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Effective Crisis Management

By Glen Trest, C.H. Guernsey

When it comes to the loss of a building, the corporate network, or the ability to work, "Mother Nature just doesn't care." This quip comes from a recent television advertisement but is very relevant to understanding crisis management. Mother Nature doesn't care, nor do other forces that are beyond a company's control.

Prevention of crises should be a primary goal of every business. Mother Nature's forces cannot be averted, but many man-made events can be prevented. In the event of a crisis, preparation is a requirement. Planning and practicing for one is essential.

The term "crisis" is often used because it can refer to various events that can disrupt normal business activities. A simple definition of a crisis is any event that threatens people, tangible assets, or intangible assets in any way that prevents or slows the normal business processes. The primary goal of crisis management is to return to normal business processes as soon as possible.

Defining a hostile situation is an individual task for each company. A crisis for one company is not one for the next. And seeing the unexpected potential catastrophes is the most difficult assessment.

Building A Crisis Team

The key to successful crisis management is selecting a team to handle crises as they occur. The team should consist of a core group of decision makers trained in crisis management and prepared to react to any situation. The members of this team must be knowledgeable of the business, so they can first identify a hostile situation and then decide what additional skills are needed to handle it successfully. The team must then decide if a crisis really exists.

Who should be on this team? For a small business, generally the management team acts as the crisis team. However, in medium to large companies the management team continues to do just that, manage the business. In these scenarios, the team should consist of representative decision makers from core disciplines that can work independently to solve the event quickly and communicate progress effectively to the management team. An ideal crisis management team requires representation from various groups such as:

• Facility management;
• Legal department;
• Risk management;
• Information technology;
• Human resources;
• Financial services;
• Real estate management;
• Corporate security; and
• Public relations/ communications.

Selecting A Leader And Establishing Principles

Each of these representatives requires action teams committed during a crisis to finding resolution and working with the business management team to keep the company at work.

After selecting a crisis management team, selecting a leader is required. The leader maintains the cohesiveness of the team. Successful leadership entails coordinating regular meetings, training, and evaluating of the threats to the business operations. The leader establishes basic principles of crisis management for the team. They include:

• Creating a written plan that can be implemented both vertically and horizontally within business operations;
• Defining the specific roles of each crisis management team member;
• Creating a communication plan that allows timely and accurate exchanges of information;
• Establishing a training schedule for the crisis management team and the respective action teams; and
• Creating a crisis culture that will thrive on cooperation.

Two of these principles are especially critical to successful crisis management. First, only when the crisis management team members understand and are committed to the crisis plan will they be effective in their tasks; and second, only when a crisis culture is established within the entire business will the company be ready to respond appropriately to a crisis.

Assessing Threat Significance

The foundation of the crisis management cycle requires identifying the potential threats to the business. This is accomplished by conducting a threat analysis and using a threat matrix to plan for the highest potential alerts. The threat assessment allows the crisis management team to analyze its environment, identify potential threats, assess the effects of each threat, and determine the probability of each threat so priorities are placed on planning.

A threat matrix allows the team to weigh the probability of a threat and the effect it will have if it occurs. For example, a fire that destroys a building in a company's complex is identified as a potential threat. That building hosts the company's customer service center. In conducting the threat assessment, the crisis management team determines that the probability that a fire would consume the entire building is low, but the potential impact on the company of such an occurrence is quite high. Therefore, the crisis management team would conclude the threat of a fire to the customer service call center should receive a high priority even though the threat is low.

Formulating crisis plans naturally follows the setting of priorities among possible crisis threats. Crisis planning, therefore, is not distinct from business planning because the former addresses the factors that might impede the accomplishment of the latter.

Using this philosophy in planning helps create the crisis culture within the company that is key to successful crisis management. Winning management's approval is dependent on the plan's ability to support the business objectives.

Crisis Management Training

Without regular exercises to test crisis management plans, these strategies become dormant and ineffectual in the event of a real crisis. A false sense of security can exist in the company simply because "we have a plan." The experience gained from training establishes the company's reputation for being prepared and able to survive.

Several types of exercises are required for proper training. A three step approach is common:

1. Notification and activation;

2. Tabletop; and

3. Simulation.

The notification and activation exercise tests the company's ability to receive information about a potential crisis, assess its impact to determine the response needed, and activate the crisis management and appropriate action teams. This exercise begins with a call to the crisis response number and ends once the crisis management team assembles. This exercise tests the team's call trees and should be substantiated periodically throughout the year.

Tabletop exercises are pre-scheduled gatherings. They are conducted as brainstorming meetings. A realistic crisis scenario facilitates the discussion. These sessions start with the crisis management team then flow to separate meetings of each representative's actions teams. This allows the action teams to discuss the ramifications of the scenario to their discipline within the business and discuss the actions they must accomplish during such a crisis.

Once the action team meetings are accomplished, everyone can gather and conduct a full-scale tabletop meeting. Integration of all the plans is discussed and leadership communications, organizational structure, and roles and responsibilities are tested.

The objectives of a tabletop exercise are to:

• Develop an understanding of the crisis management team's role in managing a crisis;
• Identify gaps and overlaps in responsibility; and
• Identify areas of weakness where additional resources are needed.

Simulation training is the final and most effective tool for crisis management training. Extensive planning and organization are required in order to conduct this training. Relevant scenarios should be developed and scripts written to simulate a real life crisis properly. A team of "facilitators" is used. It produces the crisis, controls the exercise, and evaluates the responses of the crisis management team. It is required that the "facilitators" are role players who have a good understanding of the responses they can and should give during the exercise.

During a simulation training session, the crisis management team uses all the tools it designated in its plans. The "war room" is the center of activity. At least one press conference is simulated, and the communication plan-both internal and external-is activated. The planned scenario requires more than one of the action teams to be activated, and their participation is required. The crisis management team never attempts to handle a crisis all by itself; neither is it to train without including all the needed participants.

The goals of simulation training are to:

• Validate the crisis management team's plan under simulated, real time conditions;
• Identify strengths and weaknesses in the plan and the team members under stressful conditions;
• Allow the team members to experience the emotions and stress of a real crisis; and
• improve the team's ability to handle a real business related crisis.

Training is the final step in developing a quality crisis management program. It is also the most important step. Many companies overlook training because of their false sense of security based on having a written plan and the expense of employee time for training. Crisis management, like any business process, must be evaluated completely to be effective.

In almost every instance of successful response to a crisis, management activities consist of sound operational procedures. Well planned and practiced operations save lives, property, and other assets. More importantly, the company's reputation of sound business practices and survival during critical periods is dependent on these procedures during a crisis.

Perception is reality. Both internally and externally, the ability of the crisis management team to show leadership during a crucial time is essential. Trust and confidence in the team's abilities must be established and then proven.

Not being ready for a crisis when it actually happens is a foreboding thought. How well a company responds is dependent upon its preparation, and a crisis management team can go a long way in preparing a company to do battle in a hostile situation.