The Black Swan of 2020

Sultry lounge singers in black cheongsams belted out their usual pop songs as they do every night without fail. But there was nobody in the audience – nothing but empty chairs and tables. The rest of the glittering lobby of the hotel was just as deserted and nearby malls barely had visitors. 

Driving along EDSA on a usually jampacked night was quite a breeze, too – just 30 minutes from Makati to Quezon City. Earlier in the day, schools have turned into ghost towns. Parties, concerts, press conferences and dates, forget about all that.

Manila may soon grind to a halt and the economy will likely slow to a standstill, thanks to the new coronavirus disease 2019 or COVID-19.

It’s going to be nasty before it gets better, this new reality we woke up to.  We’re suddenly jolted out of our everyday lives.

Indeed, we are now facing a crisis of unknown proportions and the impact as I’ve said before will likely be severe.

Survival of the fittest

Governments around the world are clearly overwhelmed. Ours is no exception. Our president is dishing out seemingly incoherent ramblings to explain the situation. The Department of Health is struggling to stay on top of the situation.

But equally important is the response of the private sector. Profit warnings are spreading as fast as the virus. CEOs and company owners will have to decide quickly on how to respond so their companies do not go under. 

I am sure quite a number of businesses will shut down if this crisis lingers for three months or more. 

Only companies whose leaders are adept in handling crises will survive with the lesss damage. It will be survival of the fittest. This isn’t just about having healthy CEOs; it’s about those who have the agility, the fortitude and the determination to survive. 

For one, private companies need to take the necessary measures to contain the spread of the virus. We cannot rely solely on our health authorities. 

Temporary work-at-home measures should be implemented to mitigate the risks of the virus. 

The Gokongwei-owned JG Summit, one of the country’s biggest conglomerates, is being proactive in dealing with the crisis and is preparing to implement a work-at-home measure for the company and its subsidiaries to reduce the risk of the spread of COVID-19. 

JG Summit president and CEO Lance Gokongwei said the work-at-home scheme would be implemented for as long as it is necessary. The conglomerate, founded by Lance’s father, the late taipan John Gokongwei in 1990, has at least 23,000 employees. 

I believe this is a good measure, painful as it may be.

The Gokongwei-owned Cebu Pacific is also implementing a pay cut for its senior management instead of laying off workers as travel restrictions brought about by the virus continue to take its toll on the budget carrier. Props to Cebu Pacific!

Other foreign carriers have also announced pay cuts.

Indeed, the private sector needs to rise to the occasion and work together with the government to contain the virus. Regular disinfecting of work premises is a must, too. 

Moving forward, companies should also ensure the health of its employees by investing in quality health maintenance providers as well as health and fitness programs. 

This crisis of epic proportions will differentiate between CEOs who care about their employees’ welfare and those who only care about the bottomline.

A Black Swan like no other

COVID-19 is no doubt the Black Swan of 2020, a black swan like no other. 

A term popularized by essayist and statistician Nassim Nicholas Taleb, a Black Swan is an event or occurrence that is typically random and unexpected but can cause catastrophic damage to an economy. 

In his book, The Black Swan, Taleb says Black Swans cannot be predicted and can only be prepared for by building robust systems.

Building a Black Swan-robust society

Taleb cites ways on how to build a Black Swan-robust society.  I am sharing here some of my favorites. 

“What is fragile should break early while it is still small. Nothing should ever become too big to fail. Evolution in economic life helps those with the maximum amount of hidden risks – and hence the most fragile – become the biggest.

“People who were driving a school bus blindfolded (and crashed it) should never be given a new bus.

“Do not give children sticks of dynamite, even if they come with a warning. Complex derivatives need to be banned because nobody understands them and few are rational enough to know it. Citizens must be protected from themselves, from bankers selling them ‘hedging’ products, and from gullible regulators who listen to economic theorists.”

For now, all we can do is to work together to survive. Remember, we can only survive crises, we cannot overcome them. We should all keep this in mind whether we’re facing a new coronavirus, a bloody red stock market chart or – to borrow the words of President Duterte – our idiotic dreams. 

Iris Gonzales’ email address is [email protected]. Follow her on Twitter @eyesgonzales. Column archives at eyesgonzales.com