Perspectives

Crisis management or reputation protection: where do we stand?

For the past ten years, against a backdrop of media hype, organisations have been increasingly exposed to crises of various kinds: product defects, natural disasters, scandals, social and governance crises, etc. The pressure on stakeholders (clients, staff, shareholders, etc.) is mounting: organisations are judged by the way in which they manage the difficulties they experience and how they respond to the expectations raised.

In most cases, public-sector companies and institutions are not prepared for managing such crises, not having the specific methods and tools required. The consequences are well known: delayed response, ineffective practical planning, chaotic communication, damaged image, loss of market share, loss of reputation, etc.

These days, there is not a single organisation that has not deliberated on crises and their management. This is because the consequences of a lack of management or inadequate handling are costly in terms of power, brand image, reputation and financial loss. Both public and private-sector organisations are paying greater attention to analysing their risks and to the crisis process itself. The principle of resilience is beginning to gain crededibility amongst organisations, and more appropriate and effective methods and tools are now proposed and put in place by experts, who support, train and advise the managers of these organisations.

Safeguarding your reputation

The principle of resilience

A crisis may be regarded as an opportunity, not with the aim of reducing the likelihood of an event occurring but with a view to managing more effectively any event that has occurred. A new approach would be to look at the crisis differently, to become a key crisis management player and “proactive” stakeholder. This is why there is a need to focus on the principle of resilience, which is closely tied to the crisis itself.

Crisis is, indeed, a sine qua non for establishing a resilience process. This does not mean, however, that an individual will be resilient just because there has been a crisis. Resilience, based on the principle of emerging from a trauma with greater strength, makes it possible to identify the intrinsic ability of organisations to re-establish a state of equilibrium, be it their initial state or a new equilibrium, so as to be able to function after a crisis.

The concept of resilience has rapidly found support in social, economic and behavioural fields, among others, but its analysis at organisational level has yet to be undertaken. The question of a state of resilience, as a process or ability, has yet to be resolved. Resilience may seem to be a distinct concept that is difficult to analyse since it is where a number of parameters cross and where various variables meet. But resilience should be seen as an evolving process where conditions internal and external to the organisation interact.

Is there such a thing as organisational resilience? A reliable organisation knows how to develop formal and informal procedures and a mode of operation capable of identifying and anticipating potential errors. It should be noted that the resilience of an organisation calls for the systematic evaluation and transparency of crisis management.

More effective and appropriate methods and tools

Be it an industrial accident, an outrageous press article, money laundering or major recall of defective products, a crisis often begins with the occurrence of an extraordinary or unusual event that throws the organisation off balance and sometimes puts it into a position where its sustainability is brought into doubt. Emergency plans, crisis units, risk analyses and crisis simulations are, in this regard, appropriate tools for responding to emergencies and coordinating the decisions and actions of the various players involved. In this regard, crisis management has made significant progress in enabling organisations to deal rapidly with critical situations.

Enhanced prevention through measurement and simulation

Even though the preparedness phase represents a real breakthrough in crisis management, the vast majority of those same institutions are only just beginning to realise the importance of putting such a phase in place. It involves evaluating the organisation across the board, identifying the various processes, procedures and plans that exist to measure their relevance and identify gaps. All too often, organisations still have to take emergency action in the event of a crisis because this phase, which may be thought of as a crisis firewall, has been sidelined or is non-existent.

Another phase is beginning to gain increasing acceptance, that of simulation exercises. Long part of military strategy, crisis simulation puts managers in real-life situations based on various scenarios, forcing them to identify crisis trigger points for their activities and to define appropriate alternative solutions. In the event of a crisis, the ability of the organisation to take the right decisions rapidly is a key factor for successfully achieving the best possible recovery. It is easy to see that taking the “right” decision will be greatly facilitated and enhanced by putting in place tools and procedures to assist with decision-making.

Tools to assist with decision-taking

Why is it that from one company to another, from one institution to another, the action plans adopted are not the same? Why are some options more risky than others in a crisis situation? It is because there are special factors that greatly influence the individual analysis of each different scenario and the choices they each make.

Using the organisation and processes to take objective decisions

It is important to provide the organisation with a decision-making process that makes it possible to incorporate with ease the plethora of parties involved in the event of a crisis, to evaluate the various scenarios with the greatest possible objectivity and to take rapid decisions. Devoting time to identifying the decisions that will need to be taken in the event of crisis management makes it possible to plan for these decisions as far ahead as possible, which ensures that there is time to prepare appropriately for all decisions to be taken by the crisis unit and be able to implement those decisions as quickly as possible, but also to identify the strategic decisions calling for the involvement of an arbitration body.

Not too big to fail

No institution is too big when faced with a far-reaching crisis. Examples of this have multiplied in the past few years. Size is no longer a factor in this.

Boards of Directors now acknowledge the danger a crisis can have on the sustainability of their organisation and the need to prepare for this. This realisation is no longer sufficient and major preparation is required. Managers are now looking for a clear approach to the establishment of a crisis-management process: well-defined steps, experienced staff and a clear communications plan. They no longer see it as a waste of time but as a beneficial investment. Physical injury and impairment are tangible parameters that are easy to measure; the same is true for the erosion of assets such as morale and reputation, which are much more difficult to quantify. So how can these be measured by institutions? Quite simply by making them tangible and measurable by progressing from awareness to resilience through measurement, simulation and planning.

Indeed, Deloitte organised a crisis simulation specifically for directors of banks in November 2016. Our participants, assisted by our simulation experts, were immersed in a situation based on real threats (cyber-attacks), and were able to identify and reflect together on the approach to managing an immediate crisis and its consequences.

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