COVID-19 crisis has caused uncertainty for boards and those charged with corporate oversight. Governance and communication, finance and operations, and compliance are a few of the activities impacted by the virus and the related restrictions. Boards lacking a robust strategy can risk prolonged economic distress, loss of jobs, loss of customers, and diminished capital. These are just some of the challenges, which must be overcome to emerge strong from the crisis.
Governance and Communication
Governing boards and management must respond to employees, clients and other stakeholders in times of economic crisis. Some actions to consider to effectively manage the COVID-19 crisis are:
- Create a board committee to oversee management’s response to the crisis and create accountability
- Identify and align the board’s priorities and concerns with management’s
- Provide feedback on management’s communication and messaging strategy to inform employees and clients of the priorities, along with a feedback loop
- Review all public disclosures, earnings guidance and related qualifications
- Consider changes to the competitive landscape and the short and long-term risks and opportunities such changes may have on the organization
- Review of the company’s business interruption plan and any insurance policies covering the event
Finance and Operations
A review of the organization’s financial and operational standing should be completed before major decisions are made. Cash must be conserved, costs should be re- evaluated, and the highest priority operational activities must be maintained and supported. Those charged with governance should ensure management is considering the following:
- Review and reduce discretionary spending which may include contractors, future meetings and commitments, capital projects, etc.
- Assess the feasibility of monetizing assets to improve cash flows
- Secure lines of credit or other funding and renegotiate payment terms with vendors
- Assess supply chain concentration risk for disruption (including reliance on foreign suppliers)
- Evaluate personnel costs and personnel safety
- Review availability and applicability of data to make informed decisions
From a compliance standpoint, the board’s expectations for internal audit and compliance may have to change drastically. The priorities need to be reassessed so these functions can focus on the highest risks to the company.
These priorities may include:
- Reexamining risk assessments, audit plans, compliance work programs, the timing of SOX compliance program control evaluation and testing, and the overall effectiveness of the internal control environment during the crisis
- Reevaluate audit and compliance activities requiring travel to determine if the work can be performed remotely
- Assess compliance requirements over new sources of government funding to determine if any new policies, procedures, or training need to be created
- Identify any processes that were changed as a result of working from home to ensure the controls are designed to mitigate the risks
How Can DHG Help
With the new normal that organizations are now tasked to embrace, DHG stands ready to share the lessons we have learned, and help you reach your goals. DHG does this by focusing on its four core values: trust, relationships, passion, and innovation which represent the qualities that drive our decisions and behavior. These values are what sets DHG apart from the competition.