While 60 percent of corporate executives say their companies have a crisis plan in place, only 29 percent are very confident their organization would respond effectively during a crisis, and 56 percent say they are somewhat confident, according to a new survey by Pillsbury Winthrop Shaw Pittman’s crisis management team and Levick Strategic Communications.
“Part of that uncertainty may stem from the fact that even among those companies which have developed a crisis plan, 63 percent report that their company does not conduct annual training drills or exercises to test the effectiveness of their plan and ensure that all company employees know what to do if a crisis does occur,” says Tom Campbell, head of Pillsbury’s Crisis Management team. “Even more strikingly, fully one-third of those companies which do have a crisis plan could not recall the last time they actually reviewed or revised it, which clearly indicates an out-of-sight, out-of-mind approach to crisis management that may prove a company’s undoing.”
Over the last three years, 42 percent of respondents report that their company was the subject of a government inquiry or investigation, which is cause for concern among shareholders, investors, customers and employees. Of the respondents, 24 percent say their company experienced a natural disaster and the same number of respondents reveals that their company faced a data loss or security breach. At least one worker accident or death was experienced by 21 percent of respondents, and 9 percent say they were targeted by protesters or a consumer boycott.
Most respondents believe a data breach or technology failure would have the largest negative impact of all possible crises, followed by a natural disaster, such as a hurricane, earthquake or tornado. Power outages or blackouts are named as the third most likely scenario to negatively impact a company.
Concerning social media, 52 percent of respondents say their crisis plan does not state how to handle adverse postings on Twitter, Facebook or YouTube.
After experiencing a crisis, 79 percent of respondents admit they made minor or major changes to their crisis protocol to make it more effective. Improvements include dditional training at 21 percent and conducting a crisis audit at 18 percent. Strengthened general counsel oversight, new or upgraded business interruption and liability insurance, moving crucial systems off-site, or upgraded technology security systems were all used by 14 percent of respondents, with several companies implementing more than one of these improvements.
“While there is always uncertainty associated with any crises, too many companies mistakenly labor under the assumption that since one can’t predict when a crisis will occur, there is little you really can do to prepare for it,” says Richard Levick, founder and CEO of Levick Strategic Communications. “But what companies can be sure of is that, sooner or later, a crisis will indeed hit, and when it does, legal risks, business operations and reputation management all have to be dealt with simultaneously and decisions often have to be made in a matter of hours, or in some cases, where human lives are at stake, a matter of minutes.
“That can’t happen if the decisions-makers haven’t rehearsed and ran though each scenario as laid out in their plans, so that when the crisis strikes, they will immediately know what steps to undertake in order respond effectively.”