The speed and breadth of the unfolding COVID-19 crisis – dramatically impacting lives and healthcare systems, disrupting business operations and supply chains, slowing markets, and now posing the risk of a global recession – is putting nearly every facet of business to the test. Not since the financial crisis of 2008–2009 have crisis response plans, business continuity and resilience, cash flow, scenario planning, and corporate leadership come under such intense pressure.

Navigating the uncertainty requires a sharp focus on people, liquidity, operational risks, and contingencies, while keeping sight of the bigger picture: strategy, risk, and resilience. With information changing daily (even hourly), companies should expect to recalibrate their responses—and potentially reframe their thinking about how the COVID-19 crisis is impacting the business—as conditions change.

To help boards in their oversight of the company’s pandemic response—managing through the immediate crisis as well as addressing vulnerabilities exposed by the outbreak—we highlight five key areas for board focus:


Based on our conversations with directors, KPMG subject matter professionals, and others on the front lines of the crisis, these five areas are critical today and in the medium term.

First and foremost, focus on the safety and well-being of the company’s employees

The initial focus on a company’s people and operations in China, Italy, Spain, South Korea, and other coronavirus hotspots is quickly expanding to global levels, with Europe, the UK, and the U.S. seeing spikes in COVID-19 cases. The focus on employee well-being, therefore, should now be proactive, international, and company-wide.

What policies are in place to protect and support employees (e.g. hygiene programs, restrictions on travel and congregation, flexible and remote working policies, healthcare)?

  • How frequently do we reassess these policies as the crisis evolves and based on guidance from the Belgian government and medical experts?
  • What are the plans to minimize transmission in the workplace? Are there high-risk facilities where transmission of the virus would be more likely?
  • Is the HR function equipped to deal with employee wellbeing, including issues like statutory sick pay rights and other entitlements?


Do we communicate these policies – and provide timely updates – clearly and frequently to employees?

  • Is there confusion about the policies? Have we addressed employee needs? What resources are available to minimize stress and concern – e.g. childcare?
  • How are we maintaining employee morale and corporate culture – including addressing concerns about job security – as the company weathers the crisis? 
  • Recent surveys indicate that employees want to hear from the CEO/top management at least once a day, if not twice, and that employees have greater confidence in the COVID-19-related information they receive from management than in media reports.


In addition to employees, does the company understand how its other key stakeholders are being impacted by the COVID-19 crisis?

  • How are the company’s customers, suppliers, and communities being impacted by the crisis, and how is the company supporting those stakeholders?
  • Is the company communicating proactively with its customers and the broader marketplace about the company’s response to the COVID-19 crisis?
  • Is the company actively demonstrating corporate purpose—i.e. being part of the broader response?

Focus on financial risks and scenario planning

Duration, severity, and longer-term dislocations

Lessons learned from the 2008 financial crisis – marked by turmoil in world markets, shortages of cash and liquidity, tremendous volatility and uncertainty, and the prospect of a prolonged recession – can provide a basis for boards to consider near- and longer-term financial risks posed by the coronavirus crisis. Among the lessons learned:

Given the uncertainty regarding the economic impact of the COVID-19 crisis, scenario planning is essential.

  • What scenario planning is the company doing around a global pandemic and a possible recession?
  • Are there second-order effects that will impact the company’s industry, supply chain, sales, and distribution channels? Are there key businesses that might be deemed nonessential and forced to close?
  • Does management prepare a set of probability scenarios for how the future might unfold and consider the risks that those scenarios present? Do the strategic options balance a commitment to a course of action with the flexibility to adjust amid different future scenarios?


Understand the array of financial risks to the business and how management is addressing these risks under different scenarios.

  • Liquidity, access to capital, cash flow. What are the company’s plans to raise debt/equity in the short and medium term? How dependent is the company on short-term financing? Are credit lines secure? Is the company at risk of default on debt covenants?
  • Hedging against commodity, currency, interest rate fluctuations. How is the COVID-19 crisis impacting commodity costs and procurement strategies? How will changes impact the ability to obtain economic hedges against commodity, currency, and interest rate fluctuations?
  • Exposure to third parties. Does the company understand its exposure to third parties who may experience financial difficulty (customers, suppliers, lenders, and others)? Are trade receivables a concern?
  • Threat of a deep recession. What restructuring is the company considering? What capital expenditures (or hiring) should be deferred?


Focus on fair value and possible asset impairments that may pose significant risks for the company.

  • Investments. Have we inventoried the company’s investments in debt and equity securities to identify declines in value or impairments that should be reflected in the financials?
  • Goodwill and intangibles. Have we identified triggering events that may warrant impairment assessments of goodwill and other intangibles? If so, are fair values determined by management or valuation experts realistic in light of current market conditions?
  • Pensions. How have changes in financial markets impacted the valuation of pension plan assets and funding requirements?

Understand key operational risks

Particularly the supply chain, labor, and technology capabilities, and related scenario planning to maintain operations

Supply chain disruption is being felt across most industries. The problem has quickly become global, and the complexity has made it challenging to model and evaluate the range of impacts and alternatives. Likewise, the impact of the crisis on workers and the workplace – particularly directives for physical social distancing and the resulting closures of offices, schools, and local businesses – along with the demands on technology systems to support remote working may pose significant operational challenges for the company.

Business strategy: There is little doubt that COVID-19 will cause significant disruption to the local and global business environments. Has the board:

  • Ensured that the current business model been assessed in the light of the potential disruption?
  • Assessed and agreed the key challenges for the business in the medium term?
  • Considered the extent to which the business is dependent on the economy and society stabilizing within the next 2 months?
  • Considered the biggest risks (whether that be funding, people, customers, suppliers or other)?
  • Taken steps to reposition the business in response to the disruption caused by COVID-19?


Business continuity: Is the board confident in the company’s business continuity plans?

  • Has the board conducted a business impact assessment (BIA) process within the last 2 months?
  • What if a key executive becomes ill?
  • Should we modify role descriptions, performance objectives, and/or organization structure?
  • What are the implications of employees working remotely? Do the ‘new’ working arrangements create a sufficient presence for corporate tax purposes?
  • Will layoffs become necessary?
  • How will travel restrictions, physical social distancing practices, and employees’ personal circumstances impact staffing and key activities?
  • Is the company experiencing or anticipating any significant drops in production or delivery of services as a result of the inability of employees to work on-site or remotely?
  • If only limited attention has been given to business continuity plans in the past, how can risk management and internal audit professionals help develop agile responses and identify practical solutions?


Supply chain: What measures are being taken to stabilize the company’s supply chain?

  • Is the company planning for material shortages of supplies that are routed from logistical hubs in impacted areas as well as labor concerns due to quarantine procedures or illness? What liabilities might arise if contractual obligations go unfulfilled due to supply shortages?
  • Are alternate suppliers being identified for short-term sourcing in case an alternate supply is needed?
  •  Is the company supporting key suppliers – e.g. with working capital infusion, loans, etc. – to help them weather the crisis and remain viable?
  • What is the status and duration of the company’s inventory? Are there safety stockpiles to provide a buffer and mitigate the risk of shortfalls in products or materials? How will key customers be prioritized in the event of inventory shortages?


Technology: Are the company’s technology capabilities able to support a significant increase in remote working and virtual operations?

  • Do employees have the technology, information, and access they need to work and collaborate remotely? Has a technology help line been established to support users – and are protocols established to prioritize access during peak demand?
  • Have employees been alerted to potential scams/phishing emails attempting to take advantage of the COVID-19 crisis to access systems and personal information?

Ensure the board is staying apprised of the company’s response to the crisis

Given the fast and fluid pace of the crisis, the directors and business leaders we spoke with all emphasized the critical importance of frequent management updates to the board. The board’s role in a crisis is to stay informed and oversee management’s response, while also letting management do its job. 

Understand the scope of the crisis and how management is responding.

  • Have we determined the scope of the crisis? Are the board and management of the same mind as to what’s being done?
  • Is it clear who is on point for key elements of the response – internal and external communications, operations and human resources, financial implications, etc.?
  • Are there benchmarks and checks on progress as crisis management and mitigation efforts go forward?
  • In addition to internal reporting, is the board seeing the company’s internal communications to employees as well as external communications to customers and the broader marketplace?


Consider the potential impact of the COVID-19 crisis on the board’s operations and effectiveness.

  • Does the board have contingency plans in place to meet virtually as needed?
  • Is the process defined by management – and their collaboration/discussion with the board – effective and efficient, or does the board need to step in?

Assess financial reporting and disclosure impacts

The financial reporting impacts of the outbreak will depend on facts and circumstances, including the degree to which an entity’s operations are exposed to the impacts of the outbreak and the sensitivity of amounts recorded in the financial statements to the more volatile economic conditions. 

With respect to financial statements for the year ended 31 December 2019, the financial reporting effects of the outbreak are generally considered to be non-adjusting events, with the exception of going concern under IFRS.

The significant changes in business activities and economic conditions occurred as a result of events occurring after the reporting date of 31 December 2019, such as actions taken by the government and private sector to respond to the outbreak. Therefore, based on the information about the outbreak that was reasonably available as at 31 December 2019, it is likely that entities would either have made no adjustments to their assumptions, or only inconsequential changes, based on their assessments of the available information and associated risks as at that date. 

However, the assessment as to whether the going concern basis under IFRS is appropriate takes into account events and conditions after the end of the reporting period. As there have been significant new events and changes in conditions since 31 December 2019, for entities with a calendar year-end, it will be necessary to reflect the impacts of these events and conditions in the going concern assessment.

Read more in our overview of the financial reporting and audit considerations.


For reporting dates after 31 December 2019, companies will need to consider wider impacts of the coronavirus crisis on the financial statements.

Companies should consider whether economic uncertainties and market volatility have, or will affect, accounting conclusions, including:

  • Key assumptions and sensitivities. Re-evaluate as necessary to reflect current economic conditions and uncertainties. Consider whether there is an impact on asset valuations; impairment of non-financial and financial assets; recoverability of receivables and inventories.
  • Strategies and policies to manage risk. Have these been adequately updated and disclosed if there have been changes?
  • Adequacy of disclosures. Consider disclosures for potential inventory write-downs and impairment losses, loan defaults or covenant breaches, credit risk from customers in affected countries or others negatively impacted by these events, insurance recoveries, changes in the business or economic circumstances that affect the fair value of the company’s financial and nonfinancial assets and liabilities, and changes in growth forecasts that may impact impairment evaluations (e.g. goodwill, other intangible assets).


Companies should also consider potential areas of business risk disclosures, including:

  • Customer demand. Is the company experiencing (or expecting) any changes in demand from customers in or products made in affected areas? How sensitive is demand and pricing to exchange rates and/or commodity indices (e.g. volatility of crude oil prices)?
  • Supply chain. Is the company experiencing (or expecting) supply chain impacts such as shortages related to the import/export of machinery, components, or raw materials? Is the company making new arrangements to purchase goods from sources outside of the affected areas? Will there be significant costs or other risks associated with those alternative arrangements? Is the company experiencing (or expecting) issues with the flow of goods and trade due to travel restrictions, cancelled passenger and cargo shipments by airlines, or border closings?
  • Products and services. Are there risks of production delays for products manufactured in affected areas? Is the company experiencing plant or office closures? Does the company anticipate product shortages? Is the company impacted by rent concessions or abatements associated with office and/or retail closings?
  • People. Is the company experiencing staffing shortages due to quarantines locally or in other affected locations? Are there employee compensation matters that will result in material costs?
  • Markets. To what extent does the company have exposure to the global economy? Is the company exposed to volatility in commodities markets impacted by current events?

About the BLC

The Board Leadership Center offers non-executive and executive board members and those working closely with them (including CROs and Heads of Internal Audit) a place within a community of board-level peers and access to topical seminars and ‘lunch and learn’ Board Academy sessions, invaluable resources and thought leadership, and lively and engaging networking opportunities.

[1] David A. Wemer, “Addressing the coronavirus ‘infodemic,’” Atlantic Council, March 16, 2020.


Connect with us