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Coronavirus risk mitigation: Business advisory

| Updated: March 26, 2020 00:00:48

Coronavirus risk mitigation: Business advisory

The global economy is reeling at the threats posed by coronavirus. The preliminary estimates by the UNCTAD amount to a loss of US$1.0 trillion to the global economy in 2020 alone, which is already evident in reduced shipments, falling oil prices, and cancelled orders for merchandise.

The ILO estimates a whopping 25 million job loss, which is far greater than the 22 million employment losses during the 2009 global recession.

According to recent media report, the ready-made garments sector (RMG), the leading export sector of Bangladesh, is already reeling from the shock. Adding to the woes of the local industries, Ramadan and Eid festivals are nearing, when employers will need extra cash to meet the requirements for bonuses and extra expenses. There is certainly a challenging time ahead, and our industries need to prepare for mitigating the economic and other non-health risks of coronavirus.

Broadly speaking, coronavirus poses at least six categories of risks - social, economic, institutional, geopolitical, health, and technological, which could be remembered by the mnemonic SEIGHT, shown by the info graph.


In Bangladesh context, the specific risks could be -  coronavirus related death and panic, anarchy in the healthcare system, job loss in the local and overseas markets, rise in the number of unemployed and returning migrants, economic recession, financial system collapsing into hyperinflation, and social unrest.

The business sector needs to be prepared for mitigating the risks of reduced production and trade and unemployment. From a practical point of view, the following actions may be considered to minimise the impact of the economic threat posed by coronavirus:

Remain liquid: Remain liquid as much as possible, keep the cash and collect the credits from the market, liquidate non-performing assets for cash, whenever possible. The cash can be used for timely payment of wages.

Defer capital expenditure: Defer commitments and plans to purchase real estate, land and capital machinery.  

Extend leave: Prepare employees for possible lay-offs, extend leave with pay or without, and arrange for non-cash benefits to the workers, including food ration to the wage earners in case they are out of work.

Maintain relationships: Be transparent with the clients, suppliers, creditors and employees. Communicate the reality and expectations to build mutual trust. It will help recovery when the initial shocks are over.


Shaquib Quoreshi is Enterpriser, Business Intelligence Limited

(www.bisntel.com).  He can be reached at: squoreshi@gmail.com

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