I’ve often stated with great conviction that the act of preparing for a crisis in itself reduces the likelihood of a crisis occurring. So it’s reassuring to see new research from IR (Investor Relations) magazine which seems to validate this view.
The research findings taken from a survey of 800 investor relations professionals around the world showed that 35% of all businesses have endured a crisis in the last five years (which might be reason enough to invest in a crisis plan and simulation). But there’s more.
The region which had experienced least crises in the five year period was Asia (27%). Interestingly, it was also the region in which most organisations had a crisis communication plan (73%). Not only that, more businesses had conducted a crisis simulation than any other region (50%). In comparison, only 35% of US businesses had completed a crisis simulation.
The same story emerges when you look at business sectors. More companies in the energy and utilities sector have developed a crisis plan (77%) than any other industry, and they also lead the way with crisis simulations (56%). But guess what? Despite seemingly operating in a “high risk” sector, only one in four energy and utilities companies has experienced a crisis in the last five years; the only sector less prone to crisis is business services.
The implication is clear: crisis management planning and crisis management training are important not just to ensure a professional response to an incident, but they can actually reduce the chances of a crisis happening in the first place. I believe there are three factors which explain this phenomenon.
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1. It’s a rare ostrich’s which holds its head high
Too many businesses believe that a crisis could never affect them: they go through life with their head buried in the sand, or at best with blinkers on. It means they are ill-equipped to cope when a crisis hits. Indeed, they are often paralysed by dis-belief and fail to recognise the water slowly rising around them (in recent times BP and Toyota are prime examples of this). Drafting a crisis management plan and engaging in crisis management training indicates a business which understands that it is not immune to crisis. As a consequence, it is vigilant to the first signs of an incident or issue and snuff them out before they near the crisis stage.
2. A focus on crisis management planning eradicates obvious flaws and areas of vulnerability
Crisis management planning usually involves processes such as reputational risk assessments, scenario planning and social media crisis simulations. Conducting exercises such as these identify areas of vulnerability which need to be addressed, early warning systems that need to be developed, skill deficiencies which need to be addressed and actions which need to be taken to reduce risk. Without a crisis management training and planning programme, these flaws remain unidentified but lie dormant, carrying the ever-present threat of a damaging crisis.
3. Crisis management training = a crisis resilient culture
Having a crisis management plan and backing it with a thorough crisis management training programme means that the business is ready to deal with whatever is thrown at it. As potential crises emerge, all of the planning and training comes into play with swift action and communication to assert control and defuse the situation. As a consequence many incidents never reach the point at which they become full blown crises. Compare this with the organisation which has failed to plan for crisis and is therefore likely to be slow, disorganised and confused in its response (all of which is likely to further escalate the situation).
Crisis management training and planning certainly underpins a successful response to an incident. IR Magazine’s research – and my own experience – strongly indicates that it is of equal value in preventing the crisis in the first place.