It has been established that less than half of the firms globally have taken meaningful steps to be crises-ready. PHOTO | SHUTTERSTOCK
By PAUL WANYAGAH
Having just gone through the ravages of the Covid-19 pandemic, and with the ongoing war in Ukraine and its consequent inevitabilities, can it be argued that the world is
now more attuned to risk and potential crises?Is there now an opportunity to leverage attention and find more effective ways to identify and communicate risks and potential crises that both the public and private sector leadership and decision-makers need to pay attention to?
A recent World Economic Forum report cites extreme weather, climate action failure, human-led environmental damage, digital power concentration, digital inequality, weapons of mass disruption, livelihood crises, debt crises, cybersecurity, and IT infrastructure breakdown, as the highest likelihood risks and potential areas of crises in the next 10 years.
According to Mckinsey, other risks could include privileged information leaks and missed opportunities. How, therefore, is each enterprise big, medium, and small, and for that matter, each country, gearing up for what awaits ahead, in what seems to have become a world in permacrisis?
The business environment in the 21st century has become complex, volatile, ambiguous, and unstable due to rapid developments, technological disruptions, continuous change, business disruptions, geopolitical divides, and man-made as well as natural calamities.
Organisations (countries included) are increasingly now vulnerable to a wide range and levels of crises and turbulence that differ in their causes, severity, and impact, leading to survival, performance, and continuity risks.
Crises for the most part, have devastating negative impacts on companies’ financial performance, corporate standing, employees’ morale, brand reputation, competitiveness, and ultimately, the company’s existence and survival.
Globally, it has been established that seven in 10 companies have experienced at least one corporate crisis in a span of 10 years, with the average number of crises experienced being three. Seventy-six percent of board members in a Fortune 500 Survey believed that their firms would respond effectively to crises.
Sadly though, upon scrutiny, less than half of the firms had taken meaningful steps to be crises-ready. The irony is that it has been empirically established that organisations or countries with a strategic crises’ response plan, mobilise more swiftly, stabilise their operations more swiftly, and effectively respond to the shockwaves of crises disruption when crises strike.
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So what is a crisis?
A crisis is a specific non-routine, unexpected event or events that create high levels of uncertainty, threatening a firm’s high-priority goals. A crisis can further be viewed as a change or changes, that are sudden or evolving, and whose consequences are an urgent problem calling for immediate addressing.
A crisis can also be an event or events with the potential to cause sudden and serious harm or damage to an organisation’s employees, operations, reputation, turnover, or profitability.
All in all, the definitions of what a crisis is, point to a situation happening rapidly, many a time without warning, seriously derailing an organisation’s key objectives delivery, and forcing it to take urgent steps to moderate possible consequences.
Key researchers opine that organisations, societies, countries, and so on, should maintain preparedness for specific anticipated crises events, while also maintaining response capacity for unforeseen exigencies that may arise.
For enterprises, the top leadership, alongside the board exercise the overall governance responsibility and collective strategic leadership in steering their firm to growth and continuity.
Important decisions such as strategic direction, resources portfolio including crises preparedness, the necessary practices, and controls, which are crucial for the performance, survival, and growth of the firm are made at this high level.
Unfortunately, according to a recent survey, many organisations still lack crises preparedness building blocks needed to successfully manage in this era of seemly permanent crises the world currently finds itself in.
Why firms are ill-prepared
It's worth noting that preparing for crises can be expensive, and in stretched economies occasioned by high operational costs, many enterprises have limited resources. Additionally, some companies simply lack the understanding of the potential impact of crises or are not aware of the different types of crises they may face.
Read: Small banks hit by liquidity crisis turn to CBK for rescue
This latter scenario sadly leads to complacency or a false sense of security. Further, many an organisation are caught up in short-term focus in terms of production, targets, and profitability, leaving little room for long-term planning, including crises readiness.
A good number of enterprise leaders also display overconfidence and may feel that they are immune or can handle any crises. With no doubters in the room, they get deeply ‘locked up in a shared tunnel-minded myth’ that they ignore, disregard, or do not listen to any suggestions that their enterprise is in need of crises preparedness.
Further, many organisations do not view crises preparedness as an area of opportunity to innovate new products, processes, systems, services, new business models and so forth. Often times, there is a lack of leadership commitment and resourcing, and inadequate and haphazard strategic leadership practice.
Notably, crises leadership has now become an important part of leading in today’s world, as every organisation will inevitably face some form of crisis. So how crises ready is your enterprise?
Dr Paul Wanyagah is an expert in leadership and a former media executive beyond4.zero@yahoo.com
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