Despite Rising Crises, Deloitte Survey Finds Organizations' Confidence Exceeds Crisis Preparedness

Sixty percent of crisis management leaders believe that organizations face more crises today than they did 10 years ago, according to a new survey from Deloitte. Organizations’ confidence in their crisis management capabilities often does not align with their actual level of preparedness, however.

According to Deloitte Global’s 2018 crisis management survey, “Stronger, Fitter, Better: Crisis Management for the Resilient Enterprise,” nearly 60 percent of respondents believe that organizations face more crises today than they did 10 years ago, yet many may overestimate their capabilities to respond.

The study, which builds on the findings of Deloitte Global’s 2015 study, “A Crisis of Confidence,” surveyed over 500 senior crisis management, business continuity, and risk executives about crisis management and preparedness.

“Today’s organizations face a global business environment with change happening quickly and crises on the rise,” said Rhoda Woo, managing director in Deloitte & Touche LLP’s Risk and Financial Advisory practice and leader of Deloitte’s crisis management practice for the U.S. firm. “But those who take a systematic approach to steering clear of crises and effectively managing ones that do arise, especially by engaging senior management and board members, can avoid the devastating impact a crisis can have on financial performance, employee morale, sales and reputation.”

This year’s study uncovered dramatic gaps between a company’s confidence that they can respond to crises and its level of preparedness. The gap becomes even more evident when evaluating whether organizations have conducted simulation exercises to test their preparedness.

Nearly 90 percent of respondents are confident in their organization’s ability to deal with a corporate scandal, yet only 17 percent of organizations have tested the assumption through simulation. The gap is reminiscent of the 2015 findings, which illuminated the fact that board members believed they could respond well if a crisis struck, yet playbooks of likely scenarios failed to exist.

Eighty percent of organizations worldwide have had to mobilize their crisis management teams at least once in the past two years. In particular, cyber and safety incidents have topped companies’ crises (46 and 45 percent, respectively).

Many who have already experienced a crisis are learning from them. Following a crisis, nearly 90 percent of organizations have conducted reviews. The major insight from these examinations is that many crises may have been averted. This appears to prompt organizations to act to forestall future crises. Respondents identified the need to improve detection and early warning systems, invest more effort in prevention, and do more to identify potential crisis scenarios.

When responding to a crisis, strong leadership skills and situational awareness are critical. The survey finds that nearly a quarter (24 percent) of respondents cite the effectiveness of leadership and decision making as one of their greatest crisis management challenges.

To help leaders be prepared to navigate their organizations through a crisis, organizations should consider: organizing leaders ahead of time, clearly defining their various roles and responsibilities; training leaders in the tools and techniques that can help them through a crisis; identifying, improving and counterbalancing leadership tendencies and styles which, while they may serve as strengths in normal situations, could cause trouble in a crisis.

(For more information visit https://www2.deloitte.com).