The Key Challenges Boards Face Now: Some early lessons from India as it faces down COVID-19 illustrate what boards--and companies--are focusing on.

• Author: Kumar-Sinha, Punita
• Position: THE AGE OF RISK: Boards in Crisis

The COVID-19 pandemic is just beginning to take off in India [in late March]. Nonetheless, the Indian government has undertaken a preemptive 21-day lockdown to flatten the curve. As a result, companies are already grappling with massive disruptions. As a board member of several leading Indian companies, I am already observing some major challenges.

First, we are dealing with major workforce and revenue disruption situations. Many workers in India are the "last mile" connection to customers. This is common in financial services and the automotive sector. The option to work from home is difficult to implement for such remote field forces. Management and the board have to consider these workforce constraints: What do you do with your workers? How do you retain them in the face of uncertain layoffs and work stoppages? This is a real dilemma in places where infrastructure or other constraints prohibit putting a workforce on hold. And what happens when things return to normal? Will these workers still be available? Will they even want to return after months of uncertainty? If no vaccine or cure is found for COVID-19, the pandemic could last a year or more. The damage to businesses, relationships, and the bond between employer and employee will then be even more serious.

Second, we are dealing with situations where revenues go to zero because all operations have to shut down, for example in factories. Even before the current crisis we were examining black swan risks to cash flow and the ability to raise capital under those circumstances. How do you raise cash when revenues are in a steep decline? How can you unlock capital from other sources when everyone everywhere is suffering from liquidity constraints? Some companies may have the capacity to sell down some assets to maintain operations, but to whom? Across our businesses we are delaying noncritical spends, and some M&A activities are on hold, while we sort these questions out.

This crisis may provoke a change in thinking about maintaining massive cash reserves, but in principle we have not seen or had that discussion yet. In any case, businesses that are not cash-generative or are engaged in aggressive growth will not be able to generate any appreciable reserves.

Third, we are evaluating the resilience of global supply chains. An...