In this increasingly volatile environment, it is no longer possible to say, ‘it can’t happen to us’ or ‘we’d manage.’
Risk, as we all know, is an inherent responsibility in any business. The role of the board is crucial in evaluating risk and building solutions to ensure the resilience to survive the unthinkable.
Managing a crisis can potentially make or break any company, therefore the risk to getting this wrong can be catastrophic.
Responding to a crisis
A good crisis response is, of course, about swiftly addressing what has gone wrong.
But it is also about being externally focused to find end-to-end solutions – communicating to stakeholders, shareholders, regulators, managing finances, protecting assets – and making big decisions that have a significant impact on the future of the organisation.
Crisis management should be an integral part of the wider organisation’s resilience measures and not simply something to deploy when all other options have failed.
There are actions boards can take now – and questions they can ask – to give themselves comfort that the organisation is prepared to manage a crisis.
When the stakes are high and scrutiny is intense, the board has a unique role. Stepping in may be uncomfortable but stepping aside is not an option.
Planning for a crisis
There are several crises that have happened in the last 30 years or so – Ash Cloud, Kobe Earthquake, Twin Towers, Foot and Mouth, IRA bombings and more recently Covid 19 – all of which had far reaching effects on many businesses. In an increasingly globalised marketplace, repercussions from all of these were seen to affect companies in the UK as well as across the World.
A good strategic adviser will draw from the learnings of all these situations and help the board to plan better for unforeseen circumstances. They will also be there when the chips are down to work side-by-side to help implement should the need arise.
Products vs Solutions
There are a wide range of options for the board to turn to for strategic advice and support in this area.
Traditional insurance broking tends to support clients in a crisis through provisions of a whole range of products which help compensate and support financially.
A good strategic adviser, however, will work with the business to find solutions. Insurance products aren’t solutions in themselves, rather they are an important ingredient of the solution.
In a crisis an adviser should be able to answer the questions “What are my options? What would you do? How do I deal with this?”
Scott Ingham, CEO of Matrix Global “I was adviser to a large multi-national supplier of IT during the Kobe Earthquake. In the fall-out the value of microchips increased dramatically which led to the very real threat of theft from warehouses across the globe of this commodity. We were able to put in place with the client, solutions to protect the commodity as well as compensate for the financial loss. An insurance policy isn’t going to protect your warehouse on its own but can help provide the financial support to help you do it. Taking just one example in isolation in a whole maelstrom that was happening!”
An important decision
Appointing a trusted adviser that understands the business implicitly, as an extension of the board, is critically important. Someone able to call on experience in dealing with a crisis. Someone who can help build end-to-end solutions, plugging in products and expertise at the relevant points.
In a crisis it is vital to work with someone who can take ownership of the solution. Someone who can step in and help when the going gets tough.
The most important decision for any board in crisis planning is to decide who best to trust to guide them to find solutions and to help implement them.