Making a Case for Crisis Planning

Car manufacturers hit with allegations of improper emissions testing, restaurant chains reeling from contamination and virus outbreaks, police departments facing claims of discrimination and abuse — you don’t have to look far to find news about organizations in crisis.

Just “Google” your industry along with the words “crisis” or “disaster” and examples, case studies, and cautionary tales jump up on the screen and dare you to imagine your business or organization facing similar threats and ask how, or if, it would recover.

Most executives follow the news and know that virtually any organization of any size can experience a crisis — an event that seriously threatens its people, reputation, property or profitability — at any time. They just may not have prepared themselves for such an event.

This was confirmed in a 2013 Burson-Marsteller survey of business leaders where over 75% of respondents said they believed that crisis planning had value. Belief, however, doesn’t always trigger action as just 51% of those responding had a crisis plan while only one-third of that group felt their plan was adequate.

So why are so many organizations operating with a crisis plan they have no confidence in or without any plan at all?

The Burson-Marsteller survey asked that question too, and the business leaders responded with a list of usual suspects including, “not a priority,” “rarely needed,” “expensive,” and, “it would take too much time.”

Hidden Benefits of Crisis Planning

Responses like these voice valid concerns about return on invested time, money, and effort but they also focus heavily on the “cost of planning” and overlook or ignore some of the many important advantages that a crisis plan can bring to an organization. These underappreciated benefits can include:

Strategic Focus – A crisis plan is your map of the first important steps on the road to restoring normal operations and profitability. Crisis plans are far more strategic than simple emergency response plans because once the “fire is out and everyone is safe,” crisis plans help you quickly shift focus toward the critical short and medium term priorities of repairing vulnerabilities to your capital, supply chain, market position, and brand.

Self-Audit – A well-crafted plan is the most obvious result of crisis planning but the planning process itself can contribute just as much to your organization’s ongoing success. Planning calls on your executive and operational leadership teams to answer, maybe for the first time ever, a broad range of important questions in a thoughtful and specific way:

What is your organization’s media relations policy? Do all employees who may be approached by media outlets know the “do’s and don’ts” appropriate to their role during and after a crisis? Even after hours and at home? How do you know they know? What about social media like Facebook, Twitter and Instagram?

This kind of critical self-assessment paired with a good-natured commitment to challenge unconfirmed assumptions is part of every component of crisis planning and can help improve management systems across an organization.

Defensibility and Community Responsibility – Maintaining even a basic crisis plan demonstrates that your organization has made an effort to anticipate the potential impact of these unexpected events on the community, customers, employees, and stakeholders and has prepared itself to respond to their needs and concerns. This becomes especially important as more of your industry peers raise the bar by implementing crisis plans and the public begins to view crisis planning as a “basic management responsibility” instead of a “best management practice.”

New Dangers and Demands

Less surprising but maybe more revealing, a core belief underlying all these reasons for not having a crisis plan is:

“We just don’t think it will happen to us.”

Optimism aside, this means,

“Developing and maintaining a crisis plan we’ll never use is a waste of our valuable time, energy, and resources.”

Most firms have operated crisis-free for decades so it’s no surprise that busy people who are focused on managing growth and profitability might come to this rational and practical opinion. That said, it’s worth considering a few game-changing realities before you dismiss crisis planning based on cost alone.

First, the world is changing fast and the trend is not your friend. 21^st century business leaders face an expanding list of potentially serious threats and crises that would have been unimaginable just 20 years ago when most of the business world still heard “crisis” and thought “earthquake” or “fire.” Imagine traveling back to 1996 and trying to convince executives and risk managers that cyber-ransom, bulk identity theft, active shooter, or social media backlash would soon become everyday concerns for many, if not most, companies.

Second, the price for not managing crisis grows each year. News travels instantly now and, fair or not, bad news can go “viral” in an afternoon and create a public relations nightmare that threatens the integrity of your brand and impacts sales the next day. Add to this a regulatory landscape that continually grows more prescriptive and less forgiving, imposing larger penalties and greater willingness to criminally prosecute managers for failing to ensure compliance.

Some Good News

Crisis plans don’t have to cost a lot to be effective. In fact, crisis plans are remarkably scalable to each organization and its available resources.

Want to limit your plan’s scope to incident/emergency response, network security and integrity, and media/public relations? Focus on those priorities. Don’t see the value in considering alternate supply chain options in your plan? Leave it out. Maintaining a “hot-site” backup server doesn’t make sense for your business? Don’t have one — just make sure that during the planning process you’ve truly evaluated your exposure and at least considered alternatives like “cold servers” and off-site records back-up.

The bottom line is that the odds of facing a crisis are increasing at an increasing rate and even the most cost-conscious crisis plan is vastly better than none at all.

To learn more about crisis planning and options available to you contact any of us at Propel Insurance.