Column: Risk Management

Opinion | I Can’t Believe You Still Think a Crisis Is a Bad Thing

By: | September 28, 2018

Joanna Makomaski is a specialist in innovative enterprise risk management methods and implementation techniques. She can be reached at [email protected]

What’s the difference between a disaster and a crisis? Risk managers should know. When it comes to crisis management and disaster recovery planning, it is critical to know these terms and how they relate to one another. It is hard to plan for what you don’t understand.

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I’ve always understood a disaster to be a catastrophically damaging consequence or outcome that gravely impacts communities beyond their ability to swiftly resurrect. A crisis is a difficult, unstable situation or time that can lead to a calamitous event or a disaster. Crises brew and threaten to become disasters.

One should not fear crises, but recognizing them in your organization is crucial. Great leaders “never let a good crisis go to waste.”

Leadership behavior is paramount during a crisis. Management decisions and observations can be the key to skirting catastrophe. Astute leaders will also get a chance to truly see, assess and implement enterprise-wide changes. It is as though a crisis forces a corporate veil or fog to lift off.

Bad behavior, weak protocols and salty politics tend to rear their ugly heads during times of stress. Naughty heads are easier to spot when not in line during a crisis. The heat created by crises also helps an organization be more receptive to needed changes.

Policies get debated and rules questioned more readily. It’s interesting to witness how the need for survival breeds more compliant behaviors from leadership and employees.

I experienced such a crisis. As CRO, I was charged with preparing my organization for contentious and high-risk union negotiations, likely to lead to a lock-out of thousands of front-line customer-facing employees. Without preparation and guidance, the organization could’ve faced a serious customer service disaster.

Two risk management plans were designed: A crisis management plan that guided the actual union negotiations and a disaster recovery and continuity plan designed to deal with a possible lock-out requiring replacement workers.

One should not fear crises, but recognizing them in your organization is crucial. Great leaders “never let a good crisis go to waste.”

The result? The disaster and crisis management plans worked. No disaster emerged. Employees were locked out for 15 weeks, but the company stayed open, and eventually negotiations concluded with good results. Union employees were re-integrated back into the office under a new agreement.

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The best part was that the crisis was not wasted. Good, bad and ugly things were revealed. Process and performance weaknesses were exposed. Distinctions amongst leaders were made. Revealed were the leaders who ran from the heat and those who stepped up under pressure.

Financial performance assumptions were tested. Organizational growth strategies were revisited. Capital projects were re-prioritized. The lid came off and the Board and executive team got a unique chance to look in and make changes.

Never waste a good crisis. &

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The R&I Editorial Team can be reached at [email protected]