The Noggin Blog

The Key Benefits of Crisis Management Planning

Posted by The Brain on Aug 8, 2018 7:48:17 AM


You’ve heard it before, failing to plan is planning to fail. But the question is: why then do so few companies actually plan for crisis, especially when post-crisis post mortems tend to reveal that crises, while often unforeseen, could usually be avoided?

Key Benefits of Management Planning@2x

Well, one often hears that you can’t possibly plan for every conceivable crisis. What goes unsaid seems to be that you should just jettison crisis management planning entirely. That’s foolish. Businesses should plan for crisis, because in doing so, they develop a culture and create a system for getting resources to the right place as quickly as possible when crisis finally does strike.

That’s not all. Crisis management planning isn’t only about being better equipped to effectively respond to specific incidents. Developing a crisis management plan also helps teams identify potential threats as they plan and game out the tasks, communications, and information they’ll need to deal with those threats.

What’s more, planning (and executing on those plans) just yields better outcomes, including better financial outcomes. An Oxford Executive Research Centre study from the early 2000s showed that the publicly traded companies who were able to execute their disaster recovery plans reduced the initial negative capital impact (of crisis) by a whopping 60 percent. On the other hand, those unable to execute plans had initial losses equivalent to 11 percent of their capitalization and average stock price losses of almost 15 percent.

Not impressed by those losses? Here are some more benefits of crisis management planning:

The value of crisis management planning is similar to that of crisis management. And like crisis management, crisis management planning helps you increase the well-being of your employees and the safety of the public at large. If you were sitting on a stockpile of hazardous materials, for instance, it would simply be foolhardy not to prepare a contingency plan for an accidental leak or contamination.

It might also be criminal. That’s another advantage of crisis management planning: it can help firms mitigate potential legal exposure in the case of a crisis – exposure to the organization as well as to senior stakeholders. For certain businesses and in certain industries, planning is often mandated by regulators. As such, forgoing robust planning opens you up to the threat of fines and penalties.

What’s more, it’s not uncommon that a crisis will shut down your operation – if only for a few hours. But even those few short hours still mean revenue loss. Without proper preparation, a few hours might stretch out into days, maybe even weeks. Effective planning can help minimize downtime, which increases productivity and revenue.

Another incentive to plan, especially your crisis communications, is the avoidance of significant reputational damage. Just think of what a disaster it would be to have your CEO hauled before Congress to answer for why your company didn’t plan for a likely.

To learn more about the case for crisis management planning, download our introductory guide, Understanding the Value of Crisis Management Planning.

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For even more content on crisis management planning, follow us on Twitter, @teamnoggin

Topics: Crisis Management, Noggin Crisis, Critical Issues Management

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