Boards Must Get More Involved in Crisis Planning and Management, Survey Says

So says a survey of more than 300 board members conducted by Forbes Insights on behalf of Deloitte Touche Tomahatsu Ltd., whose results were released last month in the report, A Crisis in Confidence.

More than three-quarters of board members (76%) expressed confidence in their organization’s ability to respond to a crisis, yet less than half (49%) said their companies actually monitor potential problems or have an internal communication structure to detect trouble ahead.

Moreover, only 49% said their companies have playbooks for likely crisis scenarios, and even fewer (32%) said their companies engage in crisis simulations or training.

Perhaps most critically, the reported noted, board members must ensure their companies respond immediately—and in the best interest of customers.

“You need to be able to respond very quickly, very decidedly,” said one North American food company board member responding to the survey, “…with concern for your customers and your community, with humility, with a sense of accountability. Yes, this happened and we allowed this to happen, but not only do we apologize to all, please know that we are doing everything to make this right, not just for today but into the future. We are sorry. We will fix this. And we assure you we won’t take your business, your trust, for granted.”

One key element within a crisis plan that was mentioned least often by survey respondents was “before-the-fact” crisis simulation. But those that do it said it pays off greatly.

“We do regular training exercises for a variety of scenarios at both our work sites and corporate office,” a board director of a mining company said. “These exercises give us the opportunity to interact with emergency response personnel and provide us with a good understanding of how and when we need to respond under certain circumstances. While many companies may look at these activities as time consuming, we see great value in ensuring that our people are prepared to address unplanned or disruptive events.”

The report listed several things organizations can do to achieve crisis readiness:

• Companies should recruit directors to serve on the board who have had real-world experience with a past crisis.
• Board members should make time for joint planning committees, simulations, and other crisis planning activities, and prepare to engage directly with shareholders during a crisis.
  Companies should make sure employees throughout the organization have the necessary skills to respond well to a crisis, including expertise in crisis communications to both traditional media and social media, and expertise in risk management within each silo of the organization. Roles within silos should be clearly defined ahead of any potential problems.
• Board members should expect to see specific plans for handling each of the scenarios that might threaten their organizations. They should participate in testing those specifics against their best knowledge of what may happen and what the company is capable of.

The report also gave a drilled-down list of specific tasks that boards should do before, during and after a crisis.

“No board should go without a clear expectation of what questions it expects executives to answer, what steps it expects executives to take, and what lines of communication will have to be clear in a future moment when nothing else is,” the authors wrote.

The survey, conducted in the fourth quarter of 2015, targeted large companies with annual revenues ranging from $500 million to more than $20 billion.