Why is it that organisations which understand how a crisis can cause intense damage to reputation and value, don’t take proper steps to prevent crises from happening in the first place? This is one of the most perplexing questions in issue and crisis management.
We know from research that CEOs agree the most effective crisis management is to take proactive steps to prevent a crisis. But we also know from headlines around the world that many organisations fail to take even the most basic preventive steps.
One important element in this riddle is that some executives simply fail to appreciate the difference between tactical crisis response and strategic crisis management. This means they may miss the critical opportunity to prevent issues escalating into crises. As a result they put in place key activities to be prepared in case a crisis strikes – such as crisis management manuals, team selection, and a variety of simulations and training – and think the job is done.
This prepares the organisation in case a crisis occurs, and helps it respond as effectively as possible to minimise the damage. But it does little to reduce the likelihood of a crisis happening in the first place. The problem here is that crisis response and crisis management are not the same thing. And the way an organisation approaches crisis management can in fact literally represent the difference between survival and extinction.
My new book on Issue and Crisis Management (Oxford University Press, 2014)* highlights the modern approach to crisis management, which calls for organisations not just to put traditional crisis preparedness and response in place but also to implement a wide range of proven activities to prevent the likelihood of the event occurring. These might include environmental scanning, risk analysis, media monitoring and issue management, as well as effective emergency response (because an emergency badly managed has the potential to become a crisis).
None of these processes is new. However, this approach to crisis management deliberately positions crisis prevention as part of a continuum of organisational activities. Moreover, this approach emphasises much more clearly the importance of strategic crisis management as opposed to tactical crisis response. An explicit focus on crisis prevention lies at the heart of effective crisis management. Its absence is akin to a homeowner who takes out insurance against fire and burglary in case disaster strikes (crisis preparedness) yet fails to install smoke detectors or to burglar-proof the doors and windows (crisis prevention).
There is, sadly, a huge body of case studies and news reports which spell out the disastrous impact of a crisis on reputation, long-term share value and the chances of corporate survival. While nothing can guarantee that a crisis won’t strike and potentially cause these impacts, the modern strategic approach offers practical steps to reduce the chance of a crisis in the first place; to minimise damage should a crisis occur; and if a crisis does occur, to help the organisation survive.
*Jaques, Tony (2014). Issue and Crisis Management: Exploring issues, crises, risk and reputation. Oxford University Press, Melbourne.