Deloitte launches Global Centre for Crisis management
Helping clients prepare, respond and recover from growing threats
23 October 2014: Graeme Newton, ex CEO of the world renowned Queensland Reconstruction Authority, joins professional services firm Deloitte Australia (Deloitte) to lead its Australian Crisis Management business and set up the Australian and S.E. Asian arm of the Deloitte Centre for Excellence for Crisis Management.
Equipped to handle the growing severity and frequency of crises - whether natural or manmade, economic, political, financial or technological – the Centre will deliver a high-level capability for crisis readiness.
“The way business and government anticipate and react to crises is critical to their resilience,” said Newton. “Our task is to help clients prepare for and respond quickly and effectively wherever the crisis or combination of crises is in the world, and ultimately emerge stronger. My role will be to act as an ‘integrator’ between Australia, S.E. Asia and the huge reach Deloitte has in the field globally.”
Newton has just returned from Washington where he presented at the 2nd World Reconstruction Conference1 and participated as a member of the World Bank’s Global Facility for Disaster Reduction and Recovery technical advisory group. He is also the recipient of Australia’s 2013 national Award for Planning Excellence.
Queensland-based, Deloitte Forensic Risk Services leader Chris Noble said: “The economic cost of natural disasters in Australia is estimated by Deloitte Access Economics to exceed $6 billion a year. These costs are expected to double by 2030 and to rise to an average of $23 billion a year by 2050. Each year an estimated $560 million is spent on post-disaster relief and recovery by the Australian Government compared with an estimated consistent annual expenditure of $50 million on pre-disaster resilience: a ratio of more than $10 post-disaster for every $1 spent pre-disaster.
“However natural disasters are just one crisis scenario for organisations as cyber attacks, financial crime, technological or industrial threats, supply chain failure, reputation damaging fraud, disclosure issues and other events – such as the current Ebola crisis or preparedness for the Heads of State for the G20 session in Brisbane - trigger complex and potential crises. Responding quickly and effectively to minimise short and long-term damage to companies is becoming a core capability.”
Noble added: “A crisis for an organisation is any high-consequence event that has the potential to threaten its existence, value, reputation, or ability to operate. Bringing the depth of expertise that Graeme has in responding to crises is a great example of the investment we will make to bring the best of the best to help our clients.”
What do the numbers tell us?
Financial fraud and, especially cybercrime, are growing exponentially. Cybercrime costs the global economy more than US $400 billion2 a year, with more than 700 companies annually suffering at least one type of financial fraud, resulting in a loss of 1.4% of revenues3. Natural and environmental disasters also continue to create crises for businesses. There were 890 natural disasters in 2013 globally.
Melbourne-based Forensic Risk Partner Campbell Jackson said: “Regardless of the nature of the crisis, how a company prepares for and reacts to it can determine the extent and duration of reputational damage. In our 2013 global executive survey on strategic risk we found that reputation damage was the #1 risk concern for business executives around the world. According to a current global survey of c-level executives, board members, and risk-executives, they directly attribute more than 25% of a company’s market value to reputation.”
Research shows a strong correlation between good Crisis Management and Shareholder Value
Source: Oxford Metric and AON Reputation Review, 2012
The impact of reputation crises on shareholder value
Newton explained that the Oxford Metric and AON Reputation Review shows there is an 80% chance of a company losing at least 20% of its value (over and above the market) in any single month, in a given five-year period due to the impact of a crisis on reputation. In each case researched, the value loss was sustained.
“It has been identified that having a robust, evidence-based reputation strategy in place will minimise the likelihood of a critical event turning into a reputation crisis and will maximise the probability of recovery,” Newton said. He added that: “The Deloitte Centre for Crisis Management4 builds on the Deloitte global network’s deep experience and established reputation in financial and operational crisis management to provide an extensive, end-to-end solution to help clients protect their reputation.
“It’s about harnessing both our capabilities and competencies and focusing them on the crisis in a way that resolves it as effectively and efficiently as possible. The four key services the Centre offers are 24/7 monitoring, crisis communications, rapid response and crisis simulations. The key is to be prepared,” Newton said.
“From today the crisis management service has now launched globally across all three of Deloitte’s operating regions, Asia Pacific; Europe, the Middle East, and Africa (EMEA); and the Americas.”
The Centre is a next step in Deloitte’s global leadership in crisis management. In 2013, Deloitte Global launched the Humanitarian Innovation Program (HIP), which supports innovative, scalable solutions to improve the humanitarian sector’s readiness to respond to crises. Through HIP, Deloitte member firms have provided pro bono services to address some of the biggest challenges facing the sector, such as leadership development, surge capacity, and resilience.
For more information about Deloitte’s crisis management service, please visit: Deloitte Center for Crisis Management
1 The Global Facility for Disaster Reduction and Recovery’s second World Reconstruction Conference in Washington D.C. in collaboration with the European Union, United Nations Development Program, United Nations Office for Disaster Risk Reduction, World Bank Group, and other development partners.
2 Mcafee Report: Net Losses Estimating the Global Cost of Cybercrime, June 2014
3 Kroll: Global Fraud Report, 2013-2014
4 An international network of experienced practitioners that coordinate via the Centre and coalesce on relevant matters.
The Centre has strict governance and protocols to enable rapid mobilisation of the firms’ talent to hot spots
The Centre collects intelligence and researches contemporary crises issues, pulls insight from lessons learned, and produces blue prints and response protocols.
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