Operational risk management applied to the COVID-19 pandemic: the impact on the automotive sector and the KIA Motors Europe case.

Abstract

Covid-19 is one of the major plagues the world’s population has ever been confronted with and the purpose of this research will be to analyze the devastating economic impact of this pandemic through an operational risk management point of view. Small firms couldn’t cope with the effects of the pandemic and SMEs in general still are trying to find a way to save the business after severe losses and forced closures. Multinational companies, on the other hand, have to respond to this new crisis in a different and maybe more complex way. The strategies, both short and long term oriented, that companies and industries will follow in order to recoup, will have a huge impact on the national and global economies and also will define the future of the various sectors. Risk management comes back to have one of the most important roles in the different business environments, both in terms of promptness of the response and effectiveness of the strategies put in motion. After approaching the topic step by step, this analysis will highlight the impacts on the different industries, trying to give a panoramic of the main hit ones. One of the most hit industries was the automotive. This sector is characterized by continues changes and also has been facing a remarkable shrinking in the past years. Covid-19 put the ultimate challenge, forcing the production sites to shut down and the businesses to quicken up their decision-making processes. Kia Motors Europe will be taken as study case to understand the critical bullet points of how a company should face the problem, analyse the risks and take decisions to be able to keep the business under control. The factors involved in this process are several and there is of course no ex-ante proper way to confront with a crisis like the one created by the coronavirus. Furthermore, to go deeper in the firm’s mentality, some interviews to Kia’s managers will be presented and the key points highlighted.