How to effectively manage your organisation through a crisis in an everchanging risk landscape
(Sponsored article)
The contemporary risk landscape is continually changing and being influenced by environmental and regulatory changes, technological advancements and socio-political shifts, amongst others. All of these can disrupt operations and expose organisations.
Uncertainties and crises are likely to occur and challenge every organisation, irrespective of industry, geography or scale. Quite simply, all organisations are susceptible to risk. History and recent events tell us that it is no longer a matter of if a significant event or crisis may occur but when.
Boards and executive teams, therefore, should regularly consider and test what they would do when the dreaded bad news phone call or email lands.
When this happens, how should an organisation swing into action to mitigate the risks that the crisis brings? What can it do to ensure it maintains the trust and confidence of its stakeholders?
A potential crisis could include a cyber breach, a workplace psychosocial incident, a wage compliance concern or a data breach – all of which are frequent headline articles. But it could also extend to other more nuanced, yet still influential, circumstances which can have a negative impact on any business.
Workshopping crisis scenarios
Recently PKF led a session at the Governance Institute of Australia International Governance Leadership Conference exploring these themes. Our scenario was a day that started badly for the hypothetical organisation which progressively got worse.
Imagine you are the CEO of a listed entity where you are met with the following on a sunny Monday morning in spring and you have several members of the C-Suite looking to speak with you.
You are informed that there has been a cyber breach overnight and a serious people issue has been identified.
You then get a call from a significant news outlet asking for a comment.
What next?
This is a scenario which organisations could face and need to be prepared to manage and mitigate. In a room of business owners, directors, risk professionals and more, the rich discussion that followed was insightful. A few key themes emerged including:
- The need to foster a culture of preparedness in our businesses
- The significance of being transparent and consistent in your actions and communications
- How important it is that any actions or responses are aligned with the organisations values
- How crucial adept and effective crisis management processes are, but only when appropriately designed and implemented and routinely tested
- Engagement with the Board and key stakeholders needs to be a priority.
Key crisis management principles
What was evident from our discussions was that there is no one way to manage a negative event. But some key lessons from our workshop were:
- Fostering a culture of preparedness and practice
The phrase ‘Fail to plan, plan to fail’ is relevant in this context. Preparedness is critical, however what is often identified during a crisis is the presence of a documented policy but the absence of the knowledge of how to practically apply the crisis management plan and it remains untested. This is the situation organisations do not want to find themselves in when time is of the essence.
- Understand the situation
First and foremost, it is important to understand what has occurred, how and when. Gathering the facts of the situation and asking the right questions to unearth a comprehensive timeline and understanding is key.
It is impossible to be completely prepared for every crisis as there are many variables to each situation that may arise, and each requires a unique approach relative to the situation at hand.
- Gather the crisis management team
Identify the dedicated crisis management team composed of key stakeholders across the organisation who can best contribute and support the decision-making process and actions to be taken.
Ensuring that the right people are in the room to address different aspects of the crisis extending beyond the C-Suite. Depending on the situation it can extend to the Board of Directors, CEO, CFO, CIO, Risk Officers and Legal Counsel.
- Evaluate the preparedness of the organisation
Preparing your organisation extends beyond having a comprehensive crisis management plan and holding training sessions – it requires the consistent practice and execution of simulation exercises supported by robust risk management strategies and communication.
Reflect on past exercises; what worked well and what did not? Revisit prepared strategies which are to be modified to the situation at hand.
- Formulate a plan
During a crisis, the pressure to act swiftly and effectively is immense. Informed, timely, and effective decision-making is crucial in these high-stress situations. The choices made can significantly impact the outcome and the organisation’s ability to recover.
Clearly define the roles and responsibilities of each team member. Ensure that there is a clear chain of command and that everyone understands their specific duties during a crisis.
- Communicate consistently and with clarity
Develop protocols for both internal and external communication.
Identify key spokespersons, establishing communication channels, and setting guidelines to manage the consistency of the message.
- Adapt and repeat
Be prepared to adapt as the situation evolves. Crises can be dynamic, and new information may necessitate changes in the response strategy. Adaptability is crucial for effective crisis management.
- Learn and reflect
After a crisis, it’s important to reflect on the specifics of what occurred, what was done well, and what could be improved upon. This reflection helps in preparing for future challenges and strengthening crisis management strategies.
The risks of not being crisis-ready
The negative effects of such an incident can have significant impacts on an organisation financially, culturally and reputationally. Often, it is how the crisis is managed which gets the most attention.
Recent examples such as the Crown Resorts Scandal, Westpac’s Money Laundering Controversy and many others demonstrate the impact that mishandling a crisis can have significant and detrimental impacts on an organisation in addition to the crisis itself. We have seen time and time again examples of organisations reacting defensively or demonstrating a lack of genuine accountability. Leaders must remain transparent, consistent, and clear in the management and communication with respect to the crisis which is paramount in maintaining trust in the organisation.
In each of these cases, the management of the crises was marked by poor communication, inadequate transparency, and a failure to address the underlying issues effectively. These examples highlight the importance of responsive, transparent, and empathetic crisis management in maintaining corporate reputation and trust.
Advance preparation is key to successful crisis management
Effectively managing a crisis requires a comprehensive approach that integrates risk assessment, strategic planning, technological advancement, and cultural preparedness.
By establishing a robust crisis management framework, preparing comprehensively, managing crises with agility, and learning from each experience, organisations can enhance their resilience and navigate through crises more effectively.
Through diligent preparation and strategic management, organisations can not only survive a crisis but emerge stronger and more capable of facing future challenges.
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