The outbreak of Coronavirus on a global scale has transformed conventional ways of running business and managing corporations. The social distancing guidelines and closed borders significantly paralyzed the supply chain processes of many companies that outsourced resources. According to Chang, McAleer, and Wong (2020), “the COVID-19 disease has affected tourism, travel, hospitality, supply chains, consumption, production, operations, valuations, security, financial stress and the prices of all products” (p. 1). Thus, to ensure companies’ resilience and successful recovery during and after the pandemic, organizations are in need to adjust their risk management strategies to the requirements of the new global situation. In this paper, the strategies of mitigating COVID-19-related risks are explored.
Firstly, in terms of COVID-related risk mitigation strategies, organizations refer to the calculation of Time-to-Recover to ensure smooth and resilient exist from the crisis. According to Belhadi et al. (2021), in the case of supply chain disruption, it is possible to calculate Time-to-Recover by identifying the onset of disruption and its lowest point, which ultimately allows for enough time to address the issue (see Figure 1). Secondly, organizational risk management addresses the financial impact of the crisis to evaluate the cost of possible damage (Belhadi et al., 2021). In such a manner, the organizations can mitigate avoidable expenses to meet their financial goals while considering the financial impact of COVID-19. Thirdly, shifting to circular economy principles allowed some companies to diversify their primary production and supply chain management to meet the needs of the market. In particular, breweries shift to producing disinfectants, and textile factories producing masks are examples of risk responses that allow organizations to mitigate crisis outcomes (Nandi et al., 2021). These generally identifiable strategies demonstrate the opportunities for agile and resilient supply chain management in hectic times.
To provide industry-specific evidence on the approaches to risk management during COVID-19, one might refer to the sectors that have been particularly affected by the pandemic. Overall, since the impact of the crisis is particularly relevant to resource containment and financial resilience, the utilization of resource-based theory and organizational information processing theory is applicable (El Baz & Ruel, 2021). These theoretical approaches allow for concentrating on resources and information as the essential assets of an organization during a crisis. To exemplify, the automobile industry was significantly challenged by the outbreak of the virus. Companies in this sector used such technology-driven risk management strategies as “supply chain automation, digital connectivity, supply chain simulation, social supply chain focus, and others” (Belhadi et al., 2021, p. 7). Furthermore, the vulnerable sector of small and medium-sized enterprises practiced “diversifying products, market research, and enhancement of education” to mitigate the risks (Cepel et al., 2020, p. 251). Thus, the examples of strategies demonstrate the applicability of proactive risk-taking, mitigating, monitoring, and risk acceptance as effective measures for COVID-19 crisis management.
In conclusion, the explored strategies used by organizations and businesses to mitigate the abundance of supply chain-related risks associated with the COVID-19 pandemic demonstrate the concentration of resource and information management. Using the resource-based and organizational information processing theories, companies from various economic sectors practice proactive, mitigating, and acceptance strategies. As a result, they allow for building resilience in supply chains and ensuring the longevity of enterprises in post-COVID times.
References
Belhadi, A., Kamble, S., Jabbour, C. J. C., Gunasekaran, A., Ndubisi, N. O., & Venkatesh, M. (2021). Manufacturing and service supply chain resilience to the COVID-19 outbreak: Lessons learned from the automobile and airline industries. Technological Forecasting and Social Change, 163, 1-20.
Cepel, M., Gavurova, B., Dvorsky, J., & Belas, J. (2020).The impact of the COVID-19 crisis on the perception of business risk in the SME segment. Journal of International Studies, 13(3), 248-263.
Chang, C. L., McAleer, M., & Wong, W. K. (2020). Risk and financial management of COVID-19 in business, economics and finance. The Journal of Risk and Financial Management, 13(102), 1-7.
El Baz, J., & Ruel, S. (2021). Can supply chain risk management practices mitigate the disruption impacts on supply chains’ resilience and robustness? Evidence from an empirical survey in a COVID-19 outbreak era. International Journal of Production Economics, 233, 1-12.
Nandi, S., Sarkis, J., Hervani, A. A., & Helms, M. M. (2021). Redesigning supply chains using blockchain-enabled circular economy and COVID-19 experiences. Sustainable Production and Consumption, 27, 10-22.