Authorities, enterprise and civil society must face up to one unalterable actuality. Covid-19 won’t be the final disruption. It may be one other pandemic, a pure catastrophe, a cyberware assault, maybe a “sizzling” collision between the incumbent superpower, the US and the ascendant challenger, China, a social upheaval or synthetic studying (AI) gone rogue. No matter the trigger, they need to count on one other systemic disruption.
The query is: What must they do to better anticipate, forestall (if potential) and handle (if prevention shouldn’t be potential) the fallout? My (partial) reply to this query is influenced by two observations.
One, Covid-19 has established the significance of collaboration. The vaccines couldn’t have been developed in report time with out the collaborative effort of governments, business, scientists and lecturers. Governments supported the pharma corporations with funds, specialists joined arms throughout boundaries and establishments and all entities have been aligned in the direction of the frequent goal of countering the virus. The vaccination programme in India has moved quicker in these states the place governments have introduced in the non-public sector and solicited skilled recommendation than these the place selections have been made inside the siloed chambers of forms and politics.
Two, the severity of the impression of the second wave on the administration cadre of corporates. SEBI requires corporates to inform it of any change in the composition of their board and/or their key administration personnel (KMP). The information submitted has revealed that 24 corporations misplaced a number of of their Board Administrators or KMPs to Covid in March and April. By logical extension, it may be assumed the numbers of these in the second tier have been comparably excessive.
This can be a stunning statistic and casts a pall over what in any other case has been a commendable efficiency by corporates to handle the pandemic.
I’ve a foot in the company world as a non-executive impartial director. From that perch, I’ve noticed the response of the bigger listed corporations to the first wave. It was spectacular. They used the hiatus to refashion their enterprise fashions, reduce out pointless flab, digitise operations and leverage know-how to establish and pursue new alternatives. The outcomes of the final quarter of FY 20/21 (January-March) displays their efforts. All main parameters of monetary efficiency (internet gross sales, working margin, money flows, earnings) have been, on common, substantively in the black. The present quarter outcomes will be comparatively poor due to the lockdowns however the reality stays that many corporations are extra aggressive at present than a 12 months again.
Set towards this backdrop, the tragic HR knowledge does immediate reflection.
Do corporates have sufficiently strong danger administration techniques in place to establish, put together and handle the emergent dangers of a quick altering, dynamic, networked and hyper-connected world? Have they got the instruments to deal with the surprising fallout of a systemic disruption? Nobody ought to misunderstand these questions to indicate that corporates ought to have been better prepared to stave off the HR implications of the second wave.The aim of those questions is to merely replicate on the learnings to be distilled from the incontrovertible fact that regardless of the commendable method during which they managed the direct monetary and operational impression of the pandemic, they didn’t foresee its oblique and rippled ramifications.
Most corporations have well-established danger administration techniques and processes. These work nicely in figuring out and managing predictable operational, industrial and monetary dangers together with these arising from identified geopolitical and geoeconomic forces. However they’re much less efficient in circumstances of flux and unpredictability. It’s because the methodologies observe a predetermined pathway and questions. In consequence, even when the exterior circumstances require the lens to be turned outward, the method stays tunnel visioned.
Dovetailing these two observations, I’ve two recommendations in response to the query I posed at the begin of this text.
First, Indian corporations ought to redesign their danger administration techniques. They need to loosen the straitjacket and create processes that encourage the asking of counterfactual “what if” questions. They need to additionally share info with their company friends about emergent systemic dangers — for instance, cybersecurity; international warming — and institutionalise a mechanism for inter-sector collaboration on danger administration.
Second, the authorities ought to arrange a Nationwide Danger Administration Committee. This committee ought to comprise members from business, authorities, and civil society. It ought to be chaired by a non-government particular person recognised for his or her mind, management and public service. Two names come instantly to thoughts: Azim Premji and Nandan Nilekani. The federal government ought to be represented at the highest degree. The cupboard secretary and the secretary to the PM would give it the required heft. Members must additionally embody famend area specialists and intellectuals. The committee ought to be non-partisan and guarded by an Act of Parliament. It ought to be financially autonomous. And its goal ought to be to establish the surprising, develop situations of other futures, coordinate responses and affect political and bureaucratic mindsets.
We have no idea what is going to set off the next disruption, when it should happen, how widespread its impression will be. However what we do know is that when that occurs, the fallout will be multidimensional, multi-sectoral and probably multinational. We additionally know the Covid fact, “Nobody is secure wherever except everyone seems to be secure all over the place” will apply to future disruptions. We additionally know that to stave off one other human disaster everybody could have to work together. It’s because no single entity, whether or not authorities, company or civic society, has the instruments to handle the consequential fallout.
This leads to just one conclusion. The world and India haven’t any different however to construct establishments that foster collaborative “anticipatory governance”.
The author is chairman, Centre for Social and Financial Progress