Making crisis simulations matter

Preparing for a crisis simulation

There’s more than one way to approach a simulation. The ones that create lasting value put the organization to a stringent test, whether the scenario represents the worst case. It demands the right questions be brought to the table and the right responses or actions executed, even if only on paper. It should evaluate where the wrong questions were asked and any actions that were not executed. It cascades realistically from one decision point to another. It plays through both your external and internal worlds. It leaves participants feeling they’ve truly learned something by testing their responsibilities under trying circumstances that subject them to uncertainty, ambiguity, and conflicting and incomplete information—where there is often less known than unknown—so the crisis modus operandi permeates all levels of the organization.

The foundation of this approach is preparation. The objective(s) might test the ability to follow a crisis management plan throughout the duration of the scenario (an orderly exploration of strategic market risk), an exploration of the organization’s continuity capabilities, or something in between. The trigger might involve technical failure, market disruption, natural events, or deliberate malfeasance. 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. The result is a team that is more confidently equipped to handle the crisis, faster in reacting to it, and ready to scale up the necessary resources for response and recovery.

Where to begin

Begin with a scenario? We believe that is not the best approach. Instead, begin with building a foundation by identifying the problem, purpose, and objective(s) that your simulation is going to be designed to address, in order to effectively navigate the next crisis. What does your organization need to prepare for? When the next crisis happens, how do you want to look on the other side? The stakes are high for organizations in today’s environment: social and mass multi-media makes it a probability that a poor decision or crisis response will, very rapidly, be known around the globe. This can put an organization’s reputation in jeopardy and drive them even further into a reactive and defensive posture. That is not the posture an organization wants to be in throughout any phase of the crisis lifecycle. The effectiveness of a crisis response can make or break an organization’s future success. Crisis simulations are not the place for shortcuts.

Only with clear objectives can you construct a scenario that will advance the simulation. Perhaps think like a movie producer. Carrying out a crisis simulation isn’t unlike producing a movie. What’s the storyline? The scenario? How can you turn it into a plan that sets out who will say what to whom and when? This plan is known as a Master Scenario Events List or MSEL. But an MSEL should be more than just a script—because a script follows a prescribed narrative line. An MSEL enhances realism by anticipating and accounting for all potential decision points in the simulation so that cause and effect remain realistic from beginning to end. When participants interact with an MSEL using real data in a real physical setting, the lessons are real as well.

Next, find the limit. A simulation that doesn’t challenge people really won’t teach them anything. But a simulation that carries them past the breaking point can lead to humiliation and poor morale. Designing scenarios that deliver the most pressure without going over the line is part science, a part art form. Keep in mind, high-impact events that have been deemed unlikely and thus dismissed with the wave of a hand because leaders were not open to at least considering alternate scenarios or undesired/unintended consequences sometimes end up happening. Leaders should be committed to relentlessly scanning the horizon for the first signs of the next potential disruption. For example, not many imagined we would experience a pandemic of the magnitude COVID-19 is delivering and we certainly never foresaw the impact it would have on the world. Here we are today, months into our response, still trying to find footing in an unprecedented crisis that is completely unfamiliar to leaders.

The weeks that lead up to a simulation take rigorous planning. The hours that pass during a simulation should be engaging, emotional, even entertaining. When the simulation ends, the real work resumes—because collecting and evaluating the lessons learned during the simulation and applying them to create a stronger crisis management plan is where the real value lies.

Design crisis management exercises across all dimensions

To protect organizational value, a crisis simulation should be as multidimensional as the real world in which a real crisis might play out. Whether real or imagined, it should include externalities, including realistic injections of “news” and stakeholders with agendas different from your own.

People should interact as they would in real life. They should consider and challenge the impact each decision will have on finance, customers, strategy, and operations—and those decisions should have palpable consequences. If participants run up against the limits of the simulation, the simulation hasn’t been designed broadly enough.

A maturity-based approach

Depending upon the purpose of the simulation, the scenario design, and the resources available, simulation approaches will vary.

One end of the scale can be a simple discussion-based simulation bringing organizational stakeholders to the table to work through a likely scenario. The next level is a deeper test of the strategies and/or resources an organization would deploy, information flow, and communications channels in a highly realistic, scripted environment. The most intense simulations can rival military "war games" in their dynamic use of worst-case scenarios and immersive, even stressful environments. When participants make decisions, they must consider the consequences those decisions will have days, weeks, and even months down the line. Just as important, decisions need to be made at the right levels. Executives need to be confident others in their organization will handle the strategy and tactics while they focus on key stakeholder relationships and communication, outcomes, and future consequences. Getting ahead of the game is critical for them and the organization.

An organization could choose a specific place along this spectrum to stage a needed simulation, or it might stage a progressive program that builds through simulations of increasing challenges following its organizational maturity.

No matter what type of simulation your organization chooses to conduct, realism is invaluable. The simulation should mirror your internal world as well as your external environment, including non-governmental organizations, partner organizations, and constituents (customers, regulators, competitors, suppliers, and governments) whenever appropriate and possible. It should help participants reach sound decisions while information is delivered to them in many directions. The more realistic the experience, the more confidence it can build in you and your teams. It’s also vital to include the entire organization, from the board and leadership to the front lines. This is the only way to test decision-making authority and escalation succession.

How Deloitte can help
At Deloitte, our approach to crisis simulation uses information, analytics, and innovative tools that could be available in real crisis situations, combined with practical experience, to immerse participants in a fully interactive environment. These simulations can help organizations evaluate their response preparedness while also providing the experience needed to be effective when a real crisis strikes.

A crisis simulation is an opportunity to develop capabilities, stress-test plans, evaluate coordination and communication, and preview real-time response capabilities. C-Suite executives, board members, and other leaders are usually at the center of the action. But the simulation should also include the larger crisis-response organization that exists behind them. Our approach is based on a distinct combination of military and academic rigor and our own business experience. Using our advanced simulation techniques, we can assist businesses in:

• Understanding risks and their potential consequences
• Considering worst-case scenarios
• Aligning stakeholders and developing commitment to plans and strategy
• Building operational readiness for new processes or structures
• Training staff in roles and responsibilities
• Testing plans, identifying gaps, and driving out false assumptions
• Measuring the response capability of the organization to understand capability levels and improve response effectiveness

Bottom-line benefits
Crisis simulation provides insights into an organization’s readiness to manage crisis situations effectively. It is an investment that can pay off rapidly, and for many years to come if sustained through a regular and progressive program.

Confidence. The most important benefit of a crisis simulation is the personal and organizational confidence it helps to create among your people and your leadership team, as well as your board of directors, investors, and regulators.

Clarity of roles and responsibilities. With an effective simulation, everyone involved understands exactly what is expected of them.

Speed and efficiency. Crisis simulation gives people a clear sense of what’s needed when to escalate, and how they fit into the overall crisis management plan.

Control and coordination. Simulation enables an organization to practice responding in a controlled and coordinated manner—and to be seen as disciplined and competent by external parties.

Improved communications. Because of regular rehearsal and practice, communications are more likely to be speedy and transparent and make the best use of all available channels.

Effective crisis simulation practices can help create an unforeseen advantage where organizations can transform a dangerous threat into a positive force that strengthens the organization’s capabilities, enhances confidence in leadership, and builds stronger stakeholder partnerships. We can help you do just that in ways it may be difficult to duplicate in-house. Not every organization can afford to have a dedicated crisis team standing by to plan and conduct simulations. Working with Using a trusted advisor is one way to concentrate the most experience and effectiveness into a manageable cost.

Even among those who do have established crisis teams, Deloitte’s experience in running advanced simulations across hundreds of complex scenarios and industries may bring new insights and thinking to your approach—as well as the benefit of an objective evaluation.

How to start

First, decide on the objectives. Then think like a movie producer. Carrying out a crisis simulation isn’t unlike producing a movie. What’s the storyline? The scenario? How do I turn it into a script that determines who will say what to whom and when? This script is known as a Master Events List, or MEL. But a MEL must be more than just a script—because a script follows a prescribed narrative line. A MEL enhances realism by anticipating and accounting for all the decision points in the simulation, so cause and effect remains realistic from beginning to end. When participants interact with a MEL using real data in a real physical setting, the lessons are real as well.

Next, find the limit. A simulation that doesn’t challenge people won’t teach them anything. But a simulation that carries them past the breaking point will teach only humiliation and poor morale. Designing scenarios that deliver the most useful stress without going over the line is part science, part art form.

And that’s the easy part. The weeks that lead up to a simulation take rigorous planning. The hours that pass during a simulation are engaging, emotional, even entertaining. When the simulation ends, the real work resumes—because collecting the lessons and applying them to create a stronger crisis management plan is where the real value lies.

Related article

Download the PDF to read the full report, and to see how some of the world’s leading companies are addressing crisis management issues.

To learn more about Deloitte’s crisis simulation services, read "Crisis simulation: Putting readiness to the test."