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Beyond ROI: The Value of Effective Crisis Management

You are here: Home / Crisis Management / Beyond ROI: The Value of Effective Crisis Management

September 20, 2022 By //  by Bryan Strawser

Not all crises come with a silver lining.  But in the case of COVID, its global reach earned the discipline of crisis management fresh interest, as crisis management savvy organizations quickly stood apart from their lesser prepared counterparts.

Like one of our clients, a large technology company, based in the U.S. but with extensive operations and vendor dependencies in Asia. Before the pandemic hit, we had spent several months helping them build and mature their crisis management program.

As a result, they had the ability to escalate issues, assemble leaders and executives, and make decisions very quickly, like recognizing early on that COVID would soon escalate into a global crisis, particularly grim in places like India, where many of its employees and contractors were located. They moved quickly to secure laptops, computer monitors, VPN tokens, and other necessary equipment to keep operations afloat. They continued to operate while crisis management latecomers were left empty-handed and at an operational standstill.

Despite this and many other crisis management success stories coming from the pandemic experience, we know that making the business case for business continuity and crisis management is still hard. How do you quantify the ROI on making a crisis a little or a lot less terrible?

In most cases, you don’t. But there are other ways to show the value of your crisis management program.

Here, we unpack our best thoughts on how to do it.

What is crisis management, and why is it important?

You have limited options for decisions in times of crisis.  And without a crisis management program, those limited options can quickly slip through your fingers until few or none are left. A coordinated crisis management response can mean the difference between keeping your business standing, even if just on its knees, or being completely taken down.

The goal of crisis management is to have a system in place that allows you to respond quickly, mitigate damage, ensure the safety of your team, and ultimately get your operations back up and running as quickly as possible to mitigate the impacts on your organization’s reputation and recovery.

A good crisis management program will help you manage all aspects of a crisis—pre-emptively identifying potential crises, coordinating your response, ensuring proper resources and planning, and determining internal/external communication requirements before, during, and after the critical moment—to ensure the long-term success of your business.

7 ways crisis management adds value to your organization

The value of a good crisis management program is usually obvious to most business continuity and crisis management professionals. But convincing your board and executives of this is about as easy as getting a 9-year-old to floss so she doesn’t get gum disease (or, if we’re honest, most 30 and 40-somethings, too).

Amidst more urgent competing priorities, why should they make the investment for something that might or might not happen and for which it is impossibly hard to measure value in tangible (and SEC-approved) terms? Unfortunately, most boards don’t respond well to star charts and dime-store toys.

Here are some of the crisis management value-adds we’ve used to help our clients get the leverage they need with their leadership.

Preserves shareholder value

In evaluating a laundry list of the most prominent poorly-handled crises over a decade, the Economist calculated the median firm to lose 30% in shareholder value compared to their peers.  In another study, brands that bumbled their crisis response lost an average of 5% of shareholder value.

Aside from the accompanying social media blitz that can hurt your public reputation, institutional shareholders can quickly lose faith in management’s capabilities in the wake of a poorly handled crisis. Other knock-off effects, like increased regulatory scrutiny, balance-sheet woes, and distracted management, can also impact a firm’s value.

Prevents shareholder activism

Along with plummeting share prices, a mismanaged crisis can provide the perfect opportunity for activist shareholders to make their move. It signals potential governance or management weaknesses. And with stocks at a lower price, it also provides the opportunity to scoop up shares and capitalize on those weaknesses.

Mitigates executive turnover

In the wake of a mishandled crisis, someone has to take the blame. It’s most commonly someone from the executive team. But executive turnover disrupts operations and erodes trust among both investors and employees.

A good crisis management program gives your executives the tools they need to respond swiftly to a crisis and avoids the need to peg a scapegoat at all.

Minimizes impacts on productivity

While crisis and business continuity plans are important, your people are the power behind your actual crisis response. But they have little time to do much else if they’re busy responding to a crisis.

Adept crisis management reduces the time and effort spent by employees on managing the crisis so they can get back to the job they were hired to do.

Prevents regulatory scrutiny

In highly regulated areas like banking, financial services, and healthcare, a poorly handled crisis incident all but guarantees that your business will get scrubbed with a wire brush in the aftermath. Fines are inevitable, as are the costs of compliance training mandates and increased monitoring.

An effective crisis management program can help deflect regulatory scrutiny.  It can also help smooth the certification process for companies who need to certify with frameworks like DirectTrust, HITRUST, PCI, and others.

Preserves your reputation

In the age of social media, your company’s reputation is increasingly one of your most important assets. And a poorly handled crisis can quickly destroy it.  On the flip side, your firm also needs to be prepared to respond to the scrutiny from the wayward comments or misguided actions of a top executive or employee.

Disruptions can’t be avoided. But a good crisis management plan can help you respond to them effectively and minimize their impacts on your reputation.

Protects your people

Social responsibility is now table stakes for most businesses. But if you’re like most clients we work with, protecting your people isn’t just a business imperative; it’s simply the right thing to do.

From tsunamis to active shooter situations, you need to have a plan in place for how you will keep your employees safe during a crisis incident and care for their needs in the aftermath. Effective crisis management is the best way to do this, and it shows that your company is serious about the values it proclaims to hold.

How to show the value of crisis management to your board and executives

Expect questions

Don’t assume that you are doing something wrong or that your team is being unfairly targeted if your board and executive team are asking questions about the value of your crisis management program. It can actually be a great indicator that they are open to seeing the importance it can make and the contribution it can add to your organization’s sustainability.

It might seem unfair that you have to work so much harder than other parts of your business to get the resources you need. But this is the reality for nearly every business continuity and crisis management professional I’ve worked with.

Expect to be questioned. Prepare well. And continually look for opportunities to educate and inform your stakeholders about the value of your program.

Remember your audience

Have you ever been stuck in a conversation with that really passionate microbiologist who has spent their entire life studying flesh-eating bacteria that live on the ocean floor? Or the cybersecurity dude who slowly peels through the minutiae of the latest ransomware event?

You have no idea what “anaerobes” or “blastomycosis” are or what the difference is between a “botnet” and a “backdoor.” Nor do you really care.

Regrettably, this is the exact experience that many of your internal stakeholders probably have when working with your crisis management team. They don’t understand your “crisis and business continuity-speak” or why they should care about what you’re trying to accomplish with your business continuity and crisis management program.

If you want to win over your stakeholders, you’ve got to think about your company’s overall mission, values, and objectives—and those of each particular organizational component—and communicate the value of your program in a way that resonates with others.

Emphasize the benefits of the process

Even when well managed, the outcomes of a crisis are rarely optimal. But regardless of the outcome, walking through the steps of the crisis management process can help build trust, confidence, and connectivity that benefits your organization far outside the context of a crisis management response.

Some of the critical aspects of an effective crisis management process include the following:

  • Assembling a cross-functional collaborative team to lead crisis efforts
  • Capturing action items that need to occur
  • Capturing decision points
  • Ensuring effective communication protocols are in place
  • Having a way to capture lessons learned to improve your preparedness for the next disruption

Exercising these parts of the crisis management process can help build the organizational muscle you need to excel in other areas, not just managing a crisis.  Emphasizing this value to your board and executives can be a force multiplier in your efforts to get more support for your program.

Proactively look for opportunities to demonstrate the value of your crisis management program.

I wish there were a secret repository of magic numbers to help you show your board how their multimillion-dollar investment in crisis management over the years will someday pay off.

Of course, there isn’t.

Building the case for crisis management is, frankly, a lot of work. It takes creativity, persistence, and a proactive mindset.  But if you don’t write the storyline for your program’s success, no one else will. And before the next boom is the best time to start.

If you know how you want your crisis management story to end but don’t know where to start, we’d love to help.  Our team has decades of collective experience helping Fortune 500 and other companies develop and mature their crisis management programs.

We don’t promise fairy tale endings, but we can help you make sure your crisis management story is one you can be proud of.

Want to work with us or learn more about Crisis Management?

  • Our proprietary Resiliency Diagnosis process is the perfect way to advance your business continuity & crisis management program. Our thorough standards-based review culminates in a full report, maturity model scoring, and a clear set of recommendations for improvement.
  • Our Crisis Management services help you rapidly grow and mature your program to ensure your organization is prepared for the storms that lie ahead.
  • Our Crisis Management Academy is the complete online course that builds strong crisis leaders & effective crisis programs.
  • Our Ultimate Guide to Crisis Management contains everything you need to know about Crisis Management.
  • Our free Crisis Management 101 Introductory Course may help you with an introduction to the world of crisis management – and help prepare your organization for your next disruption.
  • Learn about our Free Resources, including articles, a resource library, white papers, reports, free introductory courses, webinars, and more.
  • Set up an initial call with us to chat further about how we might be able to work together.

 

Category: Crisis ManagementTag: Bryan Strawser, bryghtpath, bryghtpath llc, crisis management, crisis management consultant, crisis management value, ROI crisis management

About Bryan Strawser

Bryan Strawser is Founder, Principal, and Chief Executive at Bryghtpath LLC, a strategic advisory firm he founded in 2014. He has more than twenty-five years of experience in the areas of, business continuity, disaster recovery, crisis management, enterprise risk, intelligence, and crisis communications.

At Bryghtpath, Bryan leads a team of experts that offer strategic counsel and support to the world’s leading brands, public sector agencies, and nonprofit organizations to strategically navigate uncertainty and disruption.

Learn more about Bryan at this link.

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