The 5 steps boards should take to deal with crises
There may be no greater test of a board than how it deals with a crisis. The nerves, emotional responses and judgment of the directors are all tested in a time-critical situation. Mark Carrick GAICD of Global Business Resilience and Dr Melinda Muth FAICD of Streamwise Learning, facilitators of a new immersive AICD course that prepares participants to face the pressures of a crisis, shared their top crisis management tips for boards.
The range of crises organisations could face today are legion: a cybersecurity breach, a terrorist attack, a workplace accident, a natural disaster – all can have devastating effects on a company, its employees, its customers, its shareholders and its reputation.
It is essential that directors are prepared for a crisis no matter what form it could take. A board that is competent 99 per cent of the time can see all of its good work washed away if it is not able to steer an organisation through a time of crisis.
Two facilitators of the AICD's crisis management course, Mark Carrick GAICD, Managing Director of Global Business Resilience, and Dr Melinda Muth FAICD, Managing Director of Streamwise Learning, shared the top five steps boards should take to deal with a crisis.
1. Map out your risks
For an organisation to be prepared, it has to map out the risks that could blow up into crises. These risks should be under constant review by boards, according to Carrick.
“Before the crisis even happens, boards must consider ‘what are the potentials?’” Carrick, a former counter terrorism police officer, said. “Things that can affect and hurt your organisation, its people, and its general mission, this should be an ongoing consideration for boards. Reviewing certain scenarios that could happen prepares an organisation for the crisis when it eventually comes”
For Muth, crisis planning should form part of an organisation’s risk management protocols.
“Companies and directors need to have good risk management plans in the first place. They need to understand those risks so that they can mitigate them throughout their operations and through their crisis management plans,” Muth said.
2. Have a detailed plan
Detailed planning is vital for an organisation to emerge from a crisis incurring as little damage as possible.
“The preparation, planning, and prevention stages of a crisis are where the most important work is done,” according to Carrick. As part of the plan, a crisis management team should be drawn up with roles allocated.
“The plans will outline a particular team that needs to come together and form, once a crisis has been declared,” Carrick said. “The CEO is generally the leader of that team and they will keep the board abreast of developments during the crisis. The CEO will drive the crisis management team to understand the crisis, first and foremost, manage the crisis, and mitigate the problems that are causing the crisis. The board’s role should be taking a very strategic overview on what’s occurring tactically and operationally on the ground through the duration of the crisis.”
The plan won’t be the same across every industry. It’s important to lay out particular roles for crisis team members that reflect the operational risks the company faces, according to Muth.
“What’s in that plan will depend on the industry.” Muth said. “For example, if you’re in the tourist industry it would look different than say, something for the mining industry, or for a financial services company during a banking crisis. The plans, the roles that are laid out, who will do what, how the flow of communication will happen, all that has to be thought about in advance.”
3. Consider outside advice
By their nature, crises are rare, thankfully. But this also means when the crisis comes, the board and management of the organisation may not have experience dealing with these critical situations. An immersive simulation like the AICD crisis management course can help fill in this experience gap.
It can also be useful for an organisation when the crisis hits to bring in outside advice, according to Carrick.
“When we talk about planning for a crisis, specialists run scenario generations, mapping out what can happen and how we deal with it. A lot of the time, organisations don’t do that, day in, day out. They don’t have that level of expertise within the organisation itself. It’s not uncommon for them to bring in legal support, public relations support, crisis management experts and incident management experts to assist them in meeting that crisis’ demands. Bringing in these advisers with that experience shortens the window of sheer chaos and allows the organisation to start working through the situation in a methodical manner.”
Communication becomes an especially vital function during a crisis. It is not only important for the reputation of the organisation when the media’s gaze alights on it, it is also critical to mitigating the damage caused by the crisis. Crises sow confusion and misinformation can quickly fly between the organisation’s stakeholders.
“If we don’t communicate within a certain timeframe, the perception of our customer base, our shareholders, our stakeholders, is that we’re not managing the crisis. Crisis communication is absolutely critical to the successful management of any crisis,” Carrick said.
Again, key parts of the communication strategy need to be planned ahead. ”With communication, one of the biggest issues organisations face is what the roles are going to be and in particular who will be the spokesperson for the organisation. You don’t have time to decide during the crisis, this has to be planned in advance,” warns Muth.
For Carrick, it’s important to not only have people in place ahead of time but also some bare bones crisis messaging. ”Have pre-identified holding statements and messages. Have pre-identified people who you know are good in front of a camera, who you know can deliver the message that the organisation wants to deliver,” advises Carrick.
The messages also need to be aligned with what is actually happening, or the organisation risks exacerbating harm arising from the crisis.
“If there is disparity between the message out of the organisation and what’s actually happening inside the organisation, that will come out. That will leak out on social media, and that again will erode confidence in the organisation’s ability to manage that crisis,” Carrick said.
5. Learn the lessons
Once the crisis has passed, the board should not breathe a sigh of relief and then move on. An important part of dealing with a crisis is managing the aftermath and learning the lessons. An organisation that sincerely looks into what went wrong earns back trust and respect, as well as reducing the chance of future crises.
“The board has to sit down with management and conduct a review: what worked, what didn’t work, how did we handle things, what do we need to update, what part of our plans do we need to revise, how did everyone play their role, do we need to make changes,” Muth says.
It is a sentiment echoed by Carrick.
“You have to do a complete diagnostic of what happened prior, during and after the crisis. It will require full self-reflection. You must use the crisis to find the gaps in your planning, close them and continue to evolve forward with your planning for the next crisis.”
The AICD regularly runs courses and events for directors, aspiring directors and executives, covering governance and business best practice. Click here to see our upcoming courses in Western Australia.