Is your company prepared or crisis-prone?

Rudi Goldman

A catastrophic example is being played out in the aftermath of the terrorist attack on Wall Street. It's imaginable that few, if any, of the companies headquartered at the World Trade Center had business recovery plans for unprecedented losses of personnel, equipment and office space. Most are scrambling to recover their operations and to hold on to their most important customers.

Even fewer companies have a systematic crisis warning signal detection mechanism in place. In general, companies tend to be reactionary to crisis situations and pour resources into activities that take place in the heat of crisis. In other words, most companies are crisis-prone, even some of those who think they are crisis-prepared.

So easy to rationalize

So why is there such a seeming lack of concern among top management? Well, when it comes to the company's bottom line, it's easy to rationalize.

• "Priorities mean spending money on more pressing matters."
• "Crisis prevention and media training is a luxury."
• "We only use the media for PR purposes."
• "It's not really a crisis if it doesn't happen to us."
• "Our company's size will protect us (We're very large or too small)."
• "We have journalists as friends. They will protect us."
• These rationalizations can lead to big trouble. It's been said, "Crisis management is one of those
• things that managers don't know they need until they need it." And then, it may be too late.

Crisis preparedness starts at the top

What can companies do to be more proactive in crisis preparedness? Like successful workplace safety programs, crisis preparedness starts at the top. A company's crisis preparedness program needs to be fully supported by upper management and the corporate culture. This includes:

• Assessing current crisis preparedness
• Committing adequate resources
• Maintaining an effective crisis management program
• Creating a crisis plan
• Testing and continually updating the plan
• Establishing an ongoing issues management system

Tuning up your radar screen

Systems should be established which not only look at current issues facing a company, but those which may effect their future reputations and bottom lines. It's like having a radarscope for potential future threats. Threatening issues need to be assessed, prioritized and internal champions assigned to report on developments.

A crisis team should be established and a working crisis plan developed. A crisis operations center needs to be established and outfitted with adequate communications equipment. Your normal switchboard may not function adequately during the large influx of telephone calls generated during a crisis.

Spokespersons must be identified to deal with both internal and external communications. Media training for key spokespersons and upper management is critical. An issue handled poorly will almost certainly result in an escalation to a crisis situation. Studies show that crises almost never appear in isolation. Multiple crises, one building upon the other, are more the rule than the exception.

The crisis plan

Decisions must be made on what crises to prepare for and which can be safely neglected. This criteria or rationale needs to be based on probability and facts, not just emotion.

The crisis plan should deal with various aspects of potential crises, with an emphasis on crisis communications. For example, one aspect of the plan might address fire fighting, evacuation and business recovery, and another addresses facilitating communications to key audiences. (In the case of industrial accidents, these audiences might include: employees, victims and families, fire, police and emergency services, environmental groups, governmental agencies and the media). Remember, in the media, perception becomes reality!

Companies ill-prepared for informational, economic or perceptual threats

The majority of crisis-prepared companies are prepared for calamities like explosion or fire, but are ill-prepared for informational, economic or perceptual attacks like:

• Anonymous accusers
• Bankruptcy
• Competitive misinformation
• Copyright infringement
• Cost overruns
• Counterespionage
• Falsification
• Government intervention
• Grass-roots demonstrations
• Labor problems
• Lawsuits
• New product failures
• Poor morale
• Product recalls
• Product tampering
• Sabotage · Scanda
• Security leaks
• Shifts in value
• Technology transfers
• Unethical behavior

This is a partial list. In addition to environmental damage like fires, accidents and chemical spills, crisis-prepared companies have planned for at least one human-social crisis like false accusations, rumors and reputation damage; and one economic crisis like hostile takeovers, embezzlement and bribery. After the tragic events in New York City and Washington D.C., companies would be wise to also prepare for crises triggered by terrorism or executive kidnapping.

Crisis management - your best safeguard

Having a poorly conceived, cumbersome and untested crisis plan may actually contribute to escalating your crisis. A crisis management program, which embodies the right attitude, plans for eventualities and has a trained and tested team in place, is a company's best protection.

It's been said that there are two kinds of organizations in business today: those who have had a crisis in the past and those who will face a crisis in their future. Is your company crisis-prepared or crisis-prone? Considering recent events, this may be the right time for you to honestly decide and take appropriate action.