“Hope for the best, prepare for the worst.” That’s the advice that many of us have given or taken in our own lives. It’s that cautious optimism that causes us to buy life insurance while simultaneously setting aside funds for retirement.
For whatever reasons, organisations often haven’t always followed this motto. We’ve seen as countless organisations have crumbled during a crisis that they were ill equipped to handle. What’s generally most frustrating in this situation is when we find red flags have been ignored.
Thankfully, many organisations are starting to see the importance of advanced preparation and testing their systems to ensure they can withhold internal and external crises. This week, it was announced that the European Banking Authority (EBA), in coordination with the European Central Bank (ECB) would be launching a series of stress tests to determine the resilience of banks across Europe.
The test will consider the resilience of banks during a number of economic crisesincluding severe currency depreciation, surges in unemployment and a slump in home values. This all seeks to identify vulnerabilities in current systems before the ECB takes control of 150 European banks.
When the Global Financial Crisis hit, many organisations, individuals and institutions were shocked by just how vulnerable they were. Now, years later, some are speculating the current situation is conducive to another crisis of the same or higher magnitude.
Economics and finance, like most fields, often experiences warning signs before a crisis. While these warning signs are useful and should be monitored, the scary fact is that anything can happen at any time. Recent incidents such as the Crimean Peninsula Crisis and the disappearance of flight MH370 demonstrate how quickly industries and global priorities can shift following a crisis.
While we can’t predict every possible scenario, we can consider the things most likely to affect our organisation and develop a mitigation and response plan.
During a crisis, things move quickly. Decisions need to be made, tasks need to be delegated and everyone within an organisation must be kept informed. Without a crisis management plan that’s been implemented and tested, confusion is inevitable and is likely to exacerbate the crisis further.
On a small scale, we’ve all been a part of crisis simulations. From workplace evacuation drills to learning how to ‘stop, drop and roll’ in school, these simulations exist so that we can respond immediately in an emergency.
On a larger scale, all organisations need to apply these principles. Just as the EBA and ECB are challenging banks’ abilities to respond to common and likely economic crises, every organisation needs to test their response to financial and reputation crises as well as emergency situations.
Communications and IT systems need to be maintained and tested frequently. Ongoing audits need to be done around staff turnover to ensure all delegated responsibilities are up-to-date and that everyone from the new starter to the CEO knows what they need to do in a crisis.
At Briggs Communications, we’ve seen the look of surprise on our clients faces when an unexpected glitch emerges in their crisis simulation, and in a way, that’s the entire point. Encountering these challenges in a low-stakes scenario is the best way to prepare for the real thing.
Briggs Communications can help develop an exercise to test the robustness and efficiency of your crisis management. Contact us for more information about ensuring your organisation is crisis-ready.
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