Is ‘crisis-ready’ the new normal in a volatile world?Follow @PwC
I struggle to remember a time when the world seemed quite as unpredictable as it does today. The rise of populism, a seemingly resurgent Cold War, the ongoing refugee crisis and many other geopolitical and economic scenarios have challenged long-held assumptions and confounded politicians, pollsters, economists and media commentators alike. Brave is the pundit who states that they know what will happen next.
Today’s CEOs are painfully aware that their organisations may have to fend off calamity as a result of events that they could neither anticipate nor control. Indeed, it seems that managing crisis is becoming a new normal for businesses. When we surveyed CEOs on the topic of crisis recently, nearly two-thirds (65%) said they had experienced at least one crisis in the past three years. And the future looks equally hazardous. More than 30% predict they will face more than one crisis in the next three years, compared with just 16% who think they will face fewer.
Crisis management appears to fall squarely within the remit of the CEO. An overwhelming 91% of CEOs we spoke to told us they were in charge when a crisis hits. I commend them for their strong leadership, yet they have practical concerns about crisis management. Our survey found that 65% of CEOs feel most vulnerable about their ability to gather information quickly and accurately in a crisis while 55% worry about communicating with external stakeholders and employees. To add to the pressure, over half (57%) admit that their business continuity plan is out of date.
Of course, saving the company from disaster is not the job of the CEO alone. Effective crisis management is a team effort. It involves preparing the right strategy, governance structures, teams and plans so that, in the event of a crisis, the response can be implement, adapted and scaled appropriately. It also involves empowering the right people to make decisions so that the company keeps the trust of customers, employees and other stakeholders during a period of serious uncertainty. If decision-making is paralysed by the fear of making the wrong call, the CEO could end up isolated, undermined and exposed.
To be good at crisis management, companies need to be prepared - and prepared to work at it. Yet often they struggle to devote sufficient time and resources to creating plans based on ‘what if’ scenarios. There are signs this could be changing, however. Nearly a third (30%) of the CEOs we spoke to have proactively started crisis planning, with another quarter planning to do so over the next year.
There is no such thing as a ‘typical’ crisis. They are all different. But companies that are well prepared can often see their top-line improve after a crisis. Thirty-nine per cent of CEOs said that a well-managed crisis response actually contributes to revenue growth, no doubt reflecting the customers’ confidence that the company acted responsibly and in-line with its corporate values. Those companies that are well-prepared to face unforeseen events tend to share some common characteristics. They are proactive about identifying, monitoring and mitigating both existing and emerging risks. They make sure that they have the right in-house capabilities to manage a crisis and they plug any gaps before disaster happens. They have a crisis toolkit of processes, resources and technologies and they organise crisis drills to ensure that key personnel are battle-tested. They are clear about who is responsible for what in a crisis and they empower the appropriate individuals to take decisions. Finally, they have a leadership team that is continuously striving to improve the organisation’s crisis capabilities, particularly in the wake of an actual crisis. Wise CEOs know that a good time to prepare for the next crisis is just after the last one has taken place.
Melanie Butler leads PwC’s Global Crisis Centre “GCC”, which acts as a trusted guide to clients as they prepare for, respond to and recover from the crises they face. She has worked with and alongside governments and organisations to help them confront crises with confidence and to resolve the critical problems they encounter - and leverages the expertise of our crisis teams across the network so that organisations can reassure their own clients, communities and stakeholders that they’re able to manage crisis situations effectively. Read more
 For the purposes of this research we define a ‘crisis’ as when one or more triggers or stress events significantly impacts or threatens the continuity of ‘business as usual’.