Magazine article Risk Management

On Crisis Management and Rehearsing a Plan

Magazine article Risk Management

On Crisis Management and Rehearsing a Plan

Article excerpt

"Nothing is more difficult and therefore more precious than the ability to decide," once said Napoleon Bonaparte. While his words refer to battlefield commanders' ability to take action when under tire, they might also resonate with any risk manager who has ever had to handle a crisis requiring immediate action.

Effective crisis management depends on sound and swift decision-making, and neither can happen without some kind of pre-planning. For most firms, that entails periodically dusting off its crisis management plan and reviewing its advice on the eventuality of a crisis befalling the corporation. That assumes, however, that the events the crisis management plan covers are the ones that actually transpire. If not, what will you do when those unforeseen disasters inevitably strike?

A good crisis management plan rests on two distinct principles. The first is that crisis management is not about researching and planning contingencies for every possible crisis that might occur, but rather about developing the capability within the organization to react flexibly and to make the right snap decisions that will be required when a crisis does happen.

The second is that actually practicing or rehearsing the kind of team work that will be needed during a crisis is a critical success factor in difficult situations. The notion that the more one practices, the luckier one gets is seldom more true than in the field of crisis management.

So what is driving these views? Inevitably, handling claims provides a compelling perspective. Consider, for example, the case of a particular financial services organization with a contingency plan that stood several inches high on a table. As far as it knew, it had considered all eventualities for a major crisis. To test the plan, it was applied to a hypothetical scenario in which numerous employees who had enjoyed a box lunch provided by the company were now not able to get in to the office for several days as a result of bad food poisoning. This kind of situation was not in the company's formal crisis management plan, and the formal response to such an incident was far from clear. Staff members may be an organization's greatest asset, but as this scenario demonstrates, they do not often feature in the contingency planning process.

In contrast, a major European food distributor tried a different approach. They had experienced several major products liability incidents in the early 90s and Found that inflexible, planned scenarios did not allow a team to react to rapidly moving situation. So their plan was based around the deployment of a core team to any location in order to provide a rapid and practiced response combined with a strong technical focus.

Practice makes perfect

Effective crisis response begins with effective decision-making. In an emergency, the first major decisions made regarding how to handle the unfolding situation are almost always the most important ones. Good initial decisions can make even a catastrophe manageable; had decisions can fatally exacerbate an otherwise small problem. In both cases, the window of opportunity for initial decision making is extremely small and closes rapidly. Once the moment for decision making has gone, it does not come back.

With that in mind, proper crisis response is about developing a range of emergency management options that can be exercised and that focus on what could happen, not what will happen. This is achieved through practice, and lots of it. Nowhere else is this more evident than in determining how your crisis management team works and the role that each team member will take during an emergency. These are perhaps the most critical elements of managing any decision making process.

It is no easy task getting a crisis management team together for the first time during an unfolding emergency. It gets even more difficult for firms with a wide geographic distribution--a Seattle-based company, for example, with a Polish plant facing a major product recall or a key distribution warehouse in Singapore that has been disabled by fire. …

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