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For the sake of continuity

by Alice Murray 19 March 2020

As heads of operations, IT, compliance and risk find themselves in the spotlight, tasked with ensuring their houses can run as effectively and seamlessly as possible in the face of widespread disruption, it’s the little things often overlooked in crisis situations that must be dealt with.

Social distancing and remote working appear to be the name of the game for the foreseeable future. However, private equity practitioners by and large tend not to work from home. According to MJ Hudson’s Work/Life Balance survey: only 7% of respondents have home working capabilities, and of these 80% are senior staff of executives. Junior staff almost entirely base themselves in the office.

Against these figures, will private equity firms be able to manage the disruption of its entire workforce working remotely?

Remote control

According to Michael Asher, chief information officer at RFA, the picture is mixed. “To some degree, the smaller firms have made that transition to public cloud solutions that have more working capabilities built in. The larger firms are not as lucky; we’re seeing that they have solutions that rely on private cloud or on-premise models.”

It is understood that typically private equity firms factor for 30% of staff to be working remotely in the event of a crisis, with the most conservative firms catering for up to 50%. What’s clear about the average PE business continuity plan (BCP) is they’re relatively limited in terms of what kind of events they’re designed for; few if any will have predicted for its entire staff base to be working remotely.

But the current situation is very different from what is typically planned for. “Unlike a blackout or a hurricane where there would be mass destruction, people are relatively calm; they’re not panicking and it feels as though they still have access to most things. But what’s being overlooked are the nuances,” says Asher.

Indeed, it’s the subtleties and how they’re dealt with that could be the greatest determining factor in how well firms fair over the coming weeks. BCPs are less likely to include provisions for things such as paying vendors; in disaster situations, most would expect vendors to be understanding. “It’s also the trivial things like having your calls rerouted,” adds Asher.

“Firms need to be creating a matrix of all of the services and all the applications they use. And then they need to take into account that remote working could be extended, as well as harsher travel bans. If schools are closed down for a long period of time, then there’s additional pressure in terms of childcare. This kind of disruption will reverberate so the best thing to do now is to create a plan that takes into account all of those little details,” advises Asher.

Productivity slide

While there appears to be a relative sense of calm, there are wide variations in how firms are responding. “Right now, people’s feelings can override their perception of reality. Some businesses think it’s fine to come into the office and others are bunkering down at home. Everyone is interpreting this differently, so it’s important to set expectations. That takes centre stage, and the technology is a close second,” says Asher.

Another nuance likely to be overlooked amidst the upheaval is the impact on productivity. “The initial impact won’t be felt immediately,” warns Asher. “But over time there will be a real need to have those virtual face-to-face conversations.”

The idea of working remotely will likely be a novelty to many in private equity, given the aforementioned figures, which puts the industry at greater risk than others. People will be testing out the new boundaries of not being office based, which requires senior management to communicate consistently and clearly. “Set expectations; say that you will be having video calls, and set the parameters around them such as how long that conversation will likely be,” says Asher. “Looking at the data from places like China, we could be working away from the office for a long time. Those first weeks will creep up and it can have an impact on productivity levels.”

Same message

Beyond regular and well-defined internal communications, firms must also think about how they are interacting externally.

Asher advises using a government-style five state alert system as an efficient way to communicate to all stakeholders where you are and how you’re viewing the situation right now. “Highlight the key metrics you are able to share; information that isn’t sensitive. Tell people what your plan is, what scale you can operate on, what essential personnel are doing and where they are, what you are doing to continue business as usual,” advises Asher.

This can also be used as a way to better understand vendors and service providers. “You also need to find out if they are prepared; validate that they have a plan in place,” says Asher.

Increased attacks

Sadly, cybercriminals are already exploiting the current disruption. In the UK, experts from the National Cyber Security Centre have revealed a range of attacks seeking to exploit Covid-19.

In expectation of this, Asher and his team ran security checks with clients, including a phishing test that linked to advice on what to do regarding the virus. “We saw that users who are normally very vigilant when it comes to security failed the test and clicked the button.”

This is another pressure firms must be aware of over the coming weeks. “With everyone working remotely it’s critical to ensure security is maintained. You can’t easily check if a co-worker sent an email because you’re no longer in the same office. You have got to pay attention now more than ever,” says Asher.

These are undoubtedly strange times, but those firms able to move quickly and respond to events as they happen will likely do well. It is highly unlikely that any house would have had a BCP in place able to handle the current situation, therefore it is simply a task of assessing where you are and very carefully moving forward from there.

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