Can your business survive a crisis?

25th November 2020

Avoiding events which lead to damaging and costly enforcement action is now high on every corporate agenda and for very good reason – when an event threatens the viability or integrity of business operations, you have a crisis on your hands.

An event such as a law suit, a natural disaster (earthquake, flood), even a serious accident on the production floor – these have always had the potential to undermine the viability of even the most thriving business. What is clear is that situations will arise that are beyond your immediate control – whatever it is, you will have to deal with it. You will be placed well outside your comfort zone, it will be disturbing, out of the ordinary and threatening.

The Covid-19 pandemic has forced companies to address how they can survive while grappling with a crisis of massive proportions. Business organisations are finally “getting it” about crisis preparation, whether we’re talking about crisis communications, disaster response or business continuity.

When a healthy organisations CEO or CFO looks at the cost of preparing a crisis management plan purely as an unwanted/unnecessary cost, it has been common for them to conclude “it can’t happen to us” or “if it happens to us, we can handle it relatively easily.” Covid has surely changed that mindset. Academics have commentated that, had past ‘near misses’ (e.g. the Sars outbreak in early 2000s) been heeded, the country would have been much better placed to deal with the current crisis. They weren’t, and the costs of that oversight continues to mount.

So with little or no crisis management infrastructure in place, the cost of being exposed to a badly handled crisis will have far reaching and damaging financial, commercial and reputational implications. Away from Covid, just ask the CEOs of VW (the emissions scandal) or Boeing (the 737 MAX scandal). With a less forgiving society, and the greater choices available, the outcome could be catastrophic.

If the SLT at Merlin Entertainments was now asked whether they would rather have invested more heavily in developing the organisations risk management/crisis management infrastructure, or incur the £5m fine imposed on the company for breach of regulatory duty following the Smiler Rollercoaster accident, plus all the other attendant cost that will have been incurred, the answer would be very easy. When imposing the fine, Judge Michael Chambers QC said the accident was the result of “catastrophic failure” by the company to ensure basic health and safety. Hindsight is easy but there are clear warning signs for the rest of us.

Prudent risk management should be seen as a critical investment, not a cost, as my experience has shown me when assessing the ability of businesses to defend regulatory investigations and claims, reviewing procurement and outsourcing procedures, and advising on crisis management plans, testing them and overseeing their integration across the business.

Preparedness is the key to crisis management, preparation must be consultative, the information up-to-date, accessible and the plan rehearsed. What is the best time to prepare for a crisis? Now, before you are in one.

There are plenty of examples that demonstrate why a badly handled crisis will be so damaging to business. Doing nothing really isn’t an option.

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