Managing the Ukraine Crisis


Managing the Ukraine Crisis
© Lerbank-bbk22

Best Practices

Just when it seemed like crisis management was starting to fade into the background with the diminishing COVID-19 case count, a new crisis emerged: the Russian invasion of Ukraine. While this may seem to American readers like a rather far-flung crisis, it is likely to have consequences both short and long term, regardless of the actual length of the fighting. I suggest that you set up a Ukraine Crisis Management Team within your company, with an objective of monitoring information related to all facets of the crisis and recommending actions to the base organization to take.

The impact that the crisis may have on your company will vary widely depending on whether you may have personnel in either Russia or Ukraine and the level of business you are doing in that part of the world. However, even if you have no personnel nor business in the area, there will be impacts to manage and longer strategy to consider. Below are some of the areas to monitor and potentially take short-term action against.

Oil Prices. We have already seen the impact of the situation on oil pricing, with crude oil rising from around $80 per barrel to around $120 per barrel in the last month. It is quite possible that these elevated prices will hold for some time or rise even higher. Depending on the level of sanctions, there may emerge shortages as the global flow of Russian oil and gas adjusts to any future restrictions. Review your supply situation for any raw materials that could experience dislocations due to the crisis. Consider hedging to limit your exposure to rising prices if that is something your company allows and you can find a satisfactory way to accomplish this. Ensure that the impact of raw material prices is being closely monitored and your team is ready to react by passing increases on to customers when appropriate. 

Personnel. Consider pulling resources out of Russia and Ukraine to reduce risks to personnel. Consider eliminating travel to affected areas. Monitor and act upon travel-related risks if the situation escalates to a wider area. You may want to set up a system of green, yellow and red countries with regard to level of travel risk and whether you are allowing it or not. Such a system will be useful in the future as well with regard to other crises, including applicability to COVID-19 or future pandemic risks.

Sales Policies. Ensure that your crisis team is on top of sales restrictions regarding Russia and that you are complying in a timely manner with any new restrictions that may emerge. Ensure that your team is sensitive to the potential for certain companies to try and act as intermediaries to achieve “workarounds” of restrictions, and avoid such situations.

Banking Impacts. Ensure your finance group is monitoring impacts of sanctions on Russian banks and minimizing risks accordingly. I think it is particularly hard to assess how current and future sanctions may affect the banking systems, so this is an area requiring strong and immediate focus.

Cyber Threats. Hopefully this is an area that you have already been addressing in your business, as the growing risks have been evident for some time. However, the risk is certainly now elevated and deserves a higher level of attention in the short term. I would get a consultation in this area from one of the well-known players and determine whether new actions are needed. Ensure that your teams are well trained to watch for scams of all types and that your IT team is strengthening controls in this area, especially for remote workers.

Impact on Global Economy. While Russia accounts for only about 2% of global GDP, it has an outsized influence on the world due to its impact on oil prices. In addition, Russia is the world’s largest exporter of wheat, particularly if it adds control of Ukrainian supplies. Rising prices and supply issues related to oil and food could have a dampening effect on world economies in 2022.

In addition to the above short-term impacts, I suggest you also give some thought to the impact of this crisis on your longer-term strategy.

Impacts on Oil Majors. BP announced on Feb. 27 that it is exiting its 19.75% stake in Rosneft in response to the Russian attack on Ukraine. Shell has announced it is pulling out of Russia and exiting its stake in Gazprom, while ExxonMobil has announced it is exiting its investment in the Sakhalin oil and gas production facilities. By the time you see this column there will undoubtedly be further developments. Any announcements in this area should be monitored and assessed by your company.

Impact on Timetable for Alternative Energy. I suggest that the higher oil prices as well as the highlighting of Europe’s reliance on an unpredictable and dangerous country for oil and gas will increase attention to the transition to non-fossil-fueled sources of energy and potentially result in an accelerated timetable.

The China-Russia Connection. The image of Vladimir Putin and Xi Jinping together at the Olympics was chilling and a clear indication that China and Russia are teaming up to strengthen their relationship and weaken the global power of the Unites States and its allies. Very recently Russia announced a deal to sell 100 million tons of coal to China, while China agreed to buy Russian wheat. China and Russia share a 2,700-mile border and in recent years have become increasingly large trading partners. The degree to which China supports Russia during the Ukraine crisis should be very closely watched, as it could either deter Russia at some point if China is not supportive, or it could result in Western sanctions against China down the road if China is supportive.

This crisis is a significant one with both short-term and long-term impacts that you need to factor into your 2022 plans and longer-term strategy. Ensure that you allocate the proper resources and team structure to deal with it.  

Sara Lefcourt of Lefcourt Consulting LLC specializes in helping companies to improve profits, reduce risk and step up their operations. Her experience includes many years in marketing, sales and procurement, first for Exxon and then at Infineum, where she was vice president, supply. Contact her at or (908) 400-5210.