How can businesses prepare for the next disaster?

Aotearoa New Zealand is no stranger to sudden, severe and long-lasting disasters. These events have left indelible marks across all communities, regions and industries, and have tested - and in many ways strengthened - our collective resilience.

The frequency, severity and complexity of disasters continues to increase, as has been witnessed over the past year. While natural disasters - floods, earthquakes, tsunamis and volcanic eruption, to name a few - will continue to be front-of-mind, organisations must also consider a range of crisis scenarios. The pace of technological change, while a huge enabler for organisations’ growth strategies, also presents exposure to a number of new or emerging threats.

We’ve identified five realities of crisis management in 2023, along with common pitfalls and practical steps every organisation can take to strengthen their preparedness.

The reality: People, not documents, manage crises

Every organisation can - and should - have clearly documented plans and procedures to assist in the time of crisis. Even the best-written and best-rehearsed plans cannot be relied upon in every circumstance, and - as with running any organisation - successful crisis management relies on clear leadership supported by capable teams.

Common pitfall	Practical steps
Not every senior manager makes a great crisis leader. Crisis leadership, and membership of crisis teams, should be considered as specific capabilities, and appropriately considered within talent, learning and development frameworks.	Review the leadership roles in your current crisis management plan. Are they aware of their responsibilities, and are you confident in their capability to lead these events? Develop a crisis capability matrix to understand the attributes and skills you need within your crisis teams and from your leaders.

The reality: In crisis communication, authenticity and commitment to action are enduring

While social media has changed expectations on the speed and transparency of communications from organisations, in a crisis these pressures can be amplified and shared by all media consumers. While customers, partners, consumers and the public expect timely information, they also expect an organisation to communicate honestly, authentically, and to acknowledge the actions being taken to address any current gaps.

Common pitfall	Practical steps
Organisations have often moved cautiously when it comes to communicating, focusing on gathering all relevant information and carefully considering the sequence of stakeholder engagement. While the first communications are important, they are important in signalling commitment to address the issue.	Ensure you have explicit agreement on approval pathways for all key messaging. This should be as streamlined as possible. While it’s useful to have pre-approved holding statements as part of your toolkit, focus your preparation around refining the process for developing, approving and distributing your messaging. Practice, practice, practice!

The reality: Address the tactical, but don’t lose sight of the strategic

When crises hit, it’s easy for everyone to get into the detail; it’s human nature to want to help deal with the immediate need. Crises can have lasting and wide-reaching impacts on strategy and, in many cases, strategic choices will need to be rapidly re-assessed and adjusted. Organisations that manage crises well have a clear delineation between tactical and strategic responses, and allocate responsibilities accordingly.

Common pitfall	Practical steps
With a singular focus on the immediate response, and with significant management time dedicated to managing critical stakeholder relationships, organisations can be too late to re-assess and adjust their strategic choices, extending the time taken to fully recover operationally, financially and reputationally.	Ensure you have clear responsibilities and specific tasks assigned for an early (and regular) assessment of the strategic impact of the crisis. Explicitly identify key personnel who will not be part of the crisis team, freeing them to manage critical operational functions or to provide ‘bench strength’ to support when crisis members require a break.

The reality: The adage of “peace time” is gone… be in a constant state of readiness

There is no good or right time to invest in readiness work, but most organisations don’t have the luxury of regular, dedicated time for intensive crisis preparation. While an annual exercise and six-monthly reviews of plans may have been the norm historically, the pace of change inside and outside organisations means a constant state of readiness is needed.

Common pitfall

Practical steps

De-prioritising crisis readiness activities is easy. Delaying completion of an exercise is often viewed as ‘sensible’ when lined up with other, pressing matters.

Put a value on your top crisis scenarios. Prioritising investment in readiness activities becomes clearer when it can be positioned as a true source of value protection.
For those who favour an annual plan, break the year into small but meaningful advances in readiness. Schedule short walkthroughs of specific processes each month, and where possible integrate them with existing forums. As a starting point, why not practice the establishment of your crisis room(s) and technologies?

The reality: Crisis response is a true competitive advantage

It’s a simple equation really: organisations that manage crises well build trust and confidence with their key stakeholders. Customers, consumers, investors, suppliers and communities. Trust and confidence translates directly to value, whether that be through quicker-than-expected improvements in profitability or indirectly through a strengthened and trusted organisational brand.

Common pitfall

Practical steps

Crisis management is often perceived as all about damage control, with aspirations limited to getting ‘back’ to the baseline.

Engage your stakeholders in your readiness journey. Bring customers or suppliers into key exercises, or hold joint planning sessions to explore areas of potential concern. Better to address those now, and build deeper understanding as a result.
Don’t be content with being average in this space. Identify organisations to partner with or learn from, allowing both parties to stretch and build their capabilities.

While it may not be possible to predict when the next crisis will hit, businesses can prepare by identifying the right leadership, refining crisis processes, thinking beyond the immediate response, prioritising investment in readiness activities and engaging with stakeholders every step of the way. At PwC, we’re helping clients change the way they see risk.

PwC’s management publication strategy+business recently released a podcast titled “How can business prepare for the next disaster?” Featuring Craig Fugate, Former Administrator of FEMA, and Bobbie Ramsden-Knowles, PwC Crisis and Resilience Partner, the podcast looks at how businesses can help society and organisations to be better prepared before the next disaster strikes.

Check out the podcast

Contact us

Curtis Morton

Director, Canterbury, PwC New Zealand

+64 27 504 9095

Email

Lara Hillier

Auckland Managing Partner, Auckland, PwC New Zealand

+64 21 240 8640

Email