Business Soapbox: Rupert Johnston
Planning for a crisis can not only help reduce the damage caused it can also increase your company's reputation
So," asks the chairman of your Board, "I can understand that the disruption to the business was unforeseen, but customers have been let down, we've lost business, costs are up, and our share value is plummeting. On top of all this our reputation is in pieces. Why on earth did you not anticipate these risks and how the disruption could impact our business before now? And if you did, why was nothing done about it?"
It's a fair point and a scenario that is increasingly being played out in boardrooms across the country. The 'It'll never happen to us' mentality doesn't really cut it anymore. If your business faces a serious disruption tomorrow (no matter the cause), would you have any answers for your chairman?
It's obvious that disruptions to businesses and their closely intertwined supply chains are on the rise (anyone for another summer of flooding, a few more financial disruptions, volcanic ash clouds or even a social media led attack?). In their 2012 global survey "Planning for the Worst" report, The Chartered Management Institute tell us that 93% of businesses suffered some sort of disruption last year and the frequency and impact of these disruptions are increasing. We live in a business environment that is riddled with potential disruptions, each of which has the capacity to be terminal if unmanaged; but there are many things that can be done to exert control over the impacts a crisis may cause. It is a fundamental board responsibility to ensure the business is properly prepared, although at the end of the day it just makes business-sense.
By developing plans (call them what you like - contingency, emergency, continuity, or crisis plans ... ) that equip you with a framework to properly prepare for, respond to and recover from disruption, you're giving your business its best chance of sidestepping the worst and bouncing back sooner. By testing your plans and equipping your people with the skills to use them properly, (and under pressure), you stand the best chance of managing well, and recovering quicker than your competitors. According to the CMI, following a serious disruption 80% of companies who used their business continuity plans 'in anger' last year were able to materially reduce the level of disruption. In fact Pretty and Knight's work, 'Catastrophes and Shareholder Value' found that those who handle a crisis well will enhance their reputation and experience a sustainable rise in share value.
A company's business continuity plans and their capability to use them effectively are increasingly becoming a requirement in today's supply chains and can lead to distinct competitive advantages.
So what next? We would advise that as business leaders you look hard at your business to determine the things you really rely on and how long you could cope without them (people, premises, technology, key suppliers, business information ... ). Working out how you will protect these critical business requirements, how you will recover should they be disrupted and how long it will take, will be time well spent should the inevitable happen. Drawing up a framework for managing crises and training your people by practising their crisis specific roles in advance will pay dividends.
Lastly, make sure you think about how you will handle your stakeholders, key accounts and the media.
By following this advice before the unforeseen happens, your business will be well prepared to sidestep and bounce back and you won't have to explain your unpreparedness to the chairman and board.
Rupert Johnston is a director of Emergency Planning Solutions, one of the UK and Ireland's leading specialist firms in business continuity and crisis management. www.emergencyplanningsolutions.com