Less than half of board members say their organizations have both the capabilities and processes in place to effectively handle a crisis, according to a Deloitte survey. The survey of 317 non-executive global board members found that they have confidence in their organizations’ ability to deal with crisis situations, but are less confident that they are prepared for them.
“Most businesses will face a crisis at some point”, states Rick Cudworth, risk advisory partner at Deloitte. “In my experience, most boards now recognise that it’s a matter of when, not if. This has been a big change in recent years. Board members should hold frequent discussions with management to ensure a sound and common understanding of what preparations have been made to deal with a crisis when it arises. This should include regular rehearsals of executive and board members.”
Additional survey findings include:
- Disparity between feeling ready vs. being ready: more than three-quarters of board members believe their companies would respond effectively if a crisis struck tomorrow. However, less than half of those surveyed felt their companies engage in monitoring or internal communications designed to detect trouble.
- Damage to corporate reputation ranked highest as a vulnerability, followed by cyber-crime: supply chain issues, regulatory action, and natural disasters were also listed as key vulnerabilities.
- The ‘vulnerability gap’: When asked about specific crisis areas, board members were more likely to acknowledge their vulnerability, than they were to say they had a plan to address it.
- Board members aren’t engaging with management: fewer than half say they have engaged with management to understand what has been done to support crisis preparedness.
“It’s clear that crisis awareness, preparation and resilience needs to be a more prominent topic in the boardroom”, continues Cudworth. “While the approach may differ between organizations, our research found that fewer than a third of crisis-hit respondents recovered in less than a year. No board should underestimate the challenge that crisis brings, and its potential longevity.”
The survey was conducted by Forbes Insights on behalf of Deloitte Touche Tohmatsu Limited.