From cyberattack to product recalls, it’s now less of a question of if, but more when crisis is going to strike your business, and how severe the impact is likely to be. 80% of the 120 UK organisations taking part in our Global Crisis Management Survey had experienced at least one crisis in the past five years.
More than half of the businesses in our survey feel that they responded too slowly to a crisis. While crises are nothing new, a combination of rising consumer expectations, and the speed of social media communication, mean that issues can flare up, and quickly get out of control before businesses have a chance to take decisive action.
The complexity and interdependence of today’s supply chains and digital systems mean that an issue in one place can often set off a chain reaction of marketplace disruption, regulatory sanctions and share price damage. More than half of survey respondents report feeling overwhelmed by the impact of a crisis, not least in respect of the psychological toll.
Acting too hastily or without co-ordination is just as damaging. Examples we have seen include IT deciding to pull the plug on the organisation’s systems to contain a virus attack. While solving the immediate problem, this may look like a panic response and exacerbate the reputational damage. We know from our Global CEO Survey that less than a quarter of leaders believe that the data available to them on the risks and the reputation of the business is comprehensive. And in the confusion of a crisis, the necessary data may be even harder to extract or communicate in time. Leadership will feel the pressure to communicate with shareholders, customers, employees and the press before the full facts are known, and risking that, confidence in the response is actually undermined.
Yet if prepared for and handled well, crises open up opportunities to demonstrate the resilience and effective management of your business. Just over a quarter of the organisations we surveyed felt that they were in a better place post-crisis.
So, what marks out these businesses? Drawing on the survey findings and our wide-ranging work with clients on crisis preparation, management and remediation, we believe there are five ways to make sure your business is recovers stronger and ready to embrace the new normal after the crisis.
A number of our respondents did not have a crisis plan in place before their crisis, and had not undertaken any crisis simulation exercises to rehearse how they would work together to deliver a response. If you don’t have a crisis plan in place, develop one, and be sure everyone understands the chain of authority and decision making during a crisis event. If you do have major incident and crisis plans, conduct an assessment of your readiness - an in-depth review of your current plan to check it’s still relevant and pinpoint gaps and blindspots. Train the people involved in executing the plan to be sure they are ready at a moment’s notice. Last, exercise the plan by running simulation exercise with the relevant teams, based on creative but realistic as-live scenarios.
We know from our Global CEO Survey that less than a quarter of leaders believe that the data available to them on the risks and the reputation of the business is comprehensive. And in the confusion of a crisis, the necessary data may be hard to extract, and what you do receive sometimes later transpires to have been inaccurate. When an organisation is in the midst of a crisis, what leaders want most is solid facts. This means having a methodology in place to get the best information to the right places, and working out when a decision must be made by to be effective. But it also means having an understanding and a certain level of comfort with knowing that there will be times that a significant decision has to be made with less data than you’d like. In a crisis, information is power - and the basis for the most effective and credible response.
Ensuring a cohesive response across the organisation is key to ensuring that a response delivers the outcomes management require. There are often three broad levels to response structures. At the operational level, leaders focus on working together to cure symptoms, identify root causes, and fix the cause. At the tactical level, a smaller senior management team focuses on overseeing the operational work and informing the most strategic level. The tactical team often includes leaders from affected and enabling areas as well as, depending on the nature of the incident, specialist leaders providing Communications, Legal, HR, and Health and Safety leadership. The strategic level, populated by the most senior leaders, will draw on the specialist advice of their advisors and tactical team to develop a strategy that provides direction and guidance that leads the way.
93% of organisations that ended up “in a better place” after their crisis told us they acted with integrity and followed a values-led response. Strategies and their messaging during a crisis need to be authentic. This means everything the leadership does and the business says must be aligned with its brand values and tailored to the various stakeholders we will influence its future. It’s also important to address all of the organisation’s stakeholders. The communications strategy should incorporate a clear understanding of all the audiences it needs to reach.
An organisation’s crisis strategy should be informed by a set of strategic response objectives which inform decision-making during a crisis. Leaders will always be faced with 'wicked decisions' in a crisis - otherwise it wouldn't be a crisis. Aligning the crisis response objectives with the organisation's brand values will help leaders navigate these challenging decisions. Additionally the actions that fall out of the objectives will also be aligned with the company’s values.
If you are going to emerge stronger, you need to learn from the crisis to make sure you respond better next time. It is vital to learn lessons about two things. First, the root causes: what triggered the crisis and what could you have done differently to stop it happening again? Second, how to respond more effectively in the future: What did you learn about your crisis plans and how can they be improved for the next one. A business’ ability to learn from a crisis comes down to it’s leadership. If senior leaders are willing to accept fault and learn lessons, then this “tone from the top” shapes behaviours at all levels and employees will feel empowered to learn lessons as well.
Partner, Digital & Forensic Investigations, PwC United Kingdom
Tel: +44 (0)7801 216737