Trust is the bedrock on which our social contracts are written. It works as the starting point for all our engagements and is a core component of all our meaningful relationships. Commerce is no different. Expectations and deliverables of each commercial engagement are usually elucidated at the beginning and if acceptable, the concerned parties embark on the relationship. We end up trusting all our stakeholders with key responsibilities, usually in return of a mutually agreed rewards. Our relationships with our government, colleagues, clients, suppliers, bankers, insurers, service providers, investment advisors, tenants, landlords, partners and others stand first and foremost on the pillar of trust. It’s pivotal role in making our world, as we know it, work cannot be emphasised enough.
The above was emphatically true in a world that we were accustomed to, and were prepared for, prior to March 2020. The pandemic has since thrown all of our assumptions out of gear and ushered in an era of uncertainty. Our reaction to the pandemic in the form a global lockdown created an unprecedented disruption that none of us were ready for. Never before in human history has there been such a destruction of demand, supply, capital and wealth.
The closest instances with such global implications that one can think of are the world wars. Even then, despite of colossal destruction and human cost, their scale was still confined to theatres of war. Even at their peak, the wars did not engulf humanity the manner in which this pandemic has.
The wars were also great exercises in man and material mobilisation, as soldiers from the villages of Indian heartland were fighting to protect European heartlands from the advancing Nazi forces. Similarly material was mobilised from around the world and supplied to theatres of war. They destroyed the European economies, but also resulted in an unprecedented spurt in the fortunes of various supplying economies around the world.
Destruction caused by the world wars was real and visible, every bomb dropped, bullet shot, air raid or a naval battle had quantifiable costs – both human and financial. The destruction caused was incremental in nature, increasing as the wars pursued over years. The brutally prolonged yet immediate and visible nature of destruction enabled the governments and financial planners of the day to alter their prism and devise completely new solutions, which led to the conceptualization of Marshal Plan and various global financial institutions such as the World Bank and IMF. It was all rather real.
The destruction in the present pandemic is just as immense, even if its manifestation is rather different. We are quite probably witnessing the single most economically destructive event in human history and yet there seems to be a lack of immediacy and intent. Many commentators seem to miss the fact that humanity has reached a point where it needs to unlearn and quickly learn the new economic realities we find ourselves in.
The narrative focusing on the unavoidable nature of the lockdown has still not addressed the existential question of resultant stress on the global financial system. We might have managed to save human lives but in the process most likely destroyed the economic world they live in.
Unless policy makers step up and address this elephant in the room, this health pandemic will most certainly transform itself into an economic pandemic. The direct impact of this transformation will result in erosion of trust at all levels of human interaction, including financial. That will most likely result in en mass financial defaults from retail all the way to corporate and possibly at sovereign level. This congregation of Stressed Assets might just evolve into a Stressed Global Economy, even if some nations are able to weather this storm better than the others. Are we ready for this eventuality?
Under the prevailing circumstances, we need to re-educate ourselves rapidly. There will be a need to develop a nuanced understanding of individuals and businesses behind these ‘Non Performing Assets’. We will have to acknowledge that many well-meaning individuals, entrepreneurs and companies will fall in this perfect storm. If we do not overhaul our dictionaries then all of that talent and positive sincere intent will end up being clubbed with fraudsters.
Decision makers will need deciphering of this new reality and this is where Corporate Intelligence can play a crucial role. Over the past fifteen years, corporate intelligence has assumed an important role in Indian corporate decision making. Tracking of financial defaulters and their unencumbered assets, pre-investment reputational and forensic due diligence, senior executive background checks, corporate fraud investigations and geo political risk analysis are some of the specialised services that many have relied upon as part of their corporate decision making process.
This reliance will only increase as erosion of trust will result in an increased ambiguity. Trust will have to be restored for humanity to overcome this pandemic, both health and financial. Corporate Intelligence will have to be relied upon to become the flag bearer of trust and in the process emerge as the perfect tool needed to navigate this once in a lifetime crisis.
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