The new enterprise mindset: Continuous risk and crisis readiness
Who could have anticipated 2020? Surely the implausible confluence of environmental, social, and governance, plus technology (ESG+T) risks exacerbated by a global pandemic could never have been foreseen.
Except that the Crisis of 2020—an unspecified calamity that “could rival the gravest trials our ancestors have known” and serve as “the next great hinge of history”—was predicted by two American scholars in 1991.
William Strauss and Neil Howe proposed the theory in their book, “Generations,” that boom-to-bust cycles occur every 80 or so years. The year 2020, coming roughly eight decades after the last great crises of World War II and the Great Depression, fit that cycle.
The importance of being prepared for such a seismic shift was affirmed in my book, “Gloom to Boom,” which showed enterprise leaders how to effectively identify and manage their top ESGT risks to avoid organizational crisis, scandal, and value destruction. For those who are prepared, resilience enables brands to transform ESGT risk into opportunity and value for stakeholders.
Pandemic brings unprecedented strain
Companies and brands that were generally prepared before COVID-19 fared a lot better than those that did not, at least from a perspective of stakeholder care and organizational resilience. Those astute enterprises clearly understood their ESGT issues and risks, with practices and policies in place for crisis management, proactive communications, and corporate governance focused on the right risks.
Even among those companies that employed such foresight, few emerged unscathed by the magnitude and unprecedented convergence of multiple serious risks all at once, all over the world.
Many well-positioned small and medium-sized businesses succumbed to the ongoing financial strain of the pandemic. Those that were caught completely flat-footed, however, fared worse.
Some brands have scrambled to shore themselves up as one crisis after another has crashed in waves during the past 10 months. Worker health and safety. Working from home. Supply chain disruption. Ransomware and cyber-attacks. Social justice protests.
Many have gone under with sometimes devastating consequences to people and profits. Others have floundered, unable to protect their people, products, or services from severe reputational consequences.
A perfect storm brewing for years
What happened in 2020 is the perfect storm of systemic and other ESGT risks coming together at a scale greater than we have seen before. The catalysts, though, have been brewing for years: climate change, pandemics, social justice, pay inequity, corruption, geopolitical upheaval, and technological disruption.
That’s what you call a recipe for continuous crisis.
The warning bells and sirens that have punctuated 2020 are a jarring wake-up call to brand management teams and boards everywhere. All types of organizations—businesses big and small, nonprofits, and government entities—need to have risk and crisis preparedness programs and practices in place that are constantly tested, continuously improved, and ready for action.
Crisis readiness needs to go beyond playbooks to actual teams, resources, tools, and practices to keep brands agile and alert to the inevitable, multiple, and possibly simultaneous risks and crises that will come their way.
Enterprise leaders should be asking themselves these important questions: are we prepared to deal with these systemic disruptions and challenges? Do we have the organizational resilience to properly protect our stakeholders, our people, our purpose, and our profit in the age of COVID-19 and beyond?
If any of the answers are “no” or “maybe,” leaders should know what they need to do to get ready.
Brands need to plot resilience
The appropriate response will be unique to each company and each brand, depending on their market, size, scope, suite of services and/or products, leadership, and employee population. Regardless of scale, a well-functioning and well-prepared enterprise should have some semblance of the Virtuous Resilience Lifecycle noted below.
Source: A. Bonime-Blanc. Gloom to Boom. Routledge 2020.
This best-in-class organizational resilience calls for proactive leadership and governance, an ethical culture, stakeholder awareness and emotional intelligence, risk readiness and intelligence, an ESGT integrated strategy, balanced performance metrics, business continuity and crisis readiness, and an ethos of continuous improvement and innovation.
Organizational resilience building is not a cost-center or a nice to have; it is a must-have and core to business value protection, preservation, and creation that benefit people, profits, and the planet. It requires time, effort, resources, and, most of all, commitment from the top—the very top.
Daylight to darkness and back again
When social media started to take off about two decades ago, we thought it would usher in an age of hyper-transparency. Technology—from powerful smartphones to user-friendly social media platforms—would surely help democratize access to information.
In the recent past, though, that hoped-for transparency has given way to an age of opacity—misinformation and disinformation; deepfake videos and audio; anonymous, malicious attacks against individuals and entities. This harmful content is promoted by a variety of malign, nefarious, or otherwise ignorant or unwitting actors from every corner of the web, at a volume and velocity that easily overwhelms a brand’s ability to manage it.
Enterprise leaders and staff need to develop a new vigilance and sensitivity to risks emerging in the murky corners of social media and the internet—the dark web, the deep web, and the bot factories. Brands need to enlist the services of an experienced key risk intelligence partner and adopt an early warning system to proactively manage the coming age of continuous crisis preparedness.
The 2020 confluence of COVID-19 and ESGT risks and the growing shadow over social media demand better analyses, tools, and sources on any emerging risk—including ESGT risk—not only for companies and brands but for organizations generally in the public and private sectors.
What does it mean to be prepared in 2021 and beyond? It means shining a light into the darkness with smart governance. It means combining ESGT risk and crisis preparation with business and strategic planning. It means honestly assessing not only what risk is there, but what risks are lurking around the corner.
This crisis presents savvy CEOs and executive teams with a unique opportunity to build resilience and reputation through stakeholder trust. How business leaders treat their key stakeholders now will largely determine their ability to build longer-term trust, reputation, value, and resilience in a post-COVID-19 world.
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