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Insight

Crisis management

Focus on: Overcoming natural disasters

Crisis management when a natural disaster strikes

Tooth and claw

Unlike embezzlers, hackers, or litigants, nature doesn’t have a plan for your organization. Nature doesn’t wish you well and nature doesn’t wish you ill. But it will command your attention—often without warning, always without remorse.

People and physical assets are typically the first things leaders think of when they contemplate natural disasters. Those are certainly important. However, “acts of God” can also imperil financial assets, reputation, and shareholder value in unpredictable ways. If a flood in another country puts one of your vendors out of action, or if a typhoon bottles up ships in port, you may experience the impacts from a natural disaster from the dry, safe comfort of your office.

Like any form of crisis, natural disasters present challenges that respond well to scenario planning, simulation, and aggressive preparedness. Like other disasters, natural ones can deal large setbacks in short spans of time. But unlike other types of threats, natural disasters take no notice of borders or jurisdictions, and they can take a variety of forms. Natural disaster is also different to other types of crisis because of the way private and public roles can intermingle – which can make your company sometimes the party in need, and other times the party others need.

Organizations that take an “all hazard” approach that combines respect, resilience, and joint planning can weather the storm – or the landslide, or the earthquake – and come back stronger than before.

The common elements of crisis
A tropical depression doesn’t resemble a financial depression. A data breach is nothing like a dam breach. But in a fundamental way, all business crises present the same imperative: Something has denied you your ability to function. Something has put your reputation and perhaps your continued organizational existence at risk.

As with other types of crisis, a natural disaster challenges you to restore function, preserve value, and move past the trouble. Unlike other types of crisis, the damage from a natural disaster can be widespread, cover many areas at once, and cross the boundary between your organization’s concerns and those of the larger community. Natural disasters invite a loss of focus. What is your objective? Don’t let the drama of the cause distract you from the business of the consequence.

A mutual dependency
Before, during, and after the fact, natural disasters create de facto partnerships between government and private enterprise. The value of those partnerships flows in both directions, and the time to explore their boundaries and expectations is before trouble begins.

A business concern can be just like any other individual or corporate citizen in its dependence on first responders, restoration of essential services, and government recovery agencies. Long before that point, business and government may work together to build disaster resiliency, for example in the crafting of building codes. And in the midst of crisis, a company may become an indispensable element in a broader community response, especially if the company has responsibility for vital assets such as energy infrastructure, roads, or ports. In some instances the government may appeal directly to a company for assistance. In others, the need is self-evident. Even a food market, petrol station, or bank cashpoint can play a disaster recovery role that reaches past the company’s own fortunes.

The first domino is never the last
A crisis that starts as a natural disaster may turn into something else in the days that follow. If an earthquake knocks out a data center, you have a systems crisis. If a flood delays a shipment, you have an operational crisis. If large numbers of your team become homeless, you have a talent crisis.

Because crisis jumps these boundaries with ease, you should prepare ahead of time to follow. Seek out and eliminate the boundaries that divide your organization into silos. And look outside your organization to forge working relationships that can make you more agile – such as with government agencies, law enforcement, community groups, and other businesses.

Resilience is a commitment—and a discipline
The old adage about the reed and the oak has its very origin in the spectre of natural disaster. When the wind blows, will you break—or snap back?

Deloitte helps organizations of all types find the unforeseen advantage in all types of crises. Natural disasters are no exception. The objective is to prepare for crisis in a way that lets your organization rebound from it stronger than before. But reaching that objective is a matter of hard work, most of which takes place far ahead of time.

Crisis has a lifecycle, and so does crisis management. Identifying threat vectors and vulnerabilities is an early step. Scenario planning can help take the surprise out of many surprises. 24/7 monitoring helps keep organizations ahead of events—or at least not behind. And robust simulation exercises can greatly improve the chance that an organization’s crisis response will unfold in real life the way it intends it to on paper.

But making all that happen starts with organization-wide buy-in. On a “normal” day, people want to attend to business as usual. It takes vision and commitment to spend a sunny day in a conference room thinking about a terrible day. It takes leaders to get people there. We can help make it worthwhile.

How to start
Document everything. After a disaster, you’re working to restore the status quo. So what was the status quo? That question encompasses immediate needs like locating employees and their families. But it extends to things you’ll have to account for later, like assets and receivables. Think maps. Think inventories. Think censuses. A strong, central data repository, governed by the right permissions, will speed response when it’s needed most.

Plan today the demands you’ll make of others tomorrow. But expect resistance—after all, today is sunny and clear. In the moment of crisis and for a finite period afterward, you’re likely to find people more receptive to big asks. How can you use that window? Leaders with first-hand experience in large-scale disasters say the longer after an event you wait to request needed resources and commitments, the more the people in authority will return to a business-as-usual mindset that delays or even blocks necessary action. When the wound is raw, don’t just ask for what will get you through the day. Think about what you’ll need six months or a year down the road, and ask for it now.

This is no time to stop delegating. In the cinema, there is always a hero to lead everyone to safety single-handed. In real life, a natural disaster takes the operation of a complex organization and makes it more complex than ever. The firm hand at the top will need many deputies—capable, trusted deputies who can make independent calls in the heat of the moment. Waiting for permission to flow up and down a command chain is a recipe for paralysis at a time when paralysis has the highest cost.

Defend in depth. In the United States in 2012, many New York-based companies felt confident because their New York-based data centers had backup locations a hundred miles away or more. Then Hurricane Sandy pummeled both areas1. A natural disaster, with its attendant surprises, is a time when you will want your redundancies to have redundancies.
 

1"Disaster Recovery: 10 Lessons from Hurricane Sandy." The Wall Street Journal 29 Nov. 2012.

The Focus on series is part of Deloitte's commitment to provide insights that help board members and senior executives navigate the crisis management lifecycle, including readiness, response, and recovery.

Download the PDF to see how the world’s leading companies are addressing crisis management issues. 

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