Russia & Ukraine - What is still to come for German companies? A recommendation from WB Risk Prevention Systems.

(c) 30.03.2022 from Johannes Wamser

The fact that there is a war of aggression on our own doorstep with the Russian invasion of Ukraine poses new challenges for the whole of Europe. German Chancellor Olaf Scholz spoke of a "Turn of the times", political commentators and authors speak of a new era of "world disorder".

Military escalations, nuclear threats, potential use of chemical weapons, hybrid attacks, and gas freezes always seemed to exist only very far away from us. But at least since issues such as potential shutdown cascades ("Early warning level declared in gas emergency plan") or chaos in commodity trading (e.g. "The world's largest nickel exchange protects speculators caught cold by the war"), it is dawning on local companies that current developments could pose a risk to our stability as well.

What else can we expect in the coming months? What do we have to prepare for and what needs to be done? 

At the moment, the focus is mainly on day-to-day problems, such as "where can I get raw materials?", "will I still be able to receive payments in the future, for example from international plant construction consortia with Russian participation?", "can I pass on the increased energy costs to my customers?", "if I can now only supply my customers late, does the force majeure clause actually count?", etc.

People often react more to developments than to look strategically ahead and try to be prepared for what may come. Of course, no one has a crystal ball to accurately predict the future. But does this uncertainty mean that one can "only drive by sight" or is "forced to let oneself be driven by current events".

We have a clear recommendation for this: Separate the two topics "day-to-day problems" from the "strategic view" by setting up two task forces in your company

  1. An "Emergency Task Force" focused on day-to-day developments and their impact on your functionality, sites & companies, and employees.
  2. A "Strategic Task Force" that prepares your company for the impacts (gas shutdown, supply chain and customer outages, economic policy barriers) or models worst case scenarios.

There should be defined interfaces between the two groups, but no overlapping of personnel. Both should concentrate fully on their tasks and objectives:

  • Emergency Task Force on the containment of current harmful developments,
  • The Strategic Task Force on modeling relevant scenarios.

Wait or take action?

Our experience from crisis regions shows that it is simply not enough or too late to wait for "the politicians" to know which preparatory measures to initiate. Moreover, open and "practical" exchanges of a rather informal nature rarely take place at this level. Instead, agreements are made primarily at the "theoretical" level, also in order to secure one's own legal position.

In the international environment or in crisis & war zones, where unforeseen and unplanned events are not the exception but the daily rule, companies therefore often behave differently, e.g.

  • the permanent development and adaptation of different scenarios,
  • Having numerous informal conversations with other stakeholders,
  • the open and confidential exchange with companies from other regions, company sizes and industries,
  • looking at developments that are taking place elsewhere but that serve me as early warning indicators, and at "best practice examples" that I can transfer to myself in whole or in part,
  • Involving employees who can help based on, for example, experience in dealing with emergencies and following chains of command rather than membership in specific hierarchies.

But which developments should we keep an eye on beyond our tried and tested processes? What scenarios do we need to prepare for that we don't yet have plans for?

Medium-sized companies in particular report to us about an increasing overload of the management, because e.g. customers and suppliers are only able to deal with the "top decision-making level"want to talk. Numerous employees are also overburdened and/or inhibited in their decision-making for fear of making mistakes. Some managers even compare the situation in their company to "a headless bunch of chickens" or "blind actionism". Although initial steps have already been taken for one topic or another and employees have been entrusted with the corresponding planning work, one has the impression that many would rather bury their heads in the sand and ignore possible consequences, in keeping with the Rhineland motto "et kütt wie et kütt und et hätt noch jot jejange". It is also difficult to interpret otherwise that some companies, to whom we had already recommended the modeling of a "gas stop" scenario on February 24, i.e. the start of the Russian invasion, are now surprised that the early warning stage of the Emergency Gas Plan was actually proclaimed by the Federal Minister of Economics four weeks later...

The strength of many companies in Germany is that we have become increasingly focused and specialized in recent decades and have restructured ourselves ever more "efficiently". As a result, we have been optimally positioned for years and are regarded worldwide (not without reason) as planning world champions and perfectionists of routine processes.  

But how does that fit in with dealing with imponderables? How do you prepare yourself and your employees for a long-term state characterized by surprises, the unexpected and the unknown? 

We would like to offer you the opportunity to exchange ideas with us and to think "outside the box" together. We would be happy to provide you with recommendations on what (in our view) makes sense and how to deal with imponderable circumstances. We support you in setting up appropriate structures in your company. If required, please contact us at +49 234 9041836-30 or