Breaking Business News | Breaking business news AM | Breaking Business News PM | Business News Select | SMPost

A CEO who wasn’t prepared for the pandemic asks: How do I foresee future ‘black swans’?

29 Jul 2020

By Maynard Webb

You can’t predict the unpredictable, says Maynard Webb, but you can learn from this crisis.

Q. I didn’t see what was coming with this pandemic. How should I prepare for this kind of “black swan” issue in the future?

—An unprepared CEO

Dear CEO,

The thing about a black swan event is that you don’t see it coming. No one does. That’s the definition of a black swan event. Therefore, it’s impossible to completely prepare for this kind of issue perfectly appropriately.

So, what can you do? Our responsibility is to prepare for risk. We should all have awareness that anything can happen—and it can be both utterly unexpected and completely catastrophic. The first thing you must do, and I understand it’s hard, is to stay calm. You must not become paralyzed by anything and instead pour your energies into determining a plan. Usually that means being cautious and preserving cash. (Cash is king in times of uncertainty—make sure you have time to weather any storm.)

Knowing this, there are some practices you can implement in advance of any crisis, which will put you in a better position to survive whatever comes your way. Just as anyone should try to have six months of living expenses in savings to help withstand a loss of a job or another event that impacts cash flow, the same is true for companies. Always have enough to draw on to withstand unforeseen events and preserve optionality.

When the financial crisis hit in 2008 there were companies that had raised good rounds few months before and these companies had plenty of cash to help them through the downturn. There were other companies that were waiting for a higher valuation—something that never happened when the market went away. In hindsight, that looks like the wrong decision, but no one knew the fallout would be what it was. You don’t always know what will happen, but you do know that something could go wrong and you should put a safety net in place to give you more security.

One of the things the coronavirus crisis taught us is that today’s world is a small place and we are all interconnected. It doesn’t matter if you live in a royal palace or if you don’t have a home, all of us can be exposed and vulnerable. And it is only by working together that we can get to a better place.

In any situation, whatever happens, it’s up to you to assess what is going on and instead of just seeing the negative ramifications, look for insights that change how you see things and for opportunities. We all have an opportunity to take care of people to the best of our capabilities. One thing I can assure you is that even though it’s hard to see in our darkest hours, there are better days ahead. It’s up to all of us how to learn from the mistakes we made and ensure tomorrow is better.


Read the full article here.
This content was originally published by Fast Company. Original publishers retain all rights. It appears here for a limited time before automated archiving. By Fast Company

Covid-19 – Johns Hopkins University

Download brochure

Introduction brochure

What we do, case studies and profiles of some of our amazing team.

Download