Stronger, Fitter, Better: Crisis Management for the …...Stronger, Fitter, Better: Crisis...

Stronger, Fitter, Better: Crisis Management for the Resilient EnterpriseApril 2019

Crisis ManagementWhat is it and why is it important

Crises often have unforeseen impacts that can jeopardize the critical assets, reputation, and financial standing of an organization or community.

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Crisis ManagementWhat is a Crisis?

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Crisis Management

What is Crisis Management and how can you leverage it?

Major crises demand the very best from organizations, a time where they need to rise to the occasion, and respond with resilience and character. That means preparing, predicting, preventing, managing, and recovering - so they emerge stronger.

Even organizations with sophisticated crisis management protocols can fail to anticipate new (or previously unforeseen) threats, as well as the broader range of adverse possibilities. Still others miss the hidden opportunities to create competitive advantage in how they respond.

Standards define crisis management as the development and application of the organizational capability to deal with crises.

What is it and why is it important

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Crisis Management

Why is Crisis Management important?

Crisis Management prepares organizations to deal with both foreseeable and unexpected events that threaten to have an impact on the organization; to limit their impact, and to manage them to resolution in an effective and timely manner.

It protects assets, including people, brand, reputation and property - these may take years to build, but can be destroyed in a moment.

What is it and why is it important

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Elements of the target-state Crisis Management (CM) FunctionBuilding blocks to set-up a high performing CM Function

An overarching Framework and Structure aligns and harmonizes siloed response structures and plans

Defined Roles and Responsibilities clearly articulate who is responsible for assessing, elevating, and making decisions

Strong Leadership ensures the right leaders are trained and tested in managing high-stress situations

Stakeholder Management elevates engagement (beyond communication) with regulators, clients, and employees early and often (not just during an event)

Actionable Intelligence and Reporting helps to enhance anticipation of potential events and establish a common operating picture

Capability Building drives a high-performing training and development program

Authoritative Governance establishes how Crisis Management draws its authority and receives funding

Where Do Organizations StandDeloitte 2018 Crisis Management Survey

Our 2018 crisis management survey found that most organizations must still overcome several challenges to be ready to navigate a crisis.

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New findingsSurvey of senior executives explores crisis preparedness

Deloitte recently published its report Stronger, Fitter, Better: Crisis Management for the Resilient Enterprise, based on a survey covering 20 countries in five global regions:

• North America;

• Latin America;

• Europe;

• Middle East/Africa; and

• Asia/Pacific.

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Crises are on the riseAre organizations prepared?

More than 500 crisis management, business continuity, and risk senior executives across 20 countries were interviewed to explore the latest trends and challenges in crisis readiness for their organizations…

The magnitude and number of crises is on the rise

Nearly 60% believe organizations face more crises today than 10 years ago.

80% of organizations worldwide have had to mobilize their crisis management teams at least once in the past two years.

Cyber and safety incidents top the list of crises requiring management intervention.

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Crises are on the riseAre organizations prepared?

31%

Asia/Pacific, Middle East, and Africa reported more crises in the past 2 years than other regions.

Only 31 percent of organizations with a crisis plan report that finances had been negatively impacted by a recent crisis compared to 47 percent of organizations without a plan.

47%

compared to 47 percent of organizations without a plan.

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Analysis revealed five central insightsKey Findings

Experiencing a crisis teaches organizations to avoid them. Undergoing a crisis galvanizes organizations to prioritize detecting and preventing crises in addition to managing them.

Leaders need more development for crisis management. Helping leaders display their full range of competencies under the extreme pressures of a crisis can support effective decision-making and communication when they are most needed.

Confidence outstrips preparedness. A company’s confidence in its crisis management capabilities does not always commensurate with its level of preparedness.

Being at the ready significantly reduces the negative impact of a crisis. This is especially true if senior management and board members have been involved in creating a crisis plan and participate in crisis simulations.

Third-parties are part of the problem—and the solution. A number of companies are including partners and other outside organizations in crisis planning.

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Experiencing a crisis teaches organizations to avoid them

Nearly 90 percent of organizations have conducted reviews, mostly internally, following a crisis. The major insight for these examinations is that, although recent crises were not always foreseen, they might have been averted.

33% 27% 26%

Improve detection and earlywarning systems

Invest more effort inprevention

Do more to better identifypotential crisis scenarios

Base: All respondents who experienced a crisis in the past two years (n=421)Source: Deloitte 2018 global crisis management survey

Top lessons learned from having experienced a crisis:

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Experiencing a crisis teaches organizations to avoid them

Base: All respondents who experienced a crisis in the past two years (n=421)Source: Deloitte 2018 global crisis management survey

Additional lessons learned from having experienced a crisis:

18%

Better define the chain of command for specific

scenarios

14%

Communicate more effectively with business

partners / alliances

17%

Communicate more effectively with

employees

8%

Monitor social media as a means of

detection

15%

Execute a more timely and robust

communications plan

8%


customers

15%

Conduct better pre-crisis planning with emergency

response teams

4%


suppliers

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Effective leadership during a crisis is a top challenge

The effectiveness of leadership and decision-making is one of the greatest crisis management challenges. Organizations can help leaders become crisis leaders by:

Organizing leaders ahead of time.

Training leaders in the tools and techniques that can help them through a crisis and stress testing these learnings.

Identifying, improving, and counter balancing for leadership tendencies and styles.

21 percent of organizations with board participation in their crisismanagement plan say crises have declined over the decade.

24 percent of crisis managementleaders cite effective leadershipand decision-making as one ofthe greatest crisis managementchallenges.

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Confidence outstrips preparednessOrganizations feel more confident in confronting some types of risks rather than others.

90%Ability to tackle system failures

89%Ability to respond to regulatory

and policy changes

88%Ability to respond to corporate

scandals

87%Ability to respond to cyber attacks

This year’s study found dramatic gaps between a company’s confidence in its ability to respond to different types of crises

and its level of preparedness for those

crises.

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Confidence outstrips preparednessOrganizations feel more confident in confronting some types of risks rather than others.

Organizations believe they’re

ready for a crisis, but most haven’t tested

that belief.

What we recommend:: Don’t assume,

test.

60

70

70

71

72

76

79

79

79

86

87

88

89

90

16

33

22

12

12

22

37

22

19

20

53

17

25

50

0 10 20 30 40 50 60 70 80 90 100

Terrorist attacks

Natural disasters

Product recalls

Political unrest

Societal or political activism

Transport accidents

Industrial accidents

Health scares

Industrial action

Corporate or strategic failure

Cyberattacks

Corporate scandals

Regulatory or policy changes

System Failures

Confidence levels versus simulation levels

Conducted simulation exercise Confident could effectively respond

Base: All respondents (n=523)Source: Deloitte 2018 global crisis management survey

Driving the Crisis Management AgendaConsiderations

Major crises demand the very best from organizations. Organizations need to rise to the occasion, and respond with resilience and character. That means preparing, predicting, preventing, managing, and recovering-so they emerge stronger.

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Driving the Crisis Management AgendaStronger, Fitter, Better: A Phase Approach to Progressive Maturity

Crises can present opportunities for organizations to emerge stronger, enabling them to build more effective capabilities at all stages of the crisis and resilience lifecycle.

Understand the full implications of the organization’s risk

landscape

Prevent crises, manage issues, and prepare for the worst

Respond to, and recover from, crises and keep business

running

Learn, rebuild, and emerge stronger

Risks Issues Crisis Newnormal

Currentstate

Futurestate

Identify Assess Prevent Prepare Respond Recover LearnEmergestronger

Manage Business as usual

Source: Deloitte analysis.

Truly effective crisis management goes

beyond being reactive and simply protecting

existing value. It also enables

resilience and powers future performance, thereby enabling an

organization toemerge stronger.

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Driving the Crisis Management AgendaThoughts & Considerations

Overall, how mature do you think your

organization's crisis preparedness is?

How confident, if at all, are you that your organization could

effectively respond to crisis scenarios?

Do you think organizations nowadays

are facing more, fewer or about the same number of

crises compared to 10 years ago?

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Does your organization have a crisis management plan? That is, a plan distinct from

other resilience plans such as business continuity and

incident management plans.

Are external parties which would be involved in a real

crisis response - such as key customers, suppliers, partners, government

agencies or regulators -incorporated into your crisis preparedness programme?

What components of your crisis response plan, if

any, are your organization's board, Non-executive directors and /

or Board-level committees involved with?

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Has your organization conducted a crisis simulation exercise

against specific crisis scenarios in the past three

years?

Looking at crisis preparedness first,

thinking specifically about your organization, what are the most significant challenges to effective crisis preparedness?

Has your organization's senior leadership team taken part in a crisis

exercise or simulation in the last three years?

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Driving the Crisis Management AgendaWhat to Tackle: Structured Improvement

Program Development:

A comprehensive approach to develop the capability to be poised to respond to a full range of crisis types. Build on your existing plans and enhance critical aspects:

Governance Organizational alignment Response structure Crisis decision-making Crisis communications Capability development

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Driving the Crisis Management AgendaWhat to Tackle: Simulations

Crisis SimulationsCrisis simulations provide insights into an organization’s readiness to manage crisis situations effectively. It’s an investment that can pay off immediately and for many years to come, if sustained through a regular and progressive program. Below are the list of benefits that the organization’s management can attain through simulations:

Confidence

Clarity of roles and responsibilities

Speed and efficiency

Control and coordination

Improved communications

“A Crisis Management exercise simulates crisis conditions and provides for the opportunity for people to practice their roles and gain proficiency in the roles of the Crisis Management plan.”ISO 22390 – Societal Security –Guide for Exercising and Testing

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Driving the Crisis Management AgendaWhat to Tackle: Simulations (cont’d)

Crisis Simulations: Maturity ModelDepending upon the purpose of the simulation, the scenario design, and the resources available, simulation approaches will vary. Below are the various types of simulations:

Increasing Maturity

PreparedRehearsed

Aware

Definition • Individual and teams are aware of crisis management roles and responsibilities

• Basic understanding of how to use processes and tools defined in crisis management supporting documents

• Individuals and teams have practiced in applying crisis management processes and tools, including application of experiential judgement

• Supporting plans / procedures validated

• Individuals and teams are trained, motivated, and engaged – a culture of preparedness

• Senior executives and stakeholders are confident that incidents of any nature can be managed in a controlled way

Simulation (Types)

Desktop• Training based• Informative• Consensus building• Walkthrough scenarios,

passive environment

Simulation • Practice crisis management roles

and processes• Examine assumptions• Increased pressure and focus on

timely decision making • Scripted, active environment

War games• Stress-test assumptions• Worst-case scenarios• Cross group involvement• Free play, interactive, resistant

environment

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Increasing Maturity

PreparedRehearsed

Aware







Simulation (Types)


passive environment





environment

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Increasing Maturity

PreparedRehearsed

Aware







Simulation (Types)


passive environment





environment

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Increasing Maturity

PreparedRehearsed

Aware







Simulation (Types)


passive environment





environment

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Crisis Simulations: A World of Crisis TriggersCrises can be malicious, accidental, or completely random. Many organizations are susceptible to threats from more than one of these potential triggers:

Malevolence & Cyber Misdeeds & Crime

Technological & Industrial Confrontations Other Catastrophes

• Cyber attacks

• Identity theft

• Product tampering

Financial Disruption

• Fraud

• Other criminal activities

• Financial failures that threaten a company’s very existence

Complex systems fail, either through:

• Accident

• Mismanagement

• Sabotage

• Legal;

• Commercial;

• Geopolitical and

• Military conflicts

• Natural or man-made destructive events that disrupt almost everything

An organization can design and conduct simulations around any crisis triggers / scenarios based on its operating landscape and priorities.

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