Organisational Risk Management Strategies

The Covid-19 pandemic has reiterated the importance of flexibility, adaptability, reactiveness and proactiveness in business for successful (immediate as well as long-term) risk management during systemic crises that often involve environmental, industry, firm-specific and individual-level uncertainties simultaneously. This exploratory study provides a typology of strategies that firms employ in order to cope with or avoid the negative consequences of crises and capitalize on the opportunities they present. Using empirical evidence on firms’ responses to the pandemic from two surveys conducted among international businesses after the first wave of the 2020 Covid-19 outbreak and combining cluster and regression analyses we identify four groups of businesses based on the different strategies they use to confront the economic downturn. We label these as (1) defensive, (2) wait-and-see, (3) omnibus, and (4) innovation-oriented firms. The results show that firm size, firm age, labour productivity, profitability, export intensity and global orientation all influence the strategies used by firms when responding to crises. The firms’ crisis management-related strategic orientations also have implications for firm performance in the short and long run. The wait-and-see and innovation-oriented strategies raise the probability of stable revenue during crises, whereas the omnibus strategy also implies future growth of firm revenue. The study has theoretical and practical implications for planning, designing, monitoring, and implementing crisis management strategies in business that lead to stable or improved performance.