How Can Leadership Strengthen Crisis Management? Survival Guide For The 21st Century

London, UK - 17th February 2010, 10:00 GMT

Dear ATCA Open & Philanthropia Friends

[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]

Welcome to the brave new world of accelerating change. The 21st century is throwing up different types of crises at a breathtaking and unprecedented pace with domino effects. Hall marks of such crises include: loss of trust; rapid-fire news updates; collapsing confidence and revenue; drastic loss of market share; plunging management credibility; and high volatility in stock price and perceived value. There are several reasons for these developments, which distinguished ATCA members have discussed in Socratic dialogue over the last decade. All crises, by definition, are extremely unpredictable and highly damaging. If crises are mismanaged they can permanently degrade and damage brand value, which has been nurtured and sustained over several decades. However, if a crisis is managed correctly, the recovery can be swift and long term effects neutral to positive. The credibility and reputation of an organisation is highly influenced by the perception of its response and 'response time' during crisis situations. The organisation and communication involved in responding to a crisis in a timely fashion makes for a challenge in any sphere: business, government or NGO. The key lies in the need for open and consistent communication throughout the hierarchy to contribute to a successful crisis communication process, its effective management and timely resolution.

Crisis Management: Addressing Domino Effects

What is Crisis Management?

Crisis management is the process by which an organisation deals with a major unpredictable event that threatens to harm the organisation, its stakeholders, or the general public. Four elements are common to most definitions of crisis:

1. Threat to the organisation;
2. Element of surprise;
3. Short decision time; and
4. Need for Change.

Given that any crisis is a process of transformation where the old system can no longer be maintained, the fourth defining quality of a crisis has to be the need for change. If change is not needed, the event could more accurately be described as a failure or incident but not a crisis!

Are Risk Management and Crisis Management Different?

In contrast to risk management, which involves assessing potential threats and finding the best ways to avoid those threats, crisis management involves dealing with threats after they have occurred. It is a discipline within the broader context of management consisting of skills and techniques required to identify, assess, understand and cope with the failure of a mission-critical operation, especially from the moment it first occurs to the point that recovery procedures start.

Crisis management consists of:

. Methods used to respond to both the reality and perception of crises;
. Establishing metrics to define what scenarios constitute a crisis and should consequently trigger the necessary response mechanisms; and
. Communication that occurs within the response phase of emergency management scenarios.

Crisis management methods of an organisation are called the Crisis Management Plan.

How many Crisis Types are there?

The different types of crises that distinguished ATCA members have identified over the last decade include:

1. Natural disasters;
2. Malevolence;
3. Confrontation;
4. Technological metamorphosis;
5. Technical breakdowns;
6. Human breakdowns;
7. Competitive challenges;
8. Large scale damage;
9. Organisational misdeeds;
10. Workplace violence and social unrest;
11. Rumours;
12. Crises of skewed management value;
13. Crises of deception;
14. Crises of management misconduct; and
15. Asymmetric threats manifestation.

During the crisis management process, it is important to identify the type of crisis which is unfolding because different crises necessitate the use of different strategies and tactics.

Why focus on Crisis Communication?

In the 21st century, given the global society's expectations of transparency, intense media interest is one of the characteristics of a high-pressure environment in a crisis. Leadership communication with the media and stakeholders during this time needs to be controlled and considered, alongside other media dialogue. Key Question: What does the media want to hear from the leadership, the organisation and how best to handle frequent requests for information?

What is the optimum Crisis Management Model?

Successfully diffusing a crisis requires an understanding of how to handle a crisis, before it occurs. The four-phase crisis management model process includes: issues management, planning-prevention, the crisis, and post-crisis. The art is to define what the crisis specifically is or could be and what has caused it or could cause it.

What is the role of the Crisis Management Team?

The role of the Crisis Management Team is a straightforward management task. It should:

. Establish what has happened;
. Assess the impact;
. Resolve any conflicts of interest;
. Identify and prioritise actions required; and
. Retain control.

The Crisis Management Team must prepare real time briefs for the leadership and for the rest of the organisation in question. This is often done with the help of Corporate Communications, Public Affairs or equivalent. The regularly-updated briefs also form the basis of a common message, communicated to appropriate internal and external organisations, including the media.

What is Crisis Readiness?

Failure to take control of a crisis can lead to, at best, a loss of confidence by stakeholders including customers and employees. At worst the organisation could face real loss-of-credibility, brand damage, financial loss, share price collapse or public censure lasting many months or even years. People need to be trained, plans tested and processes rehearsed. This is Crisis Readiness!

Why consider Crisis Simulation?

Crisis Simulations are critical to get senior management buy-in to crisis management planning and to enable crisis management team members to practice their roles and response. In order to improve an organisation’s crisis management skills, workshops and training events are not sufficient, it is necessary to conduct full crisis simulation exercises, where a virtual world is created giving participants the feel of a real crisis. Simulations ought to incorporate:

. Latest methods of delivery – from news broadcasts developed specifically for the event to real-time share price data;
. Custom websites that offer realistic and engaging scenario information;
. Participants who must be able to use their email and mobile devices, just as they would in a real crisis; and
. Unique opportunities to validate end-to-end operation continuity arrangements.

Why is Crisis Leadership the key?

Crisis leadership has become a defining feature of contemporary governance, be it in the private or public sector. In times of crisis, communities and members of organisations expect their leadership to minimise the impact of the crisis at hand, while critics and competitors try to seize the moment to blame incumbent leaders and their policies. In this extreme environment, executive decision makers must somehow establish a sense of normality, and foster collective learning from the crisis experience.

Leaders must deal with the strategic challenges they face, the political risks and opportunities they encounter, the errors they make, the pitfalls they need to avoid, and the paths away from crisis they may pursue. The necessity for management is even more significant with the advent of a 24-hour news cycle and an increasingly internet-savvy audience with ever-changing technology at its fingertips including the viral nature of social media such as Twitter and Facebook.

Leaders have a special responsibility to help safeguard society from the adverse consequences of crisis. Experts in crisis management note that leaders who take this responsibility seriously would have to concern themselves with all crisis phases: the incubation stage, the onset, and the aftermath. Crisis leadership then involves five critical tasks: sense making, decision making, meaning making, terminating, and learning! Brief description of the five facets of crisis leadership includes:

1. Sense making is the classical situation assessment step in decision making;
2. Decision making is both the act of coming to a decision as the implementation of that decision;
3. Meaning making refers to crisis management as political communication;
4. Terminating a crisis is only possible if the leadership correctly handles the accountability question; and
5. Learning, refers both to the actual learning from crisis and the window of opportunity for reform for better or for worse!

Conclusion and Benefits

Invariably, crisis management requires outside help. Just like when there is a massive fire, there is a need for a fire-department, the same holds true for crisis management. There is a need for a well trained and well versed external crew to assist the senior executives in dealing with a mission-critical crisis. The benefits of effective crisis management are numerous and immediate. They include:

. Enhanced safety and security for human resources, customers and key stakeholders;
. Compliance with regulatory and ethical requirements;
. Effective management of major incidents;
. Increased people awareness of the organisation;
. Increased confidence and morale within the organisation;
. Protected and often enhanced reputation;
. Reduced risk of litigation; and
. Enhanced levels of control and authority limits.

Given that crisis management deals with incidents of major impact, the subject is separate from -- yet integrated with -- continuity of operations. A good crisis management plan without sound continuity planning is like building a house without strong foundations. There is also something of a balancing act in crisis management planning. The best plans are the simplest and yet the attention to detail remains extremely important. Failing to plan for incidents may result in casualties and poor safety procedures, with many potential losses including capital, equipment, reputation, staff morale, market share and ultimately loss of the organisation itself. The issue is not whether to have crisis management or not, but how to apply it to best suit a particular organisation. To remain competitive, operation continuity and crisis management must form part of overall management strategy and be frequently reviewed.

The Asymmetric Threats Contingency Alliance (ATCA) has been scrutinising different types of asymmetric crises unfolding at an accelerating pace in the first decade of the 21st century. This ATCA briefing of the task of crisis management is intended as a starting point for leaders to address asymmetric crises from first principles all the way to scenario planning, preparation, simulation and execution at the highest level?

[ENDS]

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