2019 has only just begun, and already we’ve got a strong contender for crisis management challenge of the year – queue the 2018 corporate crisis PTSD.
Don’t despair, though. The challenge keeping crisis leaders up at night hasn’t changed all that much from year to year. Closing the crisis preparedness gap still remains top of mind, as confirms the global Crisis Management Benchmarking Report. What other factors are at stake?
Organizations have, by in large, embraced crisis management planning, especially the biggest brands. After all, the Deloitte Insights Report, Stronger, fitter, better: crisis management for the resilient enterprise found that 84 percent of businesses had developed a crisis management plan, up from far more modest numbers in the mid 2010s.
That’s a good sign for the (continued) penetration of crisis management tools and practices into the enterprise. But it’s not the whole ballgame, either – and not just for the 16 percent of companies that don’t have crisis management plans. You see, a clear majority of crisis plan-holding organizations isn’t translating into a clear majority of crisis-ready companies.
As law firm, Morrison & Foerster’s Crisis Management Benchmarking Report reveals, confidence is in short supply among business leaders. Specifically, senior executives on the frontlines of corporate crisis management (Risk, Ethics, Compliance, Legal, and Communications) are surprisingly equivocal about the quality of their company’s crisis management plans and lukewarm about their organization’s level of crisis readiness. The exact numbers:
- Nearly two thirds of companies are only somewhat or minimally confident in the utility of their crisis management plans in the event of an actual crisis, while a little over one third of companies are very confident.
- Similarly, over 60 percent of companies are somewhat, minimally, or not at all confident in their ability to manage crises, while less than 40 percent are very confident.
So, while attention and resourcing in crisis management are going up, they aren’t necessarily creating confidence in the final product.
What’s going on, here? For starters, topline risk is going up for organizations, since the crisis threat continues to grow apace; just look at the litany of individual crisis scenarios that contemporary crisis management plans must now address:
- Cyber breach
- Workplace violence or harassment
- Government investigation
- Intellectual property theft
- Anti-corruption violation
- High-stakes litigation
- Product recall
- Controversy involving foreign government
It’s only natural, then, that crisis leaders wouldn’t feel particularly confident in their efforts, since those efforts often pale in comparison to the sheer pace of change, in particular the cross-industry trends exacerbating business risk across the globe. In their research, risk scholars Howard Kunreuther and Michael Useem point out some of the most important: growing interdependency, shorter-term (management) thinking, increased regulation, greater geographical clustering, higher probability of systemic shock, and new calls for transparency, spurred on by advances in information and communications technology.
Of course, these trends both create and exacerbate individual crisis threats, meaning individual crisis threats become just that more dynamic and difficult to combat. Case in point: the workplace harassment threat which has increased in salience as a significant reputational risk (now over 56 percent of organizations say their crisis management plan addresses the issue) in direct response to the #MeToo movement.
So what, then, are some of the measures we can take to close the crisis management preparedness gap in the face of risk headwinds? As individual crises change in kind, organizations need to get into the habit of revisiting the plans they produce on a regular basis. The Morrison & Foerster’s report specifically calls for “benchmarking” crisis plans against best practices in the field on a yearly basis, as well as conducting regular training exercises for senior officials, rank-in-file employees, and relevant third parties.
The rationale behind testing and benchmarking your crisis management plan is that crisis simulations provide valuable trial and error learning (in a relatively controlled setting) for employees. Remember, rank-in-file employees are often the “first responders” to corporate crisis. The training they get helps ensure comfort in performing assigned tasks, even going off-script as the situation demands.
The same logic applies to coordinating planning and training efforts with third parties, i.e. key business partners, major suppliers, and public safety agencies. The latter will most likely be called in in the case of a crisis. Yet, too few companies make the effort to engage those public safety agencies before crisis strikes. Even mature crisis management teams don’t often check to see if their crisis management technology actually syncs with the solutions used by large rescue and response outfits.
Organizations often neglect the resource management component of training, as well. Crisis teams shouldn’t just be training personnel (internal and external,) they also need to be regularly assessing the capabilities and availability of the resources they have at their disposal. To keep detailed track of all of these resources, teams should consider procuring information management technologies with a robust resource management feature set.
Finally, confidence comes from having a dedicated team of crisis professionals at the ready. According to the Morrison & Foerster’s report, almost all (93 percent) confident organizations have a formal and documented crisis management team.
Sure, that might sound obvious, but the devil is in the details. Not every organization knows how to build a best-practice crisis team. Luckily, there are frameworks available. The Incident Command System (ICS), for one, provides a standardized, best-practice framework for the command, control, and coordination of emergency response. To learn how to build an ICS team for your crisis management needs, download our guide to understanding the ICS.
Morrison & Foerster and Ethisphere: 2018 Crisis Management Benchmarking Report: Understanding Companies’ Preparedness and Best Practices for Closing the Crisis Management Gap
Howard Kunreuther and Michael Useem: Mastering Catastrophic Risk: How Companies Are Coping With Disruption
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