“It will never happen to me. And if it does, we will deal with it when it happens. We have insurance…
Famous last words.
I’ve heard this sentiment more often than I wish throughout my career in the insurance and risk management industry. The bad news is that all CEOs and small business owners WILL suffer a crisis of some sort on an annual basis. It’s not if, it’s when. If they aren’t ready to effectively mitigate the calamity; not prepared to be resilient; and not prepared to communicate with employees, supply chain and clients, then the ramifications range from gut wrenching to fatal to the company. Are you ready?
Crisis planning, disaster recovery, and communicating in the midst of chaos are an executive leadership function. This is where visionary strategy from the CEO is imperative. The implementation and work can be delegated, but not the strategy. This is where most CEOs make their biggest mistake. They think they can delegate this away.
All you have to do is open a Wall Street Journal, USA Today, or New York Times on a daily basis to read about businesses being devastated by disaster. Tune into CNN and watch it as it happens. And, I’m not just referring to natural disasters like hurricanes. Here is a short list of crises that have occurred to small businesses and could to yours. In each case, some sort of crisis response and damage control was required…
- A cyber crime compromises your database and threatens the identities of employees and clients.
- A cyber attack cripples your technology with a virus, leaving you unable to operate and out a lot of money to fix.
- One of your employees suffers a heart attack and dies in the office with dozens of employees watching and trying to help.
- An employee sues you for age discrimination after you terminated them for cause.
- Your server room suffers a broken water pipe and floods the room damaging your system.
- You suffer a devastating fire that will mean a complete rebuild. What do you do with 50 employees tomorrow? What do you tell them?
- One of your key executives’ poor behavior lands on the front page of the local paper. The reputation of your business is now on the line. What’s your first step?
- A massive windstorm causes a power outage and power may not be restored for 4-5 days.
- One of your drivers causes an accident that kills someone else, and then test positive for drugs.
I can do this all day. My guess is, that if I put you in a room with your peers, you could do the same. The problem is that too few CEOs actually do anything about it. Their method of managing and responding to risk is to call their insurance agent, hoping that it crisis is insured, and then respond in real time. Decisions made in real time are most often very poor.
The reason most business owners eschew proper planning is because he thought of doing it is daunting. They’ve been led to believe that it’s too time and energy consuming. The reality of it is that it’s not. You just need to know what you’re doing.
Here is my easy to use guide on how to quickly and painlessly develop a plan….
- Allocate 2 hours of uninterrupted time with your leadership team and yourself. Close the doors, turn off the cell phones and require focus from everyone.
- Decide who is in charge in the event of any This person should have authority to make decisions and also have a backup in case they are unavailable. They will be your Crisis Commander.
- Create a simple, yet effective communication plan to communicate with employees, clients, supply chain partners, and families. Take into consideration loss of power and connectivity on your plan. That means you need to have a redundancy plan for communications as well as technology.
- Find someone who is able to effectively and comfortably deal with the media. It should be someone different than the person in charge. This person will deal with press releases, interviews, and other media requests.
- Determine your most likely perils, and which ones would cause the most damage. Discuss appropriate responses.
- Test and practice your plan. This action gets overlooked all the time!
- Meet as a group at least quarterly to reassess and make changes as necessary.
This may seem oversimplified. If you just do this, you’re ahead of most of your peers. If you go beyond this and make effective crisis response part of your culture, then you dramatically improve your chances of avoiding a crisis to begin with; mitigate the ones you can’t control; and respond in a way that protects your business, employees, and reputation.
