A disaster scenario workshop based around an extreme weather-related event helped The Carlyle Group better weather the metaphorical storm of covid-19.
Several years ago, then-chief information officer Georgette Kiser, now operating executive at the firm, set up the workshop with firm leadership to look at how such an event could impact the business.
“They had this kind of war room scenario and were looking at a storm that was heading up the East Coast, potentially impacting our data centres, our physical locations, etc.,” Carlyle’s head of impact Megan Starr told Private Equity International.
“As a result of that exercise, we found we really needed to invest more heavily in better remote working technology, much better firm-wide communications, our ability to communicate with people quickly, efficiently, seamlessly, and more IT and data resiliency. We implemented a lot of those changes, and frankly, it was because of those changes that we were able to shift to remote work so quickly during the covid-19 early days.”
Starr said the workshop showed Carlyle “just how unbelievably important future proofing your business can be”, and the impact of covid-19 on the economy has proved this to be “more critical than ever”.
“What we’re seeing [through covid-19] is the world can change on a dime, and it can change during your hold period. If you’re an illiquid investor, that could have significant implications,” she said.
“We’re focused on how we internally build the competencies, agility and skill set to be forward thinking, and how we instill that in our portfolio companies. None of us knows what the future will bring, but we know if our management teams are agile and forward-thinking and quick on their feet, thinking about where the world’s going, they’ll be much better prepared to weather these potential shocks.”
For Starr, this is a reason why driving forward a climate change agenda should still be on firms’ to-do lists, even as coronavirus has pushed social impact to the fore.
“Climate change is a one-way economic, fundamental shift. During covid-19, some of our companies had significantly disrupted business models and were reevaluating all aspects of their business to think about efficiencies and cost savings. Energy was a natural place to look,” she said.
“It was actually a great incentive to say, ‘How do we think about efficiencies in terms of our energy use, because it’s great from a climate standpoint, but also from a bottom line standpoint.’”
Look out for a full interview with Carlyle head of impact Megan Starr on Private Equity International later this week.