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Four tips from leading economist, Bernard Baumohl on how to plan for risk in this time of uncertainty.
1. Carry out stress tests: Conduct adverse “what if” scenarios: (e.g., massive power failure, lengthy supply chain stoppages, loss of access to credit lines,a recession, the outbreak of a new pandemic) Can your business successfully absorb such shocks?
2. Invest in cyber security: Hackers work 24/7 to locate your “zero-day vulnerabilities.” Cybercrooks constantly seek back-door entries to your sensitive corporate data. If successful, they often secretly sell your “back door access” to bidders in the shadow market.
3. Re-think your supply chain: Reduce your exposure to geopolitical hot spots.
- Diversify your supply chain sources, consumer markets and production facilities.
- Consider vertical integration (acquire part/full ownership of your supplier or shipper) to assure product delivery.
4. The next exogenous shock could be moments away! Do you have a contingency plan ready to activate to protect your business?
- Being a reliable provider of goods & services during periods of extreme shocks boosts your reputational value.
- Firms that demonstrate operational resilience during periods of volatility & turbulence attract a loyal base of investors, lenders and customers.
Bernard Baumohl, chief global economist at The Economic Outlook Group, provided his insights during a session on “A Year of “Wild Cards!” What’s Ahead for the Economy and the Lodging Industry?” during the HSMAI Executive Roundtables, June 16, 2025.
For more tips on dealing with crisis, reread: Leadership Under Fire: Essential Lessons from Crisis Management | HSMAI Global