This post is part of BCM Basics, a series of occasional, entry-level blogs on some of the key concepts in business continuity management.
Most companies have a pretty good handle on the tactical side of crisis management. Few have given much thought to the strategic side, an oversight which can lead to costly delays and bad decisions during an emergency.
Related on MHA Consulting: Critical Assistance: How a Consultant Can Strengthen Your Crisis Management Program
According to Strong Language: The MHA Glossary of Essential Business Continuity Terminology, crisis management is “the process of trying to resolve a serious adverse event with minimal impact on an organization and its stakeholders.”
Crisis management is one of the four main business continuity areas (the others are program administration, business recovery, and IT disaster recovery) and it has four priorities: protecting life safety, stabilizing the incident, preserving property, and restoring the business.
In our experience at MHA, most organizations do pretty well with the tactical side of CM—writing plans to accomplish the CM priorities and executing on them when an event occurs. However, relatively few are mindful of the strategic side of crisis management.
For many organizations, the fact that there is a strategic side to CM might come as news. Many orgs set up their corporate CM team then figure they are done. Wise organizations go a step further, investing effort in the strategic aspects of their programs.
The strategic side of CM refers to preparations and mitigations the organization should put in place ahead of time to strengthen its crisis response capability.
Why Strategic CM Is Important
There are two main reasons why organizations should make the effort to get their strategic CM ducks in a row before they have to contend with an emergency. One is, getting key resources and approvals lined up in advance, saving people from having to scramble to obtain these during a crisis. This can cause delays that can make the difference between a company’s getting through a crisis relatively unscathed and suffering extensive and costly damage.
The second reason is, making momentous decisions under pressure in a few minutes’ time doesn’t give anyone adequate time to consider the ramifications. This can result in poor decisions being made—decisions whose negative consequences might still be making themselves felt long after the crisis is past. (An example would be a company that makes a snap decision to lift its financial approval limits to help it get through a crisis and later finds that employees spent huge sums on unneeded items.)
Key Areas of Strategic CM
Strategic crisis management centers on a few key areas. They are:
- Crisis team distribution and integration. A key strategic concern for organizations with more than one location is whether to have only one CM team (at headquarters) or additional, subordinate CM teams at some or all of the other locations. Other subordinate CM teams might be set up based on function or business unit (such as the supply chain or IT). Companies with more than one CM team need to work out ahead of time how the various teams will be integrated.
- Financial. Many companies have found their ability to respond to a crisis hampered by financial approval limits that were too low to allow staff to quickly procure goods or services needed to manage the emergency. Limits that are adequate in ordinary times can be crippling in a crisis, when time is of the essence and the people needed to give their approval for exceptions (or make changes to the relevant computer systems) might be busy on the CM team. Companies should consider enacting a policy that says that when a crisis is officially declared, financial approval limits automatically go up. The decision of how much they should go up is worthy of careful thought ahead of time. Raising limits too little might hamper the CM effort. Raising them too high can result in unnecessary spending.
- Travel. In a crisis, staff might need to travel to different company locations to help with the CM effort. If this need bumps up against hard travel restrictions—whether from a computerized booking system or a travel agent requiring an approval code—the trip will be delayed and the CM effort hampered. As part of their CM strategy, companies should consider changing their travel policies so that when a crisis is declared, limits are loosened.
- Labor and human resources. Many aspects of labor relations and human resources that are functional in ordinary times can, during a crisis, negatively impact a company’s response or even threaten its survival. Organizations should consider these matters ahead of time, identifying areas that might warrant adjustment during a declared crisis. The next step is seeing whether any of these changes can be implemented. Examples of areas where changes might be beneficial include: rules on bringing in temporary or non-union help, rules on jurisdictional work, and policies pertaining to overtime, weekend work, night shifts, vacations, and pay.
- Communication. Companies should develop pre-determined communication templates by audience (internal and external) and come up with a general schedule for communication to each audience. They should also determine in advance who will be responsible for the communication. Proactive and regular communication to staff on communication policies and expectations during crisis events is important. Don’t assume staff will remember not to comment or share information about the crisis on social media.
- Integration with other tactical plans. Cyber response is not just a technical plan but the business and reputational items that should be addressed and integrated. Ensure your crisis plan has a section specific to cyber response including your policy for paying ransoms, when to engage third parties (e.g. law enforcement), and your insurance and regulatory communication and notification requirements. Understand when escalation from normal incident management must or may be escalated to a crisis team.
- Training and awareness. Crisis teams are often made up of those in leadership positions. Leaders commonly do not have time to participate in training and awareness activities or believe they are unnecessary (because “we solve problems every day”). However, crisis management and leadership is different from day-to-day problem and issue management. The stresses are different and how people react to those stresses can be unexpected. We have all seen public figures react in ways unexpected when they are not in control of the situation. Crises by definition are not something you can control.
Strengthening the Organization’s Crisis Response Capability
While most organizations do a good job with the tactical aspects of crisis management, many overlook the strategic side of CM. This part of CM involves doing things ahead of time that will strengthen the organization’s crisis response capability, preparations that can save time and reduce the likelihood of bad decisions being made during a crisis.
The key areas to consider in strategic CM include crisis team distribution and integration, financial considerations, travel restrictions, and labor and human resources and others. Sorting out issues in these areas ahead of time can help organizations respond more effectively to crises and minimize their impact on the business and its stakeholders.
For more information on crisis management, and other hot topics in BC and IT/disaster recovery, check out these recent posts from MHA Consulting and BCMMETRICS: