In the midst of the COVID-19 pandemic, many automotive manufacturers and suppliers are scrambling to develop risk management policies and procedures. While there are many critical unknowns, and circumstances change by the hour, it's becoming increasingly clear that risk management isn't just tied to business productivity or ticking regulatory boxes anymore. As we've learned, it is now a cornerstone of social responsibility. Businesses must now look at risk management through the lens of this pandemic and beyond their core stakeholders to understand how their actions — or inactions — impact the welfare of society.
As we work to emerge from this global crisis, we are undeniably operating in a "new normal." If they have not already done so, it will be imperative for auto manufacturers and suppliers to assess their risk management structure and plans from the ground up.
With technology, changing regulations, evolving customer preferences and now even a global pandemic disrupting industries worldwide, having a risk management plan is no longer just an option — it is a must.
Unfortunately, for many auto manufacturers and suppliers, risk management and assessment lives in a silo. It's often not deeply rooted in a company's — and arguably, the industry's — culture. The current crisis proves this culture has to change.
Making risk management a top priority must come from the C-suite. It can no longer be delegated to midlevel quality and supply chain managers at a plant. Far too often, there is a clear and present gap between the C-suite's interpretation of risk management and how the business actually addresses it.
What's even more imperative now is that Tier 1s require Tier 2s to do the same with Tier 3s and so on down the supply chain. If the industry does not prioritize risk assessment and contingency planning, it will take longer for companies to recover in a crisis such as the current pandemic.
Executives across the business need to take a new look at risk as a matter of social responsibility. As we are learning today, lives and livelihoods are at stake due to the fallout from the economic and health crisis. Brand reputations can be damaged.
As we plan how best to do business, here are three key ideas that can help you make risk management an important part of your operations.