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Crisis Management: Guidelines for Response Teams and Stakeholder Engagement

Denise Pacofsky
Denise Pacofsky

For any C-suite executive, the challenges of responding to a crisis event involve having to understand and arrange numerous concerns in real time, including defining the crisis, determining the cause, and generating options to stop and address impacts. As a crisis unfolds, information can be inaccurate, contradictory and sporadic. Additionally, managers’ responsibilities often shift during a crisis, with some assuming more wide-ranging duties than they typically perform, while others may be embroiled in unfolding events and completely unavailable.

A critical first step of leading C-suite crisis responders is a mobilization meeting to share emerging information about the crisis, create an understanding of the potential impacts across the company, and start to define roles and make decisions about initial response actions.

In this splintered environment, developing a common operating picture (COP) can help organize the response team. Simply stated, the COP is a single, identical display of relevant information that can be shared across the whole team. It includes information, such as facts (what do we know? what do we want to know that we don't yet know?); impacts across lines of business, functions, and stakeholders; and decisions and actions, both planned and completed.

The benefits to a COP are threefold. First, the tactic helps to reduce white noise. During a crisis, it is often difficult to discern critical information from misinformation. No matter what, executives have to make decisions with the information they have, so the COP provides a mechanism for capturing the known information in one place as a single version of the truth. Second, an enormous amount of time is usually spent keeping everyone on the response team in the loop. The COP can streamline these efforts and save precious minutes. Lastly, using the information stored in a COP is a leading practice when creating communications related to the event, whether the messages are internal or external, to ensure the organization speaks with one voice based on one set of facts.

As circumstances change, the common operating picture will need to be updated (updates should occur multiple times per day). With the required care and maintenance, the COP provides a dynamic snapshot of what is known or not known at a particular point in time, and tracks the actions in play.

Prioritizing Stakeholders

Actions taken during a crisis, if they are ill-conceived, can create a loss of trust between a company and its stakeholders. Maintaining trust involves quickly identifying who is impacted and what their concerns entail. While companies need to demonstrate empathy for all those affected, they also have to assess who is the most impacted and who has the most influence, and then develop a very deliberate way of stratifying different categories of stakeholders.

Rhoda Woo
Rhoda Woo

Stakeholder prioritization involves advance planning that provides a quick payoff during the crisis. Impacted stakeholders are generally known in advance of different types of crises. For natural disasters, a company may prioritize employees and community members; for a cyber breach, the response may begin with the customer or law enforcement; in an accident involving the CEO, the board and shareholders may be first engaged.

After identifying the stakeholders for each type of crisis, leading companies will categorize them by the impact the event will have on them and their level of influence during the event. Some important questions to consider include:

—Who will be most impacted and how?
—Can turning the opinion of influential stakeholders create business advocates?
—Are there stakeholders who you merely need to keep in the loop? How do you prioritize them?

By categorizing the different interested parties, you can devise a strategy for how to engage with each of them, in what order and to what extent. Stakeholders who both have influence and are impacted by the event will be the most critical to engage with first.

Throughout a crisis, communication and empathy with stakeholders will be important. Effective communications should address the myriad reactions stakeholders may have to the event, including anger, concern and anxiety. Honesty, transparency and inclusiveness are also critical to an effective response.

Addressing Different Stakeholders in a Crisis

Depending on the type of crisis, stakeholders have varying levels of importance. The following stakeholders typically need to be considered during a crisis, and C-suite executives should pay special attention to their needs:

Shareholders. Overall, CFOs work effectively with investors when they approach an issue with a mindset of transparency and realism. Such a mindset in a crisis allows CFOs to clearly and concisely define the problem and relay the company’s planned response. Depending on the crisis, though, shareholders are going to have some very specific questions: By how much will we miss earnings? Is our credit rating vulnerable? How much cash might we bleed?

Regulators/auditors. Both regulators and auditors will want to know what policies and procedures may have been impacted. Communication with these stakeholders depends on the nature of the crisis and the regulatory and compliance requirements involved. Failing to notify a regulator within the prescribed time risks incurring a fine. For example, the Occupational Safety and Health Administration (OSHA) and the Environmental Protection Agency (EPA) both have thresholds for when to report workplace accidents or environmental spills. Other regulators may need to be notified if there is an incident involving product tampering or quality. Such requirements should be documented and adhered to in the crisis communications plan.

Customers. The impact to the customer base is one of the earliest assessments companies should make. Unfortunately, one of the very real consequences of a crisis may be that customers flee. Mitigating that risk requires strong communication, a commitment to action, and some degree of humility. Customers will want to know who is to blame and what steps are being taken to correct the situation (especially to protect their data). More important, customers will want the company to explain how and why the crisis will never happen again.

Flexible Deployment

Having an overarching culture of crisis preparedness and implementing associated tactics can enhance a company’s ability to protect and preserve value and maintain or enhance stakeholder confidence in the event of a crisis. The mobilization meeting, COP, and stakeholder prioritization are tried and tested approaches to crisis response. By identifying effective crisis leaders before a crisis event and empowering them with these tactics, companies can successfully manage their responses to almost any event.

—Produced by Denise Pacofsky, Deloitte Risk and Financial Advisory partner, Deloitte & Touche LLP, and Rhoda Woo, Deloitte Risk and Financial Advisory managing director, Deloitte & Touche LLP. This article is the second in a two-part series excerpted from “Stacking the deck: How to increase your odds of an effective crisis response.”

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