Organisations are keenly aware of the increasing threat of crises, yet many may overestimate their capabilities to respond. This is among the conclusions of Deloitte's latest crisis management survey, which found that 60% of organisations face more crises today than they did ten years ago.

The study, which surveyed over 500 senior crisis management, business continuity, and risk executives about crisis management and preparedness, uncovered considerable gaps between a company’s confidence that they can respond to crises and its level of preparedness. The gap becomes even more evident when evaluating whether organisations have conducted simulation exercises to test their preparedness.

“With the rapid pace of change facing companies worldwide, and with crises on the rise, it is critical for organisations to be ready to respond with skilled leadership and plans that have been tested and rehearsed,” says Peter Dent, global crisis management leader at Deloitte. “Organisations that are adept at crisis management take a systematic approach to steering clear of potential crises and managing those that do arise with an eye to both preserving and building value.”

Nearly 90% of respondents say they are confident in their organisation’s ability to deal with a corporate scandal, yet only 17% of organisations have actually tested the assumption through simulation. The gap is reminiscent of Deloitte’s 2015 findings, which illuminated the fact that board members believed they could respond well if a crisis struck, yet playbooks of likely scenarios failed to exist.

The study found that 80% of organisations have had to mobilise their crisis management teams at least once in the past two years. Cyber and safety incidents in particular have topped companies’ crises (46% and 45%, respectively).

Following a crisis, nearly 90% of organisations have conducted reviews, according to the study. The major insight from these examinations is that many crises may have been averted. This appears to prompt organisations to take action to forestall future crises. Respondents identified the need to improve detection and early warning systems, invest more effort in prevention, and do more to identify potential crisis scenarios.

“Crisis management shouldn’t start with a crisis – at this point it may already be too late. The ability to prevent a crisis can be fortified by looking at the entire life cycle of a crisis instead of just readiness and response,” continues Dent. “Successful crisis management also requires overcoming any biases to ensure that the board and senior management look closely at risks. Even those, and perhaps especially those, they believe aren’t likely to happen.”


Responding to a crisis (Source: Deloitte)

Strong leadership skills and situational awareness are critical. The survey finds that nearly a quarter (24%) of respondents cite the effectiveness of leadership and decision making as one of their greatest crisis management challenges.

To help leaders be prepared to navigate their organisations through a crisis, organisations should consider: organising leaders ahead of time, clearly defining their various roles and responsibilities; training leaders in the tools and techniques that can help them through a crisis; identifying, improving and counterbalancing leadership tendencies and styles which, while they may serve as strengths in normal situations, could cause trouble in a crisis.

Board and senior management participation in crisis exercises is critical, as is their involvement in developing an organisation’s crisis plan. More than four in five (84%) respondents say their organisations have a crisis management plan in place, and those who enlist the board to participate say the number of crises has declined over the last decade (21%), compared with those without board involvement (2%).

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