The nature of armed conflicts has changed in the present century, with localized state-based conflicts of limited intensity (mainly on the periphery of functional states that keep overall control of the national territory), larger, more intense, heavily transnationalized civil wars (mostly in weak, failed, dysfunctional or proxy states), and terrorist attacks being the three major types. Although the characteristics of wars have mutated, they still have the power to influence multiple levels of society. We have an example of the perfect storm created by Russia's invasion of Ukraine, intensifying the economic crisis initiated by the pandemic only a couple of years ago.
Many businesses are trudging and wondering what the recipe is to avoid a disaster. The following section will highlight three among the crucial areas’ companies have to keep under control to survive this troublesome period:
1. Exposure to risks
It will be inevitable to be exposed to risks during these times. However, if they are identified in advance, monitored, and addressed timely, there are higher chances of surviving them. Looking at best-case and worst-case scenarios and developing an action plan in response is an excellent exercise to do.
2. Supply chain disruptions
Many sectors have already seen their supply chains suffering due to a lack of components or raw materials. The circumstances are uncertain to the point that, frequently, it is difficult to predict when the disruption will be eased. In such situations, it is essential to examine and assess the situation to understand how your supply chain is structured and the short and long-term impact. Prioritizing the spending, looking at alternatives, and training the staff to update them with the latest protocols and processes should come right after. Another fundamental action is maintaining constant and transparent communication with customers and suppliers.
3. Force majeure
It can easily happen that clients won't be able to fulfill their obligation when an extraordinary circumstance beyond their control happens, like a war. To prevent payment default, make sure you have policies that protect the areas you need to prioritize, and always check the dollar value before accepting transactions. If you are unsure about managing contracts, consider hiring an expert to follow up with these matters.
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