Crisis Management is not a dark art
Despite all the talk about crisis planning, many firms remain ill-prepared, according to Dr Paul Robertson of Marsh.
It’s not every day that any business, potentially your own, is faced with a life-changing event; an incident or experience which can fundamentally alter the nature of your industry or company’s continuity. However, these incidents do happen all too frequently. Open any newspaper and you’ll quickly find articles about companies in crisis. Whether the creation of these crises is due to financial, physical or technical risks the impact, stresses and strains they place upon a firm can all too often prove to be fatal.
Despite the visibility of these crises, too many companies are still not taking steps to prepare and plan for them. Almost every survey on the topics of business continuity, crisis management or corporate governance show that a shocking proportion of companies have no plans to deal with crises at all. Even within those that do have plans very few have rehearsed, exercised or tested them.
In fact, Marsh recently surveyed midsized and large companies based in and around London and found that only 38% felt they had adequate crisis management, emergency response and business recovery plans in place to deal with a terrorist attack.
There is no dark art to crisis management; it is quite simple and based on common sense, if done properly. The intention is not to create a series of ever more complex scenario responses that dictate what the company will do if any given event were to happen. Instead, the plans should provide a framework of guidance, structure and communications that allows the management team to get on with solving the problems they face.
There are three key principles to effective crisis management:
Prepare
A lot can be done before anything ever goes wrong. All too often companies believe they can muddle through, and in some cases this might be true. However, good planning in advance can make even major crises manageable.
- Get the right people involved with representation from every part of the business. If you have business-critical ties with any individual customers or suppliers then it may be appropriate to involve them in the process.
- Put together a structure of the right people in the business to respond to crises, ensure that this team has a framework under which to operate and understands their role and responsibility.
- Think about what will need to be done to allow this team to work during a crisis. They’ll need somewhere to make decisions, equipment to work with and the ability to communicate internally and externally to the business.
Plan
Whilst every crisis will be different and often come from unforeseen events, there are commonalities in the response to all of them and much can be written and planned for in advance.
- Create a document that sets out the principles and structures which have been worked through in the preparation phase. This should include the practical details of how the team will work and provide all of the supporting material to get this done.
There’s a lot that can be produced in advance that will make the team’s job easier. A generic press or media statement that can be completed with details in the first few hours of a major crisis will speed up the ability to manage the media. A first meeting agenda or checklist of subjects which the team needs to cover will make those first chaotic hours a great deal more controllable. This should be a simple document, supported by key reference material in an appendix. Plans don’t need to be weighty to be worthwhile and it’s better to keep it simple and effective and allow the team to do the thinking rather than try to dictate precise responses in advance. - Each member of the team will probably have a different view on what material they individually or departmentally will need in the crisis management plan. This material should form the appendices for each subject area. Keep the main document minimal in style and easy to access; as a result it will be more effective.
Exercise
- After the plan is created there is an absolute need to rehearse it. Only through using the plan and practising the actions in it that the real measure of its capability can be understood. The best written and most well thought-out plans can easily fall apart when the reality of managing during crises becomes apparent.
An exercise doesn’t need to stop normal business. It can take the form of a desktop or simulation event which works the team through a crisis, allowing them to respond and work through the plans and procedures.
Only once this is done can a plan truly be declared to be capable. Timescales for management can be both defined and proved and the actions in the plan can be road-tested and verified.
These three steps sound simple, and managed properly they can be achieved quickly and successfully. For many organisations and businesses the process of planning for crisis management will be just that easy. With one office or one major location, or even just operating in one country, the plans will generally be quite straightforward. However, in reality many companies are far more complicated than this. The complexity, reliance on outsourced services and supply-chain intricacies that underpin many businesses mean that the simple process of crisis management can become infinitely less so.
In these cases, businesses need to focus even more closely on the final part of the three steps; exercising. Exercising will show how these intricacies operate in reality and provide a level of capability which is unmistakable. Exercising will also show the deficiencies, as no plan is perfect, and allow them to be addressed.
There are very close ties between crisis management and business continuity management. So close in fact that they should ideally be conducted together; crisis management playing a defining role in the immediate aftermath of the event and allowing the company to then examine the continuity of operations and business recovery. Despite this close relationship they are not synonymous. They both build organisational capability to respond, recover and get back into business but they do need to be treated distinctly.
They can be mutually beneficial throughout the process of planning and exercising. Decisions made about how to respond to crises will need to reflect the business objectives about operations and business continuity. Likewise the company’s ethos towards crisis management will need to be reiterated in the overall business continuity objectives.
In crisis management, and indeed business continuity, capability is truly the measure of success. Even the most comprehensive plans are worthless if they can’t actually be put into practice. The capability of the team in working through crises, either simulated or real, and the capability of the plan and supporting documents are the keys to triumph in the face of adversity.
Capability can be demonstrated by performing an exercise or series of exercises that validate and verify the plans and the teams involved. In fact, exercising is the event which can make a plan real, change it from a paper document to an organisational aptitude and build business resilience.
Get the right people involved, involve third parties if necessary; get the plans down on paper and run an exercise, three simple steps towards crisis management capability.
Dr Paul Robertson is a Managing Consultant in the Business Continu ity Management team at Marsh, the world’s leading insurance broker and risk adviser. To contact Paul, please email: paul.robertson@marsh.com
The information contained in this artic le provides only a general overview of subjects covered, is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Insureds should consult their insurance and legal advisors regarding specific coverage issues.
