Only two thirds of companies have formal crisis planning in place. And only half of those with a plan conduct crisis simulation exercises.
That is a worrying conclusion from a new survey of more than 750 investor relations professionals around the world. Equally worrying is that one in ten of the respondents didn’t even know if their company had a crisis plan.
The report from Investor Relations Insight paints a discouragingly familiar picture of poor crisis preparedness and failure of organizations to adequately involve senior managers outside the executive suite. The IR professionals interviewed consistently placed corporate reputation as the top priority in a crisis, ahead of share price and shareholder retention. Yet 53% said their department did not take part in crisis simulations and another 7% did not know either way.
As researcher John Deverell concluded: “It is alarming that 30% of respondents say their companies either don’t have a crisis management policy or they simply don’t know whether they have or not. This is despite the survey establishing that more than one third of companies have had a crisis in the last few years.” Moreover the study reinforced earlier data – that while larger companies tend to be more crisis prepared, organizations of all sizes remain dangerously vulnerable.
There is no argument that the best crisis management is to take steps to reduce the likelihood of a crisis occurring in the first place. So, effective pre-crisis management should include both getting ready to deal with a crisis when it strikes, and crisis prevention measures before it strikes. Most importantly, the steps required are not complicated and don’t have to involve large-scale resources.
• There must be a formally designated and trained Crisis Management Team. This is not simply the existing executive group with a different name. Membership is not decided by seniority and job title alone. The Crisis Management Team (CMT) needs to be a genuinely cross-functional group, comprising the right balance of people with authority to make decisions, and people with expert knowledge.
• The team must be trained as a group. Training simulations don’t have to be costly multi-agency extravaganzas. A well-managed desk-top exercise can be very powerful and cost-effective. But training should take place at least once a year – preferably every six months – and include designated deputies
• Crisis communication planning is critical. While crisis management involves much more than communication, failed communication can easily over-shadow great operational intervention. Stakeholder communication must be the responsibility of the whole CMT rather than getting dumped onto the PR person.
• Crisis management is not just crisis response. Crisis prevention is essential and must be fully integrated into overall management activity. This should normally include – at a minimum – environmental scanning, issue management, risk assessment and strategic planning.
Key to success is recognising that crisis management is a process and it’s a process which should directly involve leaders throughout the organization.
Need help to put these basics in place to be crisis prepared? Contact Tony Jaques.