Measuring a Business's Grit and Survivability when Faced with “Black Swan” Events Like the Coronavirus Pandemic

Abstract

The coronavirus crisis disrupted business survivability. Measures, like going concern opinion and bankruptcy predictors, depend on past trends extending into the future. With black swan events, past trends do not extend into the future. We propose two new metrics. The “Going Concern Survivability Index” (GCSI) is the maximum percentage revenue loss that a business can endure as a going concern. The “One Month Resilience Index” (OMRI) is the effect on the net income from the loss of the revenue for its most successful month. While OMRI is straightforward, calculating GCSI requires real options and process mining. The emerging technology of process mining and artificial intelligence are needed to capture the dynamic process by which management will juggle cash flows, sources of funds, and payment of liabilities as revenue falls. This paper is an instance of action design science research, and we discuss the steps to put our artifact into practice.