Board members across the world are confident in their organisations' ability to deal with crisis situations, but are less confident that they, and their organisations, are prepared for them, according to a new survey by Deloitte.
Even though 76 percent of board members surveyed believe that their companies would respond effectively if a crisis struck tomorrow, only 49 percent of them said that their organisations have the capabilities or processes in place required to handle a crisis with the best possible outcome.
"Most businesses will face a crisis at some point; it's a matter of when, not if," said Peter Dent leader of Deloitte's Global Center for Crisis Management. "Board members should discuss with management to ensure there is a sound and common understanding of the risks that can leave an organisation vulnerable to crisis. It's equally important to deepen that understanding by strengthening the systems used to detect and prevent adverse events from occurring in the first place."
Detecting trouble ahead
Forty-nine percent of board members said that their companies engage in monitoring or internal communications designed to detect trouble ahead.
The same percentage (49 percent) said that their companies have playbooks for likely crisis scenarios. About a third (32 percent) said that their companies engage in crisis simulations or training.
The survey also found that the crisis areas that made respondents feel the most vulnerable are corporate reputation (73 percent) and cybercrime (70 percent).Two thirds of them (66 percent) named supply chain issues, regulatory action, and natural disasters as vulnerabilities.
"In an era when risks can turn into reality in the blink of an eye, it is important for the Boards to relook at the business assumptions which have served the companies well (thus far)," said David Chew, Deloitte Singapore Centre for Corporate Governance co-leader. "It is through constantly challenging traditional wisdom and stress testing the business strategy that companies can hope to keep "black swan" type of crises at bay."
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