The cautionary tales of boards caught out and paralysed by the scope and velocity of events have been widely publicized, be it related to company finances, products, clients, social impact, cyberattacks, or dramatic developments within the board itself. A crisis can ensue because of threats to a company’s value or reputation, or even to its very existence. These often transcend the operational level and involve shareholders, regulators, and law enforcement agencies. Crises can also revolve directly around board members through controversies in exercising leadership or nominating and removing senior executives.
The brightest and strongest boards can be brought down by a crisis in an instant, and having a response architecture in place is critical to organizational survival and long-term success. There is work to be done in times of peace, and doing the groundwork required to build resilience is a key weapon in this pre-emptive battle. Here are the steps you can take and the tools you will need to build a robust and assembled crisis management team in the boardroom.
We are in an era of permacrisis. Boards around the globe have experienced a series of highly improbable events that have resulted in catastrophic socio-economic consequences. The 2008 financial crisis, the dot-com meltdown, 9/11, the subprime housing-loan collapse, and the 2019 trade wars were each black swans in their own right. They have been followed by a pandemic, a spate of wars, both trade and conflict, and unprecedented political instability on a global scale.
The best boards now use black swan simulation tools to experiment with various real-time variables to anticipate extreme outcomes of various events, the probability of which can only be estimated rather than measured. These simulations can vary from cyber breaches, where boards spend time in an escape-room-style experience from within the boardroom, to simply conversing on a range of potential events such as nuclear accidents, migration waves, natural disasters, and active gun threats.
These conversations must begin with open-ended what-if questions that allow board members to think of the worst-case scenarios and develop contingency plans to prepare themselves for any eventuality. It is important to analyze the scenarios, rank them, and consider the damage they could have on the organization’s financial, reputational, and social capital, alongside disruptions to the supply chain, staff wellbeing, and business continuity.
Part of this conversation is identifying solutions to the problems created. Elements such as how to move funds, how to alert law enforcement, and how to diversify revenue streams are critical, as is considering alternative suppliers and workforces.
“Preparedness is key. With sound planning, one email should be enough to trigger a pre-planned crisis response in motion immediately.”
Learning to imagine the unimaginable and simulate an environment around it is an increasingly useful skill and mindset. When a crisis does hit, however, taking action, even when it is anticipated, premeditated, and carefully rehearsed, is only one part of the challenge. The organization and its board must be seen and heard to be taking decisive action.
This includes sharing up-to-date information, elaborating on the company’s decisions and projected outcomes, reassuring internal and external stakeholders, and seeking assistance and support from public agencies. For international organizations, this should involve country-based teams, especially in technically risky scenarios involving the geopolitical climate.
All of these activities seem self-explanatory, yet, without preparation, making them happen ‘on the day’ or ‘during the event’ will seem impossible. In the wake of truly cataclysmic events, when every minute counts, the public will very likely be in an anxious mood, hungry for information. Any silence or indecision from the firm and its board will be deafening. News audiences will speculate the worst, social media can quickly reshape public opinion, and your customer base will soon be fundamentally questioning the organization’s values, leadership, and management competence.
Preparedness is key. With sound planning, one email should be enough to trigger a pre-planned crisis response in motion immediately. Crisis teams will assemble, with each member assuming the specialized task he or she has been trained to handle. Predetermined ad hoc task forces will address key stakeholders, call a press conference, engage the media, issue press releases, track social media, and react quickly to posts. Guidelines, toolkits, and written scripts will help automate and coordinate the procedural aspects of the response. While messaging will need to be refined, the ‘who does what’ will already have been decided, making time much more productive.
I often get asked which of my four pillars of governance, including people, information, systems and processes, and culture, is most important. My answer is always simple: good governance is like good health, and you need to focus on all aspects simultaneously to survive. Be it blood pressure, weight, or mental health, meditation and exercise are of equal importance, and the four pillars of governance are equally necessary. That said, there are consistent failures and risks present in the modern board. I see directors lacking in diversity of perspective and dedication, weak information, boards divided over culture, and systems not meeting the size and strength of the organization they serve.
It is the second pillar of information that proves to be most critical in a crisis response architecture, as, to be credible and reassuring in a crisis, the firm’s leadership, including the board, must be able to contextualize and present often conflicting information. It helps, therefore, if a board has been continuously gathering relevant information over the past few years, which includes data on the company, its market and operating environment, client needs, competitor trends, and stakeholder motivations. In many scenarios, what is typically referred to as ‘external pressures’ can be usefully redefined as information. Indeed, weak signals, complaints, and reputation hits become magnified in times of crisis, and a board that has paid attention to these smaller signals has a better chance of surviving the crisis.
In an environment of pervasive uncertainty, directors should also get information from regular conversations with people at all levels of the organization, including executives, workers on the shop floor, and customers. These discussions can give directors a feel for what is happening ‘out there’, which in turn may help them to foresee and react to a future crisis. Many of the spectacular boardroom failures we see share one essential ingredient: the director’s failure to grasp what was going on in the trenches. Ad hoc internal surveys, client feedback, social media scans, and informal testimonials can all be of great value in helping directors build a nuanced, three-dimensional view of the organization and the world in which it functions.
There is never a better time to start preparing for a crisis than when a company is sailing smoothly.
To be a board member requires ambidexterity. It requires technical competency, expertise, and experience, but it also depends upon integrity, dedication, and authenticity.
To reassure and resonate with audiences during a crisis, company messages must be seen as authentic. This needs to be rooted in a director’s sense of courage, character, empathy, and breadth of vision, rather than plucked from how-to guidelines. Gaining and maintaining trust, or rebuilding it in the aftermath of cataclysmic events, requires strong and sustained board leadership through values, integrity, and good governance. Empathy, professionalism, and experience are always fundamental to good board work, but become especially valuable during crises. To handle a crisis in a way that strengthens its reputation, a company needs to draw deeply on existing organizational values and competencies.
There is never a better time to start preparing for a crisis than when a company is sailing smoothly. When boards have performed a thorough risk analysis, including scenario planning, have contingency plans in place for every eventuality, and the communication structures, assembled teams, and information architecture in place to respond to each, organizations have a sound basis for survival and success, even during the most difficult times. In fact, they can become times of re-incubation, offering deeper and new opportunities to fuel success.
Sustainability can no longer be separated from geopolitics. In this webinar, our experts discuss how rising security risks, disrupted supply chains, and circularity are redefining strategy for global leaders....
Industrial policy is reshaping global competitiveness, strategy, and innovation as governments pursue resilience, security, and growth....
Brazil, India, and Nigeria, among others, present opportunities and challenges for business in a rapidly developing energy landscape. Companies should tailor their approaches to tap into growth markets....
Audio available
The different ways that economies tackle digital competitiveness can make them at once resilient and vulnerable in today’s increasingly fragmented digital economy, says Fabian Grimm. ...
Explore first person business intelligence from top minds curated for a global executive audience