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Preparing for a financial crisis
Financial crises are becoming a common feature of the economic landscape, particularly in emerging markets. Despite this new reality, many companies continue to conduct business as usual, with devastating effects when trouble strikes. Executives who do prepare companies when times are good can increase their odds of weathering a financial crisis when it hits—and even position them to prosper in its wake.
The take-away: Preparing for a financial crisis means monitoring key warning indicators, maximizing cash and restructuring debt, identifying key operational risks and conducting scenario analyses, and creating an explicit crisis-management plan. It also requires a continuous commitment from management and a willingness to moderate the usual focus on quarter-to-quarter results. But with crises increasingly common, these steps are well worth the trouble. Companies that operate in dangerous markets must build ships that can weather stormy seas.
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