12 March, 2020 in Industry News

COVID-19: What can businesses do to reduce risk?

Following the spread of COVID-19, asset and commodity prices continue to fall sharply as investors switch to lower risk assets. It’s now clear that financial market uncertainty has reached extreme levels and it may be a number of months before business and consumer confidence is able to recover.

Whilst limited data is available to-date, it is highly likely that this global pandemic is going to impact upon most SME businesses in Northern Ireland.

Our Advisory team review what’s been happening to help businesses survive this (hopefully) temporary shock to the markets and what steps they can take to manage risk at this time:

 

Bank of England reduction in interest rate

Yesterday, the Bank of England has voted to reduce the Bank Rate by 50 basis points to 0.25% equalling its lowest level of all time. It is hoped this reduction will help to support business and consumer confidence at a difficult time, to bolster the cash flows of businesses and households, and to reduce the cost, and to improve the availability of finance.  

 

UK Budget Annoucement

Yesterday, the new Chancellor Rishi Sunak announced, what appears to be, massive spending to help ease the burden of COVID-19 and its temporary knock-on effect on the UK economy.

Key areas include the provision of statutory sick for employees who are in isolation or have been diagnosed with Coronavirus and the implementation of loan schemes for SME’s to cover salaries and bills. 

You can read the detailed CavanaghKelly recap on the budget announcement by clicking here.

 

Local Banks

It is also welcoming that many of the local mainstream Banks have in recent days issued public statements of support for individuals and businesses who may be impacted by the current outbreak:

 

Whilst the above announcements are all positive, it is unlikely that blanket provisions will apply and therefore individual and business customers will all be considered on a case-by-case basis.

 

What can businesses do to reduce risks at this time?

Whilst we appreciate that every business is different, some of the simple, yet most effective ways to reduce risks at this uncertain time are noted below.

 

Practical / Operational:

  • Prepare and carry-out contingency/disaster planning
  • Communicate and provide support to employees
  • Encourage washing of hands and avoid human contact such as shaking of hands
  • Invest in work-from-home technology and ensure your technology is working
  • Consider work-from-home groups
  • If facilitating the above, ensure security and GDPR requirements are all in order
  • Consider policies in respect of large gatherings of people
  • Consider work patterns and precautions for staff who deal with the public on a daily basis (e.g. construction or retail industry)
  • Seek advice from professional or governing body relevant to your industry

 

Financial and supply-chain management:

  • Understand supply-chain risks and consider alternatives where possible
  • Ensure financial reporting is up-to-date
  • Prepare financial projections with scenario analysis
  • Regularly review your Key Performance Indicators
  • Where appropriate, communicate with relevant stakeholders – Customers, Banks, Trade suppliers, Landlords, HMRC, etc.
  • Review insurance cover
  • If concerned, seek professional advice

A view from CavanaghKelly?

With the sharp fall in the financial markets, the sweeping travel restrictions now in place and many major events being cancelled, the world is undoubtedly in an uncertain place at the moment.

At this time our priorities should include protecting the health and well-being of each other, our employees, family and friends as well as managing business performance and risk.

 

Please contact Michael Drumm michael.drumm@cavanaghkelly.com or Shauna McStravick shauna.mcstravick@cavanaghkelly.com for more information.

Interested in finding out more? Contact:

Whilst every effort has been made by CavanaghKelly to ensure the accuracy of the information here, it cannot be guaranteed and neither CavanaghKelly nor any related entity shall have liability to any person who relies on the information herein. Information given here is for guidance only. Detailed professional advice should be taken before acting on any information contained herein. If having read the guidance here, you would like to discuss further; a member of our team would be pleased to help you.