The new business as usual: surviving and thriving in a new economic environment
23 June 2020 | Minutes to read: 5

The new business as usual: surviving and thriving in a new economic environment

By Jeffrey Luckins

This article was first published in the CFO Magazine on the 8 June

When the ‘recession we had to have’ struck Australia in the late 1980s, there was an air of disdain across the nation for a recession caused, not by drought or flooding rains, but by greed of the 1980’s and ultimately poor economic policy decision-making by governments. Then through the 1990’s our nation faced the dual hazards of low economic activity and grunge music to dampen the soul upon which we were trying to forge ahead with prosperity and hope for the future.

At Uni, we learned about the economic boom bust cycles, which last for six to seven years of good times, followed by a recession, as sure as night followed day. And if it was only a recession we experienced, the old people would talk of how lucky we were to avoid a ‘Great Depression’ like they had in the 1930’s. There’s no doubt it coloured the thinking of Australians and created a conservative mindset that the bad days are always coming so you need to plan ahead for those days like a farmer who saves while he makes hay in the sun, knowing that the wheel turns and he will need surpluses of cash and feed to counter the bad days ahead.

The irony of the boom bust cycle was the certainty that it would occur no matter what happened, so you learned to always be wary and prepared for the bad days to come. Fast forward to 2020 and the unprecedented COVID-19 pandemic has smashed our economy and way of life in a manner not considered possible during the 29 years of continuous economic growth in our great Australian nation.

According to the Reserve Bank of Australia’s Statement of Monetary Policy Economic Outlook from May 2020, the Australian economy is expected to record a contraction in GDP of around 10 per cent over the first half of 2020, total hours worked are expected to decline by around 20 per cent, the unemployment rate is forecast to rise to around 10% in the June quarter and household consumption is forecast to decline by around 15%. The decline in activity in the June 2020 quarter is expected to be the largest in the history of the quarterly national accounts. The initial contraction in activity has been driven by necessary public health measures rather than the economic and financial developments that are typically involved in sparking economic downturn. Worse still is to read the potential scenarios for economic outcomes that the Reserve Bank speculates on due to the uncertainty of the COVID-19 pandemic. It’s a bleak and uncertain future for us all. And yet, if one considers Ecclesiastes 1:9 from the 4th century Christian bible, it does assist us to have a more calibrated perspective on life:

What has been will be again,

what has been done will be done again;

there is nothing new under the sun.

Researching world pandemics is not pleasant reading, especially commencing with the Bubonic plague of 540 AD in Europe and West Asia which is thought to have eliminated up to 100 million people or roughly half of Europe’s then population, or the Spanish Flu of 1918 which is believed to have also eliminated up to 100 million people, but the difference between these and COVID-19 is that COVID-19 spread worldwide.

So while the effects of COVID-19 are unprecedented, history tells us a downturn was imminent and the great lessons of history are the keys to understanding how we can all be surviving and thriving in a new economic environment, or indeed, in the New Business As Usual.

Risk Management

Not surprisingly, to navigate our way out of this pandemic is to properly understand the principles of Risk Management and then apply the lessons. Let’s start with the Risk vs. Reward chart:



Do not lose sight of alternative business and life choices available.

If the desired Return on Investment [ROI] is not achievable or the risk appetite is too great, surely a re-evaluation of decision-making is required? Ask owners and employees in the retail, hospitality, tourism and leisure markets whether they had properly considered the risks of not being able to work and trade through a pandemic and whether in hindsight, they could have invested their capital and/or their time as labour in lower risk industries or employment opportunities?

Re-evaluating one’s level of risk tolerance is certainly an outcome of this pandemic and will drive people and businesses to re-align their expectations and anticipated returns from their endeavours. This will almost certainly lead to a changing landscape in our economy with an increased desire to achieve relative certainty and stability.

The below diagram proposes a process for implementing risk management strategies with a considered level of risk appetite, and implementing business plans consistent with these strategies. This enables the owners of business enterprises to conduct operations, assess the ROI and re-evaluate the outcomes in terms of risk and reward. The question that ultimately needs to be answered by entrepreneurs is where on the Risk vs Reward chart (above) are they comfortable to sit?


Given the increased focus and importance of implementing, reporting upon and assessing Risk Management practices in your business operations, one expects the desired level of risk and return will diminish in the short to medium-term.

While Business Continuity Management and Risk Management will be front and centre of executive and Board discussions in 2020 and beyond, let’s not lose sight of the potential for businesses to transform their operations and significantly reduce operating costs by implementing Future of Work policies. This means reducing time of commute and the cost of travel and accommodation for executives, reducing the investment of time and cost of travel and accommodation and increasing productivity. So, the New Business as Usual will be leaner, smarter, more flexible, and more resilient. Resetting the current narrative of business operations will enable businesses to survive in the short term and thrive in the longer term.

Ultimately, we will see a flurry of merger and acquisition activity to survive and in time the future will shine a light on innovation (in the higher risk and reward quadrant) and these businesses will thrive, just as we have seen the remarkable rise of companies like Zoom Video Communications Inc. (NASDAQ: ZM) which commenced the 2020 year with a market capitalisation of USD $19B and by June2020 the value had skyrocketed to nearly USD $70B with a price earnings ratio of over 1,300!

The world has consistently faced pandemics throughout the modern ages and contained them every time. The eternal optimist in me suggests the Coronavirus crisis will be resolved. To be proactive is your choice and the best managers of business organisations will make extraordinary efforts to respond to the crisis and minimise the potential damage to people and organisations.

Business as usual will not resume after the crisis, the game has changed too much. By reimagining how they operate, organise, and use technology, companies can set the foundations for a new era of success, based on a new paradigm of acceptable risk management strategies and against a desire to achieve levels of ROI which suit the adjusted risk tolerances one can live with.

The new business as usual: surviving and thriving in a new economic environment

Jeffrey Luckins

Jeffrey is a director in our Audit and Assurance Division with extensive experience in auditing listed Australian and multinational public companies, large private corporations and groups, and preparing Investigating Accountant’s Reports. Jeffrey’s expertise spans many industries, including technology, manufacturing, mining and exploration, importing, retail and agricultural.

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