Coronavirus Consulting – Coronavirus Risk Mitigation

With the novel coronavirus continuing to spread throughout the United States and across the globe, and without a clear path toward containing the virus in sight, companies need to adjust to the present reality of doing business under the threat of a worldwide pandemic. This, of course, means different things for different companies; but, at this point, virtually all businesses in the U.S. of any significant size need to be taking steps to prepare.

What should these preparations entail? The answer depends on a variety of factors. Generally speaking, however, companies need to have actionable contingency plans in place in the event that an issue with a supplier, a trade or travel restriction, or any other issue prevents them from meeting their contractual obligations or satisfying consumer demand.

With regard to employees contracting the novel coronavirus, companies have two separate risks they need to address: (i) liability for their employees contracting COVID-19 on the job, and (ii) liability for spreading the novel coronavirus to clients and customers across the United States and around the world.

In order to mitigate risk on both of these fronts, companies should promptly adopt policies, procedures, and protocols designed to prevent contamination – and contain contamination if necessary. Once adopted, these policies, procedures, and protocols should be implemented not only on a company-wide scale, but with respect to third-party vendors and suppliers as well. If you’re concerned about the effect of this virus on your company, contact our coronavirus consultants today.

Currently, companies that trade with entities in China and Japan are among those most likely to be affected by the spread of the novel coronavirus. However, as the virus continues to spread throughout the world, this list of countries will expand quickly. In particular, companies in the following industries may face the greatest financial and legal risks linked to COVID-19:

• Food and agricultural goods
• Healthcare providers and medical device companies
• Import and export operations
• Pharmaceuticals and cosmetics
• Travel, entertainment, and hospitality

Potentially, yes. Companies that are publicly-traded in the United States and/or registered with the U.S. Securities and Exchange Commission (SEC) may have an obligation to revise their earnings forecasts if they have been negatively impacted by the novel coronavirus outbreak. Medical device companies, pharmaceutical companies, and others that are subject to oversight by the U.S. Food and Drug Administration (FDA) may also have disclosure obligations (including, but not limited to, if they intend to market products as remedies or cures). There are various other potential compliance risks as well for companies in a broad range of sectors; and, as COVID-19 continues to spread, we may see specific regulations targeting companies in various capacities.

Yes, there are, although the specific risks will vary depending on the particular facts and circumstances involved. For example, one risk involves violating a domestic or international travel or trade restriction. If you send employees to a country where travel is prohibited, or if you import or export goods in violation of a cross-border trade embargo, the legal ramifications could be substantial. Likewise, if one of your employees contracts COVID-19 and spreads the virus due to factors that were within your company’s control – and under circumstances in which your company could and should have prevented the unnecessary spread of the novel coronavirus – then your company could be at risk for substantial civil liability.

Potentially, yes. As we discussed above, if one of your employees contracts the coronavirus on the job, then your company could be liable to the employee. More broadly, if one of your employees spreads the coronavirus to others as the result of activities pertaining to his or her employment, then your company could be liable for negligently facilitating the spread of the novel coronavirus. In this scenario, the potential liability is almost incalculable.

In order to mitigate these (and other) risks associated with the novel coronavirus effectively, it is imperative that companies implement effective risk management practices and institute appropriate policies and procedures. As we mentioned earlier, this includes not only training employees internally, but also working with third-party suppliers and vendors. For example, your company may need to work with its suppliers to ensure not only that they are taking appropriate steps to mitigate risk internally, but also that they are pushing compliance downstream to their own suppliers and vendors.

Maintaining an adequate focus on compliance is an important component of risk mitigation as well. Even during times of crisis, companies cannot relax their compliance efforts. In fact, as previously discussed, there are various ways in which issues related to COVID-19 could result in additional compliance obligations for U.S. companies.

This is an interesting question, and it is one that savvy business owners and corporate executives will not want to overlook. If your company has had recurring issues with a supplier in the past, it may make sense to utilize any contractual violations related to the novel coronavirus (i.e. untimely delivery or failure to meet SLAs) to move forward with terminating the relationship. At the same time, however, it is important not to lose sight of the long-term (i.e. Is there a reason why you haven’t terminated the relationship earlier?), and there is a possibility that the supplier could try to claim force majeure as a defense to contractual non-performance as well.

In short, this is certainly a tactic worth exploring, but there may be business continuity and other considerations that take precedence.

A lot has changed since the last major global pandemic, which was the SARS outbreak of 2003. That said, there are still some important lessons that can be drawn from this past experience. For example, companies absolutely need to be concerned about the near-term risks associated with the novel coronavirus; however, they cannot lose sight of the future. Additionally, when facing news of a possible global pandemic, company leaders need to ensure that they are relying on accurate sources and not making rash decisions based on faulty or politicized reporting.

As a business owner or executive, you need to stay focused on running your company. This is true even in the most turbulent of times. At Oberheiden P.C., our former FBI agents are available to provide coronavirus consulting services to companies throughout the United States. This includes advising companies in all industries regarding internal and external risk management, federal compliance, and litigation avoidance.

Our former FBI agents understand the unique risks that U.S. companies face when the unexpected happens. They understand the practical, financial, and legal considerations involved, and they have extensive experience consulting with company owners and leaders to help them make informed and strategic decisions. If you have more questions about what your company needs to be doing during the novel coronavirus outbreak, we can help you, and we encourage you to contact us to learn more.