Nobody was able to foresee the Covid-19 pandemic. But one of the most important lessons can be learned right now: It is essential to know the risk factors and to prepare appropriate scenarios. The basis for this is known – but is too often underestimated or overlooked: Information in the form of data that facilitates better or at least more deliberate decision making.

Liquidity risks such as loss of rental and financing risks are particularly relevant for our sector. Other risks resulting from regulation and issues like insurance cover and operational risks also play a role.

Ask yourself: How quickly did you get the necessary information regarding your real estate assets? How many work steps were necessary to get a better assessment of your liquidity and financing risks? In how many different systems and documents did you have to search for the relevant data?

The current pandemic teaches us how important crisis prevention is. Because crises are always associated with a need for action. One important conclusion is therefore that consistent, high-quality data should be made available at all times to assess risks correctly and to enable appropriate and fast action.

For example, if the risk management is mainly based on spreadsheets, transfer problems will necessarily result. A spreadsheet that is perfectly adjusted for the analysis of liquidity risks is unfortunately unsuitable for any other type of risk analysis. The transfer of potentially usable data might also be impossible or so time-consuming and resource-intensive that the crisis is already over when the analysis is ready and maximum damage has occurred. Similar problems occur when different software solutions are used for each type of risk.

Data should be treated as agile, not as dedicated to a fixed purpose. This flexibility must be particularly facilitated by data management. Dynamic links are essential. Note: A change of one piece of information has consequences for other pieces of information that are linked to it. Once the data required for risk management have been collected and identified, they can be used as a basis for a limitless number of applications.

We have simulated different aspects of risk management with one of our co-investment partners who administrates approximately 1,500 assets. The most prominent finding is that a third of the data required are the same in all aspects. Note: One third of the data required for the analysis of liquidity risks are also required for the analysis of financing and operational risks.

This is good news for our sector. It provides us with a decisive advantage that may be essential for our survival: Response time. The ability of an organization to adapt as quickly as possible under uncertain conditions can be hugely increased when 30 percent of the data required for any risk analysis are already provided by a central source and can be used for acute, completely new situations. However, awareness alone is not enough – there is also a need for technical infrastructure and, in particular, for a modern data model like the Common Data Model that we are developing for the real estate sector.

Crises often happen without a warning, but they may not find us unprepared. Data-based risk management is therefore essential. We must be able to adapt quickly to new, thus far unknown situations in order to initiate the necessary counter-measures. This requires a dynamic view based on a flexible data structure. After all, the crisis could otherwise overtake us long before we have updated our spreadsheet calculations.