Few companies were prepared for a crisis on the scale of the pandemic – but it’s still important to plan for future disruptions. So what should treasurers consider when drawing up a business continuity plan?

One year ago, with the COVID-19 pandemic gaining momentum, many treasury teams found their disaster recovery plans tested to a degree few could have envisaged.

Previously, business continuity planning tended to focus on scenarios that while potentially severe, were also more limited in scope, such as how treasury teams would operate if they were prevented from accessing the office by an event like a natural disaster or a terrorist attack. Often the plan would involve working from an alternative site for a finite period of time. Other scenarios might involve contingency plans that could be activated in case of supply chain disruption, or if the business fell victim to a major cyberattack.

But last year, the arrival of the pandemic changed the way that businesses think about disaster recovery planning. In a short space of time, treasury teams around the world had to navigate the abrupt shift to remote working patterns, initially as a short-term measure but increasingly as a longer-term arrangement. At the same time, companies have faced significant shifts both in the availability of key supplies, and in customer behaviour. Another twist is that the crisis is one that has reached most countries in the world.

Seeking flexibility

With a crisis of this enormity still ongoing, the idea of planning for future crises might seem counterintuitive. Nevertheless, treasury teams still need to have business continuity plans in place for future disruptions that might occur – and the lessons of the pandemic should mean that companies are better prepared for disasters both big and small. In particular, the flexibility that companies have acquired during the past year, and the ability to switch to remote working at short notice, should help companies protect themselves more effectively from the impact of future crises.

In particular, the crisis has accelerated both the development and adoption of digital solutions. Indeed, a McKinsey survey of executives published in October 2020 found that companies had accelerated the digitisation of customer and supply chain interactions, as well as internal operations, by three to four years, while the share of digital or digitally enabled products in their portfolios had accelerated by seven years.

Forward planning

So what should treasurers be thinking about when drawing up or reviewing a business continuity plan? Carl Sharman, Head of Treasury Technology Advisory at Deloitte, says there are typically three areas of focus, namely putting your people first, breeding resilience, and reshaping ways of working. As such, treasurers will typically pay attention to the following points when drawing up a plan:

• Put your people first. “Treasury departments are typically thin on headcount and therefore most if not all people/groups/skills are critical, with key staff that could be classed as single points of failure,” Sharman explains. “Treasury manages liquidity. Here treasurers will have identified and tested where staff can work from and still be effective, with worst case scenarios identified.”

• Breeding resilience: Sharman advises: “Always ensure that decision making during the crisis has recovery in mind. Decisions that work well in a crisis, may need a crisis to work well.”

• Reshaping ways of working. “All critical applications will have been identified via impact assessments and workarounds identified,” says Sharman. “In the majority of cases, staff have demonstrated they can work from home, via secure remote access. Developing and maintaining communication methods that suit the new expectations of your staff is key.”

As Sharman notes, “Treasury is used to managing risk and managing assets. Whilst the pandemic has been specific in nature, the skillsets needed to successfully navigate it are those most associated with treasurers.”