Crisis management is not an easy task. Identifying, knowing or tackling is one thing, predicting and being prepared for it, totally another.
What is the role of the Board members during such times and how do they view crisis? A Deloitte survey has found that board members around the world have confidence in their organisationsâ€™ ability to deal with crisis situations, (76%), but are less confident that they, and their organisations, are prepared for them.
Fewer than half (49% ) of the board members surveyed say their organisations have the capabilities or processes in place required to handle a crisis with the best possible outcome, according to the Deloitte Touche Tohmatsu Limited (Deloitte Global) survey report â€śA crisis of confidence.â€ť
â€śMost businesses will face a crisis at some point; itâ€™s a matter of when, not if,â€ť Peter Dent Leader of Deloitteâ€™s Global Center for Crisis Management, said.
â€śBoard members should discuss with management to ensure there is a sound and common understanding of the risks that can leave an organisation vulnerable to crisis. Itâ€™s equally important to deepen that understanding by strengthening the systems used to detect and prevent adverse events from occurring in the first place.â€ť
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More findings from the survey reveals that damage to corporate reputation (73%) ranked top area of vulnerability, followed closely by cyber-crime (70%). Almost 66% named supply chain issues, regulatory action, and natural disasters as vulnerabilities as well.
When asked about specific crisis areas, board members were more likely to acknowledge their vulnerability, than they were to say they had a plan to address it. Whilst only 73% named reputation as a vulnerability, but only 39% said they had a plan for it.
Board members arenâ€™t engaging with management: Fewer than half (49%) say they have engaged with management to understand what has been done to support crisis preparedness. Only half say board members and management have specific discussions about crisis prevention.
No quick fixes: Fewer than one-third (30%) of board members whose organisations had been hit by crises said their reputations recovered in less than a year. Around 16%said it took four years or more. Financial and operational crises had similar long recovery times.
â€śItâ€™s clear that crisis awareness, preparation and resilience needs to be a more prominent topic in the boardroom. While the approach may differ depending on the company, no board should underestimate the challenge of crisis preparedness,â€ť said Dent.
â€śIn an era when risks can turn into reality in the blink of an eye, it is important for the Boards to relook at the business assumptions which have served the companies well (thus far).Â It is through constantly challenging traditional wisdom and stress testing the business strategy that companies can hope to keep â€śblack swanâ€ť type of crises at bay,â€ťDavid Chew, Deloitte Singapore Centre for Corporate Governance Co-Leader, said.
“Boards need to inquire about the organisationâ€™s cyber risk strategy, what information the organisation is exposed to third party partners, and the cyber resiliency of the organisationâ€™s ecosystem,” Thio Tse Gan, Southeast Asia leader for Deloitte Asia Pacific Centre for Regulatory Strategy, said, adding that:
With the widespread use of technologies in todayâ€™s environment, the Board has a key role to play in ensuring that management is building a cyber savvy organisation.
The global survey conducted by Forbes Insights on behalf of Deloitte, was undertaken to assess the state of crisis readiness in large organisations. More than 300 board members from companies representing every major industry and geographic region responded to the survey.
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