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Responding to Crisis: Part Three – Avoidance

It might seem futile to believe you can prevent crises.  However, there are a whole series of well-understood techniques that can prevent crises.  Ironically, one of the most powerful techniques to avoid crises is having a crisis management plan and a clear set of procedures used if something becomes acknowledged as a crisis.  This should flow naturally out of your risk management plan because it should look at how you reduce the likelihood of a risk becoming an issue and mitigate the impact of the problem if it does occur.  

Crisis prevention is established by reducing the likelihood that risk becomes an issue and reducing the impact of the problem so that it doesn’t lead to a crisis.  Managing risks by reducing the probability or effect will make crises less frequent.   Sometimes, there are risks that you just must accept, and perhaps those risks are too expensive to deal with until they occur.  It may be that they have a very high impact but a low likelihood, or it may be that they have a very high probability but a low impact.   

Snowballing 

Many crises occur because multiple incidents happen that are seemingly unrelated but have a snowballing effect.  A good example was the Fukushima nuclear accident.  The tsunami disaster compromised the atomic plant, and a major nuclear incident occurred as a result.  This is where your crisis management planning process comes to bear.  Several elements of a crisis management plan are crucial to preventing a crisis from escalating, nipping it in the bud.  One is surveillance.  Are you noticing that the circumstances are occurring that would lead to a crisis event?  The second thing is culture.  Are you building a culture of transparency and good communication, which means that if warning signals are detected, you are appropriately propagating the issues to the right people in the organisation?  Third, do you have a way of acknowledging a potential crisis and mobilising the right people to deal with it?   

Predictable Crises 

In a hospital setting, there is a well-understood crisis, which is when somebody has a cardiac arrest, and you call the Crash Team.  For the individual who’s having that cardiac arrest, it is undoubtedly a crisis.  However, because you have a well-understood procedure for dealing with that cardiac arrest, the Crash Team, the personal crisis for the individual, is no longer a crisis for the organisation; it’s almost routine.  Yes, people drop everything and do what’s necessary, but there’s a good plan for dealing with the individual crisis and preventing it from becoming an organisational crisis.   

Similarly, in the approach to policing, there are mechanisms to call on officers from other police districts through the mutual aid system to prevent a widespread crisis.  You will have a plan for dealing with the situation.  The summer riots in 2024 may not have been predicted, but the UK government was prepared.  New legislative powers were already in place, the COBR procedures were mobilised, additional prosecutors deployed, and long-standing police and MI5 intelligence sources were collated. 

Have you got a Crisis Management Plan? 

In your organisation, in the context in which you’re operating, ensuring you have a well-understood plan for mobilising the right people around the right kind of potential crises can mean that the situation is nipped in the bud.  One of the things that undermine those prevention approaches, one of the most significant things that means that crises don’t get nipped in the bud, is if you have problems with acknowledging and addressing failure as an organisation.  If failure is getting covered up, poor performance is ignored, and difficulties are not addressed, then over time, these issues will spread and escalate to a crisis.  If you look up many of the crises that Governments face, it is unusual for them to be issues that come out of the blue.  Long-standing problems often need to be addressed, where people’s voices haven’t been heard, and those campaigning for change have been ignored.  The signs that should have made it possible to prevent the Grenfell Tower disaster had been ignored for an extended period.  The challenges of global warming have been well understood for decades, but action continues to be slow.  

Groupthink 

Finally, I would suggest that one of the keys to preventing crisis is regularly confronting the assumptions upon which you rely as an individual or an organisation.  People and organisations are all subject to groupthink.  We believe something is true because it’s always been true, and nobody says that it’s not true.  I saw this most clearly when I was working in financial markets, and there was a whole approach to risk management encapsulated in JP Morgan’s Riskmetrics® platform, which suggested that you could understand your risks by understanding the volatility, the level of random noise if you like, over relatively short periods.  Based upon an understanding of the laws of physics and the way that molecules in the air jostled smoke particles (Yeah, I know, it does sound unlikely), you had a whole theory of risk management that was focused on the extent to which minor changes were increasing or decreasing the volatility over time.  Then, you got even more sophisticated and looked at the volatility’s volatility.  However, the assumption that an event would not move everything in one go was underlying all these risk metrics.  The expectation of randomness underpinned the whole model.  When the 2008 financial crisis occurred, it was what people subsequently called a black swan event.   At a point in time, you had a crisis that undermined all the assumptions you had relied upon for your response.  When the financial crisis hit, people had used the wrong model to predict what would happen.   

Sometimes, you need to go back to basics.  Review your assumptions, test them and then reorganise yourself if those assumptions can no longer be justified.   

Conclusion 

Crisis prevention can often be achieved by traditional risk management techniques to reduce the likelihood and impact of an issue.  A comprehensive, regularly rehearsed crisis management plan can usually take the ‘drama out of the crisis’.  However, risk management alone will not prevent systemic failure from groupthink or infrequently challenged assumptions.  Ultimately, the whistleblower and the maverick are your only hope! 

Charles McLachlan is the founder of FuturePerfect and on a mission to transform the future of work and business. The Portfolio Executive programme is a new initiative to help executives build a sustainable and impactful second-half-career. Creating an alternative future takes imagination, design, organisation and many other thinking skills. Charles is happy to lend them to you.