Crisis simulation

Effectiveness hinges on meticulous preparation

Crisis simulations can be an effective tool for risk management, but properly done, they require meticulous preparation. While an ineffective crisis simulation does little more than dampen morale, an effective one puts the organization to a stringent test and leaves the whole of the organization, from the boardroom to the front lines, confident and working as a cohesive team.

When crises strike, planning pays off

As discussed in this article from the Deloitte-sponsored module of the Wall Street Journal’s Risk & Compliance Journal, crises can be malicious, accidental, or completely random. To protect organizational value, a crisis simulation should be as multidimensional as the real world. Whether real or imagined, it should include externalities, including realistic injections of “news” and stakeholders with agendas different from your own.

The simulation’s objective might be an orderly exploration of strategic market risk, a dramatic moment-to-moment sequence of scenarios and responses, or something in between. The trigger might involve one or more of the following types of events:

  • Malevolence and cyber – Cyber attacks, identity theft, or product tampering
  • Misdeeds and financial crime – Fraud, bribery, corruption, theft, or other criminal activity
  • Financial disruption – Financial failures that threaten a company’s very existence
  • Technological & industrial – Complex systems fail, through accident, mismanagement, or sabotage
  • Confrontations – Legal, commercial, geopolitical, or military conflicts
  • Other catastrophes – Natural or manmade destructive events that disrupt almost everything

Many organizations are susceptible to threats from more than one of these potential triggers, and simulations may focus on any one of these. In each case, the effort an organization puts into planning and customizing its crisis simulation approach can pay off many times over when a real crisis strikes, in personal preparedness, process improvement, team coherence, and raw confidence.

To gain insights on real-world examples that demonstrate the utility and potential benefits of crisis simulation, read “Crisis simulation: Effectiveness hinges on meticulous preparation” in the Risk & Compliance Journal.


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