"Must Secure Resilience in Finance, Operations, and Market Aspects to Respond to the 'Post-Corona' Era"

Samjong KPMG Publishes Report on 'Resilience Strategies to Overcome COVID-19'

[Asia Economy Reporter Minji Lee] As the novel coronavirus infection (COVID-19) is affecting all aspects of business including corporate finance, customer demand, and supply chains, there is a call for companies facing crises to assess their resilience capabilities.

On the 28th, Samjong KPMG emphasized through its 'Resilience Strategy to Overcome COVID-19' that in a situation where unpredictable 'Black Swan' events such as the global economic crisis and workplace shutdowns may occur due to COVID-19, companies must secure resilience capabilities to overcome and recover from crises.

Resilience refers to the property of returning to the original state after a shock is applied, and it signifies a company's core competency to overcome crises and prepare for the future.

According to a survey conducted by the global KPMG Strategy Group targeting KPMG experts in 28 countries worldwide, assuming COVID-19 does not resurge and remains controlled, the global economy is expected to resume normally after the fourth quarter of this year, with economic recovery taking 4 to 6 quarters.

The report pointed out that the spread of COVID-19 leads to demand and supply shocks affecting global supply chains and the real economy, increasing concerns about a global economic crisis, and it anticipates medium- to long-term impacts such as global economic contraction, reduced trade volume, and shifts in monetary and fiscal policy operation trends.

Additionally, although the number of new COVID-19 cases domestically has entered a downward trend, corporate performance deterioration is expected to intensify from the second quarter, heightening companies' sense of crisis, and there is a possibility that COVID-19 could transition into an economic crisis.

Accordingly, the report presented resilience strategies for companies to overcome COVID-19 and make a leap forward in the areas of ▲finance ▲operations ▲market.

On the financial side, a defensive cash securing strategy is necessary, such as revising cash flow models and entering tight management; it is important to use short-term forecasts to adjust maturities with creditors and fund providers and to receive financial support. Companies should prepare funding and capital expansion plans considering mid- to long-term business strategies and review financial management and related risks considering production base expansion, R&D, and M&A.

On the operational side, companies should prioritize products and services offered to customers and establish strategies to develop feasible business models. Risk assessments of suppliers and the establishment of emergency supply chains are necessary, and expanding digital technology-based work support such as building remote work support solutions and remote monitoring of data centers and technical facilities, along with strengthening cybersecurity, is recommended.

On the market side, companies should analyze changing consumption patterns and customer experiences, optimize product lines accordingly, and establish strategies to strengthen digital transformation such as building automation systems and analyzing data related to changes in customer behavior. Especially, to proactively respond in the 'post-COVID' era, companies are urged to develop new business models through analysis of changing cross-industry value chains and cross-social stakeholders, and to establish feasibility analyses and risk management plans for new businesses.

Lee Dong-seok, Partner of Strategy Consulting at Samjong KPMG, stated, “COVID-19 is affecting not only corporate performance but also survival itself, and it can cause a chain crisis for both nations and companies. To overcome the pandemic crisis situation where accurate forecasts of finance, operations, and markets surrounding companies are difficult, securing a new concept of ‘resilience’ strategy that considers the values of social stakeholders such as employees, customers, government, shareholders, and social systems is a crucial time.”

This content was produced with the assistance of AI translation services.