“Vulnerability gap” threatens preparedness for crisis management
18 February 2016
Less than half of board members say their organisations have both the capabilities and processes in place to effectively handle a crisis, according to Deloitte, the business advisory firm.
The survey of 317 non-executive global board members found that they have confidence in their organisations’ ability to deal with crisis situations, but are less confident that they are prepared for them.
“Most businesses will face a crisis at some point”, states Rick Cudworth, risk advisory partner at Deloitte. “In my experience, most boards now recognise that it’s a matter of when, not if. This has been a big change in recent years. Board members should hold frequent discussions with management to ensure a sound and common understanding of what preparations have been made to deal with a crisis when it arises. This should include regular rehearsals of executive and board members.”
Additional survey findings include:
- Disparity between feeling ready vs. being ready: More than three-quarters of board members believe their companies would respond effectively if a crisis struck tomorrow. However, less than half of those surveyed felt their companies engage in monitoring or internal communications designed to detect trouble.
- Damage to corporate reputation ranked highest as a vulnerability, followed by cyber-crime: Supply chain issues, regulatory action, and natural disasters were also listed as vulnerabilities.
- The “vulnerability gap”: When asked about specific crisis areas, board members were more likely to acknowledge their vulnerability, than they were to say they had a plan to address it.
- Board members aren’t engaging with management: Fewer than half say they have engaged with management to understand what has been done to support crisis preparedness.
“It’s clear that crisis awareness, preparation and resilience needs to be a more prominent topic in the boardroom”, continues Cudworth. “While the approach may differ between organisations, our research found that fewer than a third of crisis-hit respondents recovered in less than a year. No board should underestimate the challenge that crisis brings, and it’s potential longevity.”
Notes to editors
About the survey
This study was conducted by Forbes Insights on behalf of Deloitte Touche Tohmatsu Limited. The global survey, conducted in the fourth quarter of 2015, included 317 respondents who identified as non-executive board members of their organisations. Among respondent companies, 16 percent had annual revenues between US$500 million and US$999 million; 47 percent were between US$1 billion and US$4.9 billion; 23 percent were between US$5 billion and US$9.9 billion; 12 percent were between US$10 billion and US$19.9 billion; and 2 percent had annual revenues of US$20 billion or more. Respondents were divided among three regions: EMEA (32 percent), Asia/Pacific (32 percent) and the Americas (36 percent), and represented companies from all ﬁve major industry sectors (Financial Services, Consumer & Industrial Products, Technology / Media / Telecommunications, Life Sciences & Health Care, and Energy & Resources).
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
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