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A Proactive Approach to Crisis Management
IMR, March 15, 2004
Most companies adopt the "it-won't-happen-to-us" mentality rather than create crisis response plans. "It is true that the chance of a terrorist-piloted airplane flying into your building are slim," says Jonathan Bernstein, president of Bernstein Crisis Management LLC. "But there are dozens of scenarios that could occur that would result in the loss of the use of your building--floods, fires, accidental deaths. There's no such thing as a business that avoids crisis permanently."
Bernstein says small companies in particular put off crisis management planning because of cost. But he cites a study by Marsh Consulting that says every dollar put into preparedness planning returns $7 in averted losses. He suggests small companies in the same business and area, such as a handful of distributorships in Philadelphia, pool resources. "Do the work collectively, share the costs and create a plan that works for all of you," says Bernstein.
Bernstein recommends dividing the preparation of crisis management plans into four parts: a vulnerability/risk assessment, an analysis and plan writing phase, training, and crisis plan testing and validation. The vulnerability assessment helps companies determine current and potential areas of weakness. "It is far more cost-effective to prevent crises, or minimize the chances of crises occurring, than to merely respond to them," says Bernstein.
As part of the assessment, companies anticipate the disasters to which they are most vulnerable. For example, a company in Iowa probably won't experience an earthquake, but does risk loss from tornados. "Prepare for the destruction and loss of people and property for the acts of nature you're likely to face," says Bernstein. During the assessment, companies also should look at whether they are set up to respond quickly to employees, customers and vendors and if they have back-ups in place for communication systems. "Identify anything that could lead to a significant interruption in business and reputation damage," says Bernstein.
During the next phase, companies analyze results from the assessments: What are the challenges to effective crisis prevention and response--human or system? How can you meet those challenges? Considering the disaster scenarios most likely to affect your company, you should draft a crisis management plan. The plan should outline the steps the company will take during a disaster and include clear delineation of each employee's responsibilities. In addition, Bernstein recommends drafting a response to inform the community and media that "reflects the organization's values while considering the public's sensitivities and need to know."
Next comes training. "A plan is a nice document on a shelf, but it's got to be accompanied by training," says Bernstein. He adds that most employees are good at getting out of the building during a fire, but don't know what to do next. Companies should hold executive meetings and employee orientations to make sure each employee understands his or her role in ensuring everyone is safe, contacting all necessary people, getting the business back up-and-running and so on.
Finally, Bernstein encourages companies to do crisis plan testing through emergency exercises and simulations. "How well will your crisis plans work and the people charged with executing them perform when the next crisis strikes?" asks Bernstein. "The best time to answer that question is before the crisis strikes." You can hold companywide scenario-driven discussions, where you discuss possible emergencies. Or you can take a more interactive approach: Hold drills and full-scale exercises to simulate catastrophes and your company's response to them.
Your company's survival may depend on good crisis planning, says Bernstein. "Smaller businesses are the ones that can least do without crisis management because they have the least margin for error," he says. For example, if you have two printing plants and you lose one, you may be in bigger trouble than the 10-plant manufacturing firm that suffers the loss of a facility. "Unless you have adequate planning, you can go out of business," says Bernstein. "Consider crisis planning an investment."
For more information on crisis planning, check out Bernstein Crisis Management's web site.