Recent events have revealed a need for financial professionals to be more prepared for unexpected events.
One of the most recent, and frightening, cases are COVID-19. This virus has spread all over the world in just one year.
Financial professionals can learn a lot from the COVID-19 pandemic.
For example, when it comes to retirement planning, they need to be thinking about how their clients are going to handle fluctuating interest rates and market volatility.
How Did the COVID-19 Pandemic Effect the Economy
The COVID-19 affected the economy by putting extreme financial strain on businesses.
According to the recent data from ONS, when compared to the last pre-pandemic recording in Q4 2019, business closures increased by 37% in Q4 2020.
The damage is gradually fading, but the newest numbers show that the economic environment remains very volatile1 – 111,145 enterprises closed in Q1 2021, up 30% from the same time in 2019.
It should be highlighted that even the best financial management may not have been enough to shield some firms from the pandemic’s effects. Yet, for many, it was critical to their survival.
The economy is reopening in stages and at a faster pace now. Naturally, many people are refocusing their recovery efforts on quick development.
Finance experts’ skills and experience will be crucial in reviving trading, just as they were in assuring enterprises’ survival during the worst of the pandemic.
Looking ahead, we must analyse the lessons learned by financial management teams from the COVID-192 problem and how they might be applied in future decision-making.
To do so, we must first determine the specific ways in which their position has become more important and scrutinized3.
Financial constraints were vast during the pandemic and are still felt today.
The fast outbreak of the virus4, as well as the speed with which much of society was engulfed in social distancing restrictions and national lockdowns, created an atmosphere of fear.
Because of the magnitude of the disruption to business, even short-term planning was impossible, and long-term strategy was a far-fetched possibility for most.
Financial decision-makers were forced to adapt to a variety of unique conditions in minute detail, including:
- Tighter regional lockdowns within national lockdowns5.
- The implementation of business and public financial support schemes that were regularly retooled in response to changing circumstances.
- Keeping in mind the larger picture of the national economic outlook and ongoing economic policy reviews.
Management teams had to deal with a slew of difficulties surrounding their operations, Throughout the year, supply was also considerably affected.
Long delays and variable pricing systems hampered international shipment, making profit margins and connections with their conventional customer base increasingly insecure.
Returning to the Basics
Many are returning to the basics because of the emotional toll the pandemic has had on society, and there is a distinct sense of optimism when limitations are lifted.
However, given the economic harm that must be repaired, financial professionals will be aware that the epidemic will continue to be felt for the foreseeable future.
As a result, it’s critical that finance management teams think about how they’ve handled the pandemic response thus far.
The reopening of society and the revitalization6 of businesses will provide many with the opportunity to make more risky decisions and seek out new growth prospects,
But the lessons learned in the previous year will naturally rise in value.
What's a Finance Professional?
Financial experts provide financial services by applying their understanding of finance, accounting, and tax legislation. Individuals that are qualified can help with personal money, business finances, or both. Financial experts should be able to analyze data and provide excellent customer service.
What's COVID-19 Pandemic?
Covid-19 is an ongoing pandemic caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2).
It is important to be prepared for the future, even if it seems like a long way off.
The COVID-19 pandemic taught us that no one can predict with 100% certainty what will happen in the next few years.
You may not know which country will experience an outbreak first or how quickly they’ll spread around the world,
but you should still make sure your financial professionals have plans in place for when things go wrong beyond just making sales pitches and writing up contracts.