Could modelling hold the key to post-Covid 19 success?
Data will reign supreme when it comes to future-proofing your business against the next Covid-19. Here, we look at some of the modelling methods that could help  For many businesses, just staying afloat throughout the pandemic has been difficult enough. But those who continue to survive  and even thrive  will be the companies engaging in robust modelling via economic, stochastic and actuarial data. The problem with many of the traditional early warning systems, such as credit reports and credit checks, is that they rarely provide much guide as to what will happen when there is such a massive shock to the economy, says George Pennock, chairman and co-founder of Pomanda, an online data platform that helps companies protect against risk using data. He adds: We believe that it remains key to focus on cash levels and cash collection as a guide to how well a business will survive in the future.  Key business indicators, such as cash balance and debt level, and working capital indicators such as debtor days (how quickly it pays its customers), creditor days (how quickly it gets paid by its customers) and a measure of gross margin (sales minus the costs of goods sold) are some of the ways Pomanda analyses business risk. Keeping these key indicators at a healthy level to maximise cash levels and cash generations, and reducing your fixed cost base as far as possible, are the best tools for protecting against future shocks, says Pennock. Covidsim is a predictive modelling tool that uses simulations to create and forecast different scenarios based on infection rates. It enables simulation of events such as likely global supply-chain disruptions, Covid-19 impacts on markets in different countries, or impending factory lockdowns. David Sarphie: '...a single day of lost production in an automobile plant can incur direct costs in excess of $1m.' Credit: Getty  For example, a single day of lost production in an automobile plant can incur direct costs in excess of $1m. And thats in addition to the impacts of higher inventory levels, potential loss of sales and brand damage, says David Sarphie, CEO of AquAffirm, the company behind the tool. When looking to predict and overcome external business risks, econometrics and multi-scenario modelling is a fundamental tool that businesses can adopt to forecast and respond to future scenarios, says Matt Andrew, UK MD of data science consultancy Ekimetrics. This kind of approach is used in banking regulation, and the concept is completely transferrable to other applications. It allows business leaders to get a handle on the impact of numerous potential risk factors that may emerge in different ways at different times, and to pre-prepare plans accordingly. Analysing thousands of data points and leading indicators to simulate possible outcomes helps to mitigate those risks and allows businesses to navigate uncertainty with confidence.  However, warns Erica Orange, CEO of The Future Hunters, modelling can only get us so far: While useful exercises in determining nearer-term trends, these methods can fall short when identifying long-term trends.  She explains: The problem is that traditional modelling can often discount second- or third-order consequences  and these unforeseen events can change the direction of everything. Economic modelling, for instance, fell short 15 years ago when it failed to recognise the fact that what we were going through was not just a recession, but rather a fundamental economic transformation.  The future is now  Forget making predictions for next years business trends  if theres anything that 2020 taught us, its to be ready for anything. From being more adaptable in the face of socio-economic changes, to ensuring data and systems are secure in the new hybrid workplace, Brother is here to get your business ready for the future  now. For more information, visit brother.co.uk/business-solutions/hybrid-working