The upcoming tenth anniversary of the September 11 attacks in the United States will doubtless trigger a flood of analysis and discussion about “lessons learned.”
But one lesson which history suggests has not been learned is about the need for organizations to be properly prepared for a crisis.
In the immediate aftermath of September 11, 2001, the American Management Association surveyed its members and customers and found that only 49% had a crisis management plan in place and only 39% had ever carried out a drill or simulation. Their follow-up survey 12 months later showed the number with a plan had increased to over 60%, which the AMA believed was a direct result of September 11. However within a few years the number started to fall back again.
Sadly, experience in Australia and around the world shows that major adverse events may produce a spike in action on crisis preparedness – Victoria’s bushfires provide a good example – but that increased attention soon fades.
Nothing damages corporate and organizational reputation faster and deeper than a crisis, and it is not as if senior executives don’t understand the importance of reputation management. For example the latest AON risk survey of over 500 major corporate and public sector organizations in Australia and New Zealand ranked damage to brand and image as the single most important risk concern for the fourth year in succession. But there is little evidence that this concern gets translated into adequate crisis preparedness. And this failure is widespread.
Earlier this year a survey of financial analysts and investor relations officers in companies across Canada and the United States found that while many companies are mindful of the potential damage crises can do to their sales, reputation and share value, few have an effective crisis management plan in place – and if they do it is likely out of date. Of the responding analysts, 85% said a corporate crisis had the greatest negative impact on a company’s value, yet over 50% said the company prepared them only for an operational crisis. Half didn’t even know if their company conducted crisis simulations.
Elsewhere too the picture is discouraging. Recent research involving CEOs in the Australian chemical and petrochemical industry found that only half believed their own company had a fully planned and properly tested crisis management system in place. The anniversary of September 11 provides an ideal opportunity to ask, does a nation have to suffer a major disaster before corporations will turn their attention to getting ready for their own crisis?
One major Australian study showed that one in four local organizations struck by a serious crisis disappeared completely. Given those odds – and the lesson from September 11 – no business has any excuse not to make a start putting basic systems and processes in place to be crisis prepared.