Crisis events are more frequent, severe and unpredictable than ever. For businesses, being un- or under-prepared for myriad crisis scenarios is also costlier than ever. The perils that confront them range from temporary paralysis of operations, to permanent business closures to adverse impacts that ripple through the broader economy. Beyond protecting enterprises from the worst impacts of crisis events, robust crisis preparedness also comes with a promise of growing and supporting bottom lines further. Moreover, all crises have deep reputational implications. General counsels (GCs), with their analytical rigour, legal expertise and a broad view of the crisis landscape, can serve as trusted partners in preparing for and responding to these events.
The imperative for building and strengthening organisational crisis preparedness and more actively involving GCs in this process is clear to businesses. However, via a survey of 600 primary legal decision-makers in North America, Europe, the Middle East and Africa (EMEA), and Asia-Pacific (APAC), we find that they still have work to do to future-proof themselves against crisis events. Notably:
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As crisis events become more frequent, severe, and unpredictable, the role of GCs has expanded—beyond the traditional legal functions— to include critical crisis management responsibilities.
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Organisations are least prepared to manage crises that pose the greatest risks to their business, according to their GCs. (See figure 1)
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Timely and thorough identification and escalation of red flags can be the difference between a brief interruption and the complete paralysis of critical business functions. However, about three-fifths of surveyed organisations are scanning and escalating internal or external red flags less than once a month.
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Close to 70% of surveyed organisations lack an identified ad-hoc cross-functional crisis response team or a pre-selected list of external crisis response advisers that can assemble easily when a crisis does arise.
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More than two-thirds of the canvassed organisations are not engaging in crisis simulation activities such as stress testing and running workshops/trainings/crisis scenario drills to integrate learnings from past crisis events into the crisis management strategy, according to their GCs. Less than half of the canvassed organisations are deploying artificial intelligence (AI) and machine learning (ML)-based solutions for comprehensive impact analysis of crisis events.
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With increasing exposure to crises in their supply chain and among other strategic partners, a growing number of organisations are building supply chain redundancy and extending their crisis preparedness outside their organisation. (See figure 2)
