Managing a crisis is always challenging; however, taking steps to prepare for and guard against challenging situations can lead to operational and cultural benefits within organisations, even if crises never arise.
Here we summarise 10 key themes and tips that have emerged from recent client workshops on this topic:
1. What is a crisis: The definition of a crisis differs from organisation to organisation based on sector, risk-profile, operations and perhaps most importantly, issues that may have arisen in the past.
Tip: In the same way that good corporate compliance demands that risk assessments are conducted for specific economic crime risks such as bribery and fraud, organisations should take time to consider a broader range of risks (financial and non-financial) that might impact on their business, looking carefully at issues that have arisen historically and that other organisations, both within and outside their industry, have faced.
2. Risk: While most organisations are conscious of the legal exposure and consequences that might arise in any given crisis situation, there is often a lack of rigorous analysis applied to reputational and commercial damage. Very few organisations turn their attention to the impact that a crisis might have on their internal culture.
Tip: The analysis of potential risks arising from any given situation should be holistic. Formal frameworks can be developed to aid this exercise and avoid blind-spots, and reduce the risk of taking steps to address certain issues, that ultimately lead to unexpected and unwanted consequences elsewhere.
3. Stakeholders: Shareholders, the media and regulators are important stakeholders in a crisis, however the impact on employees and customers can be underestimated.
Tip: The initial risk analysis should be framed around potential impact on all stakeholders, including staff and customers, with appropriate mapping carried out.
4. Management: Most organisations consider that senior leadership, legal and HR teams have an important role to play in managing a crisis. However, the role DE&I teams play is often overlooked.
Tip: While management of a crisis might fall naturally to a particular team in the initial stages (typically legal and HR), ensuring that a range of voices and perspectives are involved will help ensure that a sophisticated approach to crisis management is achieved.
5. Crisis Management Plan: While most organisations have internal procedures to manage certain situations that will also be relevant to the management of a crisis, relatively few have a formal crisis management plan.
Tip: Even in organisations where there is a perception that risk is low and issues have arisen infrequently, the process of creating a crisis management plan will allow organisations to turn their minds to refining and tightening up important operational topics – for example, the management of confidential information and collaboration and understanding between teams, which might otherwise be operating in silos.
6. Communication: The need for external communication (e.g. with the media, regulators, customers and suppliers) in the event of a crisis is well-recognised. However, organisations often overlook the importance of internal messaging, albeit recognising the need to manage the risk of leaks. DE&I leaders are not generally consulted as part of internal communications.
Tip: Most organisations will have an internal and external communications plan. Some companies will have specialist external PR and communications advisors. Where communications (both internal and external) during a crisis situation are handled internally, the best way of ensuring that communications serve their purpose in containing and mitigating the impact of a situation is to involve as many relevant internal stakeholders as possible to ensure all angles are covered.
7. Legal Duties: While many senior leaders (legal and non-legal) within organisations are aware of Legal Professional Privilege, data privacy and confidentiality, very few organisations provide training on these topics to non-lawyer managers and even fewer have readily accessible protocols to manage them.
Tip: Companies frequently overlook the fact that confidentiality, privilege and data privacy breaches often occur unwittingly due to a lack of knowledge on the part of employees who do not specialise in these areas. Managing these issues during a crisis (including associated investigations) is not straightforward and can be challenging. While specialists should structure and communicate appropriate protocols at the outset of any given situation, crisis situations rarely afford the luxury of time. Pre-emptive training and education on relevant topics in advance of a crisis creates efficiencies and reduces risk.
8. Speak Up Culture: Many organisations have experienced positive changes in the willingness of individuals to come forward and report concerns, particularly in relation to DE&I issues.
Tip: Not all crises are preventable, and some will arise as a result of external factors outside the organisation’s control. It is well-established however that fostering and supporting cultures where employees feel able to speak up on issues (no matter how seemingly insignificant) plays a crucial role in ensuring that even minor issues can be addressed before they escalate.
9. Post-Crisis Management: Irrespective of the outcome of a crisis, there can often be unsettling and negative impacts on a range of stakeholders, including employees, particularly where there has been external media attention.
Tip: Crises create opportunities. Once the dust has settled, organisations must consider proactive steps to reflect, learn and improve. In addition to tightening up legal policies and procedures, HR and DE&I teams have an important role to play in repairing and strengthening internal cultural, with full buy-in from top level management.
10. DE&I and Risk: Diversity and inclusion are inextricably and directly linked to risk. However, this message is not always effectively communicated to all levels of management within organisations.
Tip: DE&I professionals and champions have a role to play in educating senior management link between DE&I and risk. This requires effective presentation of evidence in a manner that is both relevant and resonates with the audience. The number of crises that have occurred in recent years across a range of industries, due to poor corporate culture, should be summarised and presented for all decision-makers, along with details of actual consequences that have flowed from them, including:
(i) impact on share price;
(ii) irrecoverable loss of key contracts/customers;
(iii) long-term reputational harm; and
(iv) loss of employment by senior executives.
The Crisis Management Team at Fieldfisher comprises experts from teams including Employment, Regulatory, Dispute Resolution, Data Privacy and Investigations. We help organisations, management boards, senior executives and entrepreneurs to prevent and manage the most important and sensitive risks they face, providing holistic, practical and emotionally-intelligent advice from start to finish.
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