Risk Management in Crisis Risk management is a domain of management which comes to the fore in crisis. This book looks at risk management under crisis conditions in the COVID-19 pandemic context. The book synthesizes existing concepts, strategies, approaches and methods of risk management and provides the results of empirical research on risk and risk management during the COVID-19 pandemic. The research outcome was based on the authors’ study on 42 enterprises of different sizes in various sectors, and these firms have either been negatively affected by COVID-19 or have thrived successfully under the new conditions of conducting business activities. The anal- ysis looks at both the impact of the COVID-19 pandemic on the selected enter- prises and the risk management measures these enterprises had taken in response to the emerging global trends. The book puts together key factors which could have determined the enterprises’ failures and successes. The final part of the book reflects on how firms can build resilience in chal- lenging times and suggests a model for business resilience. The comparative anal- ysis will provide useful insights into key strategic approaches of risk management. Piotr Jedynak is Professor of Management. He works at Jagiellonian University in Cracow, Poland, where he holds the positions of Vice-Rector for Financial and HR Policy and Head of the Management Systems Department. He specializes in risk management, strategic management and management systems. He is the author of numerous publications, an auditor and consultant to many public and business organizations. Sylwia Bąk holds a PhD in Management Sciences. She works as a Researcher and Lecturer in the Management Systems Department of Jagiellonian University in Cracow, Poland. In her interests, research and publications, she focuses on issues related to risk management, strategic management and standardized manage- ment systems. Routledge Advances in Risk Management Forecasting Air Travel Demand Looking at China Yafei Zheng, Kin Keung Lai and Shouyang Wang Supply Chain Risk Management in the Apparel Industry Peter Cheng, Yelin Fu and Kin Keung Lai Risk Management in Supply Chains Using Linear and Non-linear Models Mohammad Heydari, Kin Keung Lai and Zhou Xiaohu Risk Management in Public–Private Partnerships Mohammad Heydari, Kin Keung Lai and Zhou Xiaohu Renminbi Exchange Rate Forecasting Yunjie Wei, Shouyang Wang and Kin Keung Lai Candlestick Forecasting for Investments Applications, Models and Properties Haibin Xie, Kuikui Fan and Shouyang Wang Risk Management in Crisis Winners and Losers during the COVID-19 Pandemic Piotr Jedynak and Sylwia Bąk Corruption, Infrastructure Management and Public–Private Partnership Optimizing through Mathematical Models Mohammad Heydari, Kin Keung Lai and Zhou Xiaohu For more information about this series, please visit: www .r outle dge .c om /Ro utled ge -Ad vance s -in- Risk- Manag ement /book -seri es /RM 001 Risk Management in Crisis Winners and Losers during the COVID-19 Pandemic Piotr Jedynak and Sylwia Bąk First published 2021 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 605 Third Avenue, New York, NY 10158 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2021 Piotr Jedynak and Sylwia Bąk The right of Piotr Jedynak and Sylwia Bąk to be identified as authors of this work has been asserted by them in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. The Open Access version of this book, available at www .taylorfrancis .com, has been made available under a Creative Commons Attribution-Non-Commercial-No Derivatives 4.0 license. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Names: Jedynak, Piotr, author. | Bąk, Sylwia, author. Title: Risk management in crisis: winners and losers during the COVID-19 pandemic/Piotr Jedynak and Sylwia Bąk. Description: Abingdon, Oxon; New York, NY: Routledge, 2022. | Series: Routledge advances in risk management series | Includes bibliographical references and index. | Identifiers: LCCN 2021017834 | ISBN 9780367674540 (hbk) | ISBN 9780367674557 (pbk) | ISBN 9781003131366 (ebk) Subjects: LCSH: Risk management. | Organizational resilience. | COVID-19 (Disease) Classification: LCC HD61 .J44 2022 | DDC 658.15/5–dc23 LC record available at https://lccn.loc.gov/2021017834 ISBN: 978-0-367-67454-0 (hbk) ISBN: 978-0-367-67455-7 (pbk) ISBN: 978-1-003-13136-6 (ebk) DOI: 10.4324/9781003131366 Typeset in Galliard by Deanta Global Publishing Services, Chennai, India Contents List of fgures vi List of tables vii Preface ix Credits x Introduction 1 1 Uncertainty and risk in the modern world 4 2 Concepts and standards of risk management 49 3 Challenges of risk management during crisis situations 87 4 Dominant business risks during the COVID-19 pandemic 116 5 “Risk losers” during the COVID-19 pandemic: Case studies 152 6 “Risk winners” during the COVID-19 pandemic: Case studies 182 7 Building enterprises’ resilience to crisis: Lessons learned during the COVID-19 pandemic 214 Conclusions 235 Index 239 Figures 1.1 A chronological development of risks regarding business activities 28 2.1 The place of risk management in enterprise management system 51 3.1 Relationships between risk management and crisis management 103 5.1 Factors determining the failures of the enterprises under analysis during the COVID-19 pandemic 174 6.1 Factors determining the success of the enterprises under analysis during the COVID-19 pandemic 205 7.1 Directions in reducing threats and combating weaknesses in enterprises affected by the COVID-19 pandemic 215 7.2 Directions in exploiting opportunities and developing strengths in enterprises during the COVID-19 pandemic 218 7.3 A framework of an enterprise’s resilience to crisis 222 7.4 A procedure for implementing a model of an enterprise’s resilience to crisis 226 Tables 1.1 Approaches to defining uncertainty 15 1.2 Approaches to defining risk 17 1.3 A catalogue of criteria to distinguish between uncertainty and risk 19 1.4 Nobel Prize Laureates in economic sciences conducting research on risk and uncertainty 29 2.1 The formal status of risk management 56 2.2 Risk in outsourcing 59 2.3 Risk in Supply Chain Management 61 2.4 A comparison of risk management domains 65 2.5 A comparison of risk management standards 76 3.1 An overview of major definitions of crisis 88 3.2 A typology of crises in management 94 3.3 Selected crisis management models 102 4.1 The results of selected research and surveys on financial liquidity of enterprises during the global COVID-19 pandemic 119 4.2 Changes in insurance risk caused by COVID-19 121 4.3 The range of insurance against risks related to the COVID-19 pandemic 122 4.4 The P/TBV ratio of the world’s leading banks before and during the COVID-19 pandemic 125 4.5 Actions aimed at preparing workplaces for COVID-19 131 4.6 CSR during the COVID-19 global pandemic 135 4.7 The impact of the COVID-19 pandemic on FDI 137 4.8 The degree of preparedness of enterprises functioning in supply chains for combating the effects of COVID-19 141 4.9 The average share of digitized customer interactions and partially or fully digitized products and/or services during COVID-19 – a geographical analysis 143 viii Tables 4.10 The three phases of technological risk management during the COVID-19 pandemic 145 4.11 Technological risks during COVID-19 – likelihood, impact, active action plans 146 Preface Risk management is an approach to management that works particularly well in difficult and turbulent times when the comfort of planning an enterprise’s activi- ties is significantly disrupted. Such a situation that has made management diffi- cult on an unprecedented scale is the COVID-19 pandemic. The book addresses the issue of risk management in crisis situations, with a particular focus on the circumstances caused by the COVID-19 pandemic. The book consists of seven chapters. We first synthesize existing concepts, strategies, approaches and meth- ods of risk management. This is followed by an identification of challenges to risk management as they emerge in crisis situations. The second part of the book (Chapters 4, 5, 6, 7) already deals directly with the COVID-19 pandemic situa- tion. We present a series of case studies illustrating the following categories: (1) the main business risks that emerged as a result of the pandemic, (2) the behav- iours of enterprises that appear to be losers because they lost a lot in the crisis situation associated with the pandemic and (3) the behaviours of enterprises that, despite emerging risks, transformed their business in such a way that in the end they at least did not lose, and sometimes benefited from the crisis situation. Due to the great diversity of the identified behaviours of the selected enterprises, we divided them into particular categories, which allowed us to identify the domi- nant profiles of risk exposure under the pandemic conditions, indicating the key factors of failure and success. The final part of the book is our attempt to develop an original model of resilience to crisis based on the experiences of the discussed enterprises during the COVID-19 pandemic. The book is addressed to academ- ics, students of many specializations (especially business studies), as well as prac- titioners employed as managers and specialists in enterprises of various sizes and sectors. Piotr Jedynak and Sylwia Bąk Credits The publication was funded by the Priority Research Area Society of the Future under the programme “Excellence Initiative – Research University” at the Jagiellonian University in Krakow.