” economic recovery

► Overall review and re-baselining of digitaland technology strategy

► Review and restart on-hold projects andalign them to growth initiatives

► Cross skilling of resources and leveragingGIG economy to make up for capacity gap

Technology

Talent andworkforce

Regulatory complianceand controls

Re-imagine yourbusiness forlong termsustainability

Gear your businessmodel and decisionframework towards 5Csof the ‘Quality Economy’

Rebuild andstrengthen trustacross valuechain ecosystem

Drive the change andcommunicate your visionacross stakeholders atglobal and hyperlocal level


Let’s navigate through this crisisIllustrative C–Suite sectoral response worksheet

Priorities across Now and Next Horizon

Digital Customeraccess

Risk Managementadjustments

Workforceflexibility

Cost Structureflexibility

Re-engineering ofSupplyChain

Digitalization &Automation

Re-engineeringofSupplyChain

Cost cutting +structuraladaptions

Sales Disruptions

Priorities across Beyond HorizonEnterprisefocus areas

EnterpriseOwner Supply Chain

DisruptionsBusinessandoperatingmodel

CEOCOOCFO

Customer andbrand

CMOCDOCOO

Talent andworkforce

CEOCHRO

CROCFO

Regulatorycomplianceand controls

CDOCSOCTO

Cybersecurity

COOCRO

Risk andresilience

Financing ,structuringandstimulus

CFO

Technology

Building a resilient enterpriseNow, Next and Beyond

Releasing shortly our sectoral Point of View(PoV) on navigating COVID 19

CTOCOO

Ernst & Young LLP

EY | Assurance | Tax | Transactions | Advisory

About EYEY is a global leader in assurance, tax,transaction and advisory services. Theinsights and quality services we deliver helpbuild trust and confidence in the capitalmarkets and in economies the world over.We develop outstanding leaders who teamto deliver on our promises to all of ourstakeholders. In so doing, we play a criticalrole in building a better working world forour people, for our clients and for ourcommunities.

EY refers to the global organization, andmay refer to one or more, of the memberfirms of Ernst & Young Global Limited, eachof which is a separate legal entity. Ernst &Young Global Limited, a UK company limitedby guarantee, does not provide services toclients. For more information about ourorganization, please visit ey.com.

Ernst & Young LLP is one of the Indian client serving memberfirms of EYGM Limited. For more information about ourorganization, please visit www.ey.com/en_in.

Ernst & Young LLP is a Limited Liability Partnership,registered under the Limited Liability Partnership Act, 2008 inIndia, having its registered office at 22 Camac Street, 3rdFloor, Block C, Kolkata – 700016

© 2020 Ernst & Young LLP. Published in India.All Rights Reserved.

This publication contains information in summary form and istherefore intended for general guidance only. It is not intendedto be a substitute for detailed research or the exercise ofprofessional judgment. Neither EYGM Limited nor any othermember of the global Ernst & Young organization can acceptany responsibility for loss occasioned to any person acting orrefraining from action as a result of any material in thispublication. On any specific matter, reference should be madeto the appropriate advisor.

Date post:	04-Jun-2020
Category:	Documents
Upload:	others
View:	1 times
Download:	0 times

Building a resilient enterprise– Now, Next and Beyond...digital transformation Creativity Innovate...

Documents