Preparing for the unexpected

This year has started with a number of critical events and crises - notably the Australian bushfires and the emergence of the novel coronavirus, COVID-19. (See just published Coronavirus: Information for businesses).

With devastating effects to people, organisations and communities, these unforeseen events create uncertainty and disruption in an already challenging operating environment for boards. They also provide a timely reminder to the governance community that it is critical for boards to ensure their organisations are prepared for the unexpected.

When faced with critical events and crises, board leadership is vital – both in preparing for the unexpected and supporting management in responding to and recovering from a crisis. The board is responsible for ensuring management has developed and implemented appropriate crisis management plans and monitoring these plans over time.

However, the results of the 2019 Director Sentiment Survey showed that just 65% of boards had discussed crisis management plans in their organisation in the last 12 months, suggesting that crisis management needs more attention in our boardrooms.

Some key questions for boards:

• Does the organisation have a crisis management plan?
• Does it include a robust communications plan with staff and key stakeholders?
• Does it ensure access to critical resources (operational, financial, human and technological resources)?
• Does it deal with the organisation’s key risks and vulnerabilities?
• Does it address health and safety, eg of staff working remotely?
• What are the roles and responsibilities of the board and management in crises?
• Is the board and executive team ready/capable to deal with a crisis?
• Is an independent review of the crisis plan needed?

Resources for boards on crisis readiness:

The Four Pillars of Governance Best Practice provides guidance on:

• Crises and the board in section 2.14
• Risk management section 3.4 – section 3.41 includes information on business continuity and disaster recovery
• Health and safety governance in section 3.7

Other useful resources:

• KPMG US Crisis prevention and readiness
• Resilient Organisations Striving Through and Shut Happens
• Civil Defence Learn about business continuity planning