In today’s volatile operating landscape, companies are faced with ever-increasing possibilities of experiencing a crisis. Employees, investors and other stakeholders are aware of the spectrum of potential crises – everything from weather events to global cyberattacks. According to Deloitte Global’s 2018 crisis management survey, Stronger, fitter, better: Crisis management for the resilient enterprise, nearly 60% believe that organizations face more crises today than they did 10 years ago and 80% have had to mobilize their crisis management teams at least once in the past two years. According to the survey, organizations based in the Asia-Pacific region (APAC) and in the Middle East and Africa (MEA) are more likely than organizations in other regions to have experienced more than one type of crisis in the past two years. In the Middle East and Africa, nearly half have had to deal with three or more types.
But many companies aren’t fully prepared to prevent or respond to crises, and business leaders aren’t being developed to navigate their organizations through such instances. More often than not, crises are unforeseen. Some of them though can be avoidable, in turn affording companies more room to focus on performance and growth. Risk intelligent business leaders recognize the value of having crisis management capabilities in place. Those leaders understand that such capabilities can help their organizations better manage, and in some cases avoid, hefty and possibly irremediable impacts to financial standing, employee sentiment, brand and reputation.
Positioning the organization in a state of readiness to handle a crisis takes more than just reacting to one when it occurs. An organization that emerges stronger upon experiencing a crisis is one that has built the capability to anticipate, assess, prepare for, respond to, recover from and review a crisis event. Building this capability requires several elements that are considered foundational building blocks. The first element, often realized as the stepping stone for developing an effective crisis management function, is establishing clearly-defined governance that defines how the organization will draw authority and support for that function.
Such support can be most effective in the form of strong top-down organizational leadership that drives a high-performing training and development program to ensure the right leaders are trained and tested in managing high-stress situations. Another critical element in building the crisis management function is the essential need for defining roles and responsibilities that clearly articulate who is responsible for assessing, elevating, and making decisions – including a focus on stakeholder management that elevates engagement with regulators, clients, and employees early and often and not just during an event. A solid crisis management function also pivots on having an overarching framework and structure that aligns and harmonizes siloed response structures and plans, ideally supported with actionable intelligence and reporting that can help enhance anticipation of potential events and establish a common operating picture.
Crises can present opportunities for organizations to emerge stronger, enabling them to build more effective capabilities at all stages of the crisis lifecycle. Organizations that have truly effective crisis management start this lifecycle by identifying and assessing risks in order to understand the full implications of their risk landscape.
They then seek to prepare for and prevent issues that may otherwise foster into crises if not handled, whilst nonetheless preparing for the worst by establishing and exercising an ability to respond to, and recover from, crises to keep their business running. Such organizations also acknowledge the need to learn and rebuild post a crisis event, as truly effective crisis management goes beyond being reactive and simply protecting existing value - it also enables resilience and powers future performance, thereby enabling an organization to emerge stronger.
Deloitte’s study in 2018 highlighted that significant gaps exist between the confidence levels of companies in their ability to manage different crises and their perceived level of preparedness for those crises. Accordingly, the recommendation for companies on this front is simple and pragmatic: run simulations as part of the crisis management lifecycle.
A crisis simulation can quickly reveal the organization’s state of readiness by shedding light on strengths as well as areas it needs to improve in terms of crisis management capabilities, which can equip management with insights that are vital for setting direction, building commitment and prioritizing initiatives geared towards placing the organization on a path of increased resilience.
Omar Jabsheh is a Senior Manager, Risk Advisory, Deloitte Middle East.