- 46% of Irish firms now focused on planning for the future
- Businesses who diligently manage risk could see shareholder value grow by up to 20%
- Aon publishes white paper to help business leaders respond effectively over coming months
15th June 2020 – New research from the professional services firm Aon has revealed that while the immediate business impacts of the novel coronavirus (COVID-19) are still being felt, Irish firms are firmly focused on managing risk along the road to recovery with close to half of all businesses in Ireland currently planning for the future compared to just 18% who remain in crisis management mode.
Businesses who diligently manage continuing volatility could see their shareholder value rise by as much as 20% in the year following the virus outbreak while those who fail to manage the COVID-19 pandemic and its impact on their business could see shareholder value depreciate by as much as 30% in the same period.
These new statistics come as Aon launched its new white paper on “Decision Making in Complex and Volatile Times” outlining the five difficult decisions senior leaders face amidst the COVID-19 crisis and the steps that can be taken by leaders to respond effectively.
1. Protecting people and assets
With many companies due to make remote working a permanent option for their employees, business leaders will need to enhance the flexibility of their wellbeing supports both in the online and offline world. Despite only 14% of firms reducing the size of their workforce in recent weeks, companies will need to consider how to right-size their workforce and redeploy talent to meet the changed needs of their customers. Beyond the workforce, it is essential that organisations also protect physical assets such as real estate and analyse changes to cyber risk where creative new threats evolve daily, and frequency of attacks increase.
2. Protect the balance sheet
In the second half of 2020, Irish CFOs and their teams will need to manage the liquidity risks facing their organisation. From freeing up capital in the supply chain to converting trade debtors into cash, companies can enhance the balance sheet in the short-term. Renewed focus will be placed on raising capital while actively seeking to reduce liabilities associated with pension plans. This comes as some employers will face challenges in meeting their commitment to pension plans in the face of investment market volatility.
3. Maintain or increase revenue
Leaders will need to accelerate efforts to transform their business model in order to protect their company from current revenue loss. Pivoting business models is one of the main steps that can be taken with technology playing an essential role in connecting businesses to customers. Business leaders need to give serious consideration to monetising intangible assets, on their balance sheet such as Intellectual Property. Leaders should be reviewing all areas of their business and analysing their total cost of risk with a view to reducing it through enterprise risk management.
4. Cost management
Companies in Ireland are likely to take further actions to manage costs. This comes as 43% of businesses in Ireland have decided to defer or cancel planned pay increases. Non-pay related costs have and will be brought into sharp focus. Additionally, companies who have placed employees either on unpaid leave or temporary lay off may need to consider what actions, if any, they can take in relation to pension contributions and risk benefit cover. In particular, for those companies that sponsor defined contribution pension plans, enhanced management of costs may be achievable by transferring from own trusts to master trusts. This comes in light of the likely consolidation in the number of plans in the Irish market.
5. Revisit business strategy
Executives face the challenges of planning for 2021 and beyond. Leaders will need to rethink how they reward employees considering the way they work is being transformed. Irish companies should also consider long-term ambitions for mergers and acquisitions while assessing divesting underperforming elements of the business.
To help business leaders respond quickly and make the right decision in a fluid and uncertain environment, Aon has set out a COVID-19 response framework focused on creating a resilient mindset, fostering flexible business models and taking timely action.
To help business leaders respond quickly and make the right decision in a fluid and uncertain environment, Aon has set out a COVID-19 response framework focused on creating a resilient mindset, fostering flexible business models and taking timely action.
“However, our research reveals that business leaders are changing focus. Close to half of all firms have now shifted their focus from crisis management and business continuity to planning for the future. This marks the beginning of the long road to recovery. The whitepaper we’ve produced at Aon provides a snapshot of the difficult decisions now facing business leaders. Effectively managing and mitigating the risks that lie ahead will play a key role in framing the speed of business recovery.
“That’s why we are urging leaders to make the kind of decisions that position their firm for its best opportunity for success. This will require leaders to have the right mindset, the most relevant information at hand and the decision-making framework to manage the expected uncertainty in the months ahead. While no one can predict the future, we hope that leaders can use Aon’s COVID-19 Response Framework to take an enterprise wide view of risk, which covers people, assets, business strategy and financial factors.
“As the COVID-19 pandemic continues to evolve, so too will the risks businesses face. In the coming weeks and months as the country continues to reopen it will be important for firms to keep pace and ensure they best position themselves to survive and ultimately rebuild over the coming months.”
To access Aon’s COVID-19 Response Framework visit: https://www.aon.com/event-response/decision-making-coronavirus-covid-19.jsp?promo_name=HP-01-2020-05-07-covid-19-decision-making-whitepaper&promo_position=HP-01
Aon has created a dedicated COVID-19 Response Site which features a number of resources to support decision making at a time of uncertainty. This includes toolkits on business recovery and webinars in financial wellbeing. To access the site, visit: https://www.aon.com/ireland/Coronavirus.jsp.
Media Contacts:
Paul Nallon, Q4PR – Tel: 086-8694041 / Email: [email protected]
Suzanne Sullivan, Q4PR – Tel: 086-4619680 / Email: [email protected]
About Aon
Aon plc (NYSE:AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance.
About the Aon COVID-19 White Paper
The Aon COVID-19 White Paper explores the cyclical nature of COVID-19’s event arc and lays out a comprehensive response framework that helps businesses globally to build the right mindsets, create flexibility and execute meaningful actions for both the short and long term.
To note, the Irish research findings referenced in the release were captured as part of a COVID-19 Pulse Survey of 218 Irish business leaders undertaken by Aon between April 28th and May 1st.