BE PREPARED FOR A CRISIS
When you’re faced with an event that can destroy your business, it’s good to know that
you’ve prepared for it. Self-reliance starts with a clear understanding of your business model
and its vulnerabilities.
It sounds obvious, but it’s surprising how infrequently business leaders truly know the nature
and extent of their organisations’ vulnerabilities.
From a practical point of view, the source of an event- global financial crisis, earthquake,
internal fraud- is less important than putting yourself in a position to cope when something
happens that severely interrupts everyday business.
Following a simple risk management approach will help you to understand the effect of the
likelihood and consequence of a breakdown at every point of vulnerability. Using those
assessments, you can then consciously decide what investment should be made to treat the
risks, bearing in mind the cost and effectiveness of the treatment.
Most Australasian organisations use the ISO 31000 Risk Management Standard, as a sensible
way to help think about risk, prepare for an event, and to guide quick recovery.
Following this approach, the first things to do is to establish the context, i.e. how your
business objectives sit in relation to what’s important to your stakeholders and customers,
legal constraints, market pressures, etc.
The second part is risk assessment: what uncertainly exists around achieving your business
objectives? Understand those risks and place them in order of priority. This is a process of
anticipating the future; a process of systematically identifying your risks then analysing and
evaluating them against criteria that are relevant to your business context.
Having tried to anticipate the future, the third part in the sequence is where leaders shape the
future by taking informed decisions about how to treat their risks. Up to this point it’s all talk,
after these decisions are taken you need to take action and be committed.
In many organisations, the most overlooked part of this process is to communicate and
consult. Don’t forget that stakeholders (especially staff) can help make your organisation
more robust, so be sure to keep them aware of what is being done to make your organisation
resilient.
How do leaders prepare their organisations?
There are four basic areas that business leaders must ensure are prepared if they want to give
their organisations the best chance of survival in a crisis: staff welfare, client impact, cash
flow and communications.
On top of these four, each organisation will probably have one or two absolutely critical areas
particular to its own business model, such as its information technology platform.
In the event of a credit crunch, commodity price collapse or other economic crisis, there is
usually more time to think.
Whatever the nature of the event, good preparation will give leaders the confidence and
composure to reassure their stakeholders that action is underway to recover the situation.
Understand vulnerabilities
One way into a systematic understanding of your business model is to run a Business Impact
Analysis (BIA), which identifies critical and non-critical system vulnerabilities in the
organisation, estimates recovery times and recovery requirements, and compares costs of
failure against the costs of upgrading a particular system.
This needn’t be as complicated or onerous as it sounds. And there is usually the benefit of
identifying redundant or inefficient business,
Conducting a BIA or similar exercise will give you and your teams a solid understanding of
your business and its vulnerabilities. That’s one pillar. The two other critical pillars involve
infrastructure and people.
Maintain a solid infrastructure
Infrastructure is the underlying base necessary for an organisation to function at all. It’s the
essential facilities, services, and installations. This will vary from organisation to
organisation. It will also vary over time.
Obvious things, such as working toilets are often overlooked. Assumptions, such as sufficient
capacity on the organisation’s virtual private network to support all staff working from home,
are often unverified. Well prepared leaders ensure that their organisations have infrastructures
that are fir for purpose, well maintained and periodically updated.
It is absolutely critical that there is sound infrastructure to deal with the four basics of staff
welfare, client care, cash flow and communications.
How this is done isn’t important, as long as it fits with your organisation’s style, but it is
important that there is not reliance on one component in case that component fails (eg
expecting all communication to be done via mobile phone, only to find the mobile towers are
inoperable because of the event that caused the crisis in the first place).
Prepare their people
The final preparatory pillar is people. Everyone on your organisation needs to have a big
picture of the organisation painted for them, and to have their roles made clear.
This does not mean beating awareness into everyone with enormous emergency manuals.
What it does mean is that people are aware of the relevant findings of a BIA, they are
involved in developing contingencies, and they have the training to be able to help when a
crisis hits. This could mean finding efficiencies to cope with an unexpected tidal wave of
cheap competition, or dealing with the pressure of working oout of temporary
accommodation after a flood.
Your organisation should try to encourage future assistance by putting staff concerns at rest
in advanced (for example, indicating that payment of wages/ salaries will continue during an
emergency).
Similarly, individuals should ideally know their roles and be reassured that they have
authority to act.
What are the most important preparations to enable quick recovery?
1984 Rogernomic Reforms, 2001 World Trade Cebtre Attacks, 2005 Hurricane Katrina, 2008
global financial crisis, the 2011 Christchurch earthquake…… the list goes on.
With hindsight, the likelihood and consequences of each of these events were obvious, but at
the time they were unexpected. Some leaders and organisations coped well, many didn’t.
Organisations that survive such events and subsequently thrive do not to rely on the
authorities. Their infrastructure – particularly communications- stands up and their people
stand up. The most important preparations to enable quick recovery lie in these two areas.
Give your people the tools to be able to do the job; and give them the training, and
simulations so that they have the confidence and ability to cope.
The final safety net is good and sufficient insurance.
Conclusion
Being prepared for an event that could potentially destroy your business isn’t particularly
easy or cheap. Neither is it particularly hard or expensive.
Certainly, not being prepared is a lot more expensive when such an event does occur.