No Result
View All Result
SUBSCRIBE | NO FEES, NO PAYWALLS
MANAGE MY SUBSCRIPTION
NEWSLETTER
Corporate Compliance Insights
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
No Result
View All Result
Corporate Compliance Insights
Home Featured

Crisis Simulation: Your Best Defense Against Risk

Preparing Effectively for the Next Crisis

by Michael Affronti
June 25, 2020
in Featured, Risk
multicolor illustration of man with virtual reality headset on, concept of simulation

On average, large companies experience a crisis every year, and, as COVID-19 has revealed, few organizations are sufficiently prepared when a crisis arises. Dataminr’s Michael Affronti discusses the importance of running crisis simulations.

You open the binder in front of you.

There’s been an accident at one of your factories. Details are scarce — all you know is that production lines have stopped, people are evacuating and police and firefighters are on their way. You need to convene a small group of internal stakeholders and gather enough information to make a series of very important, very fast decisions right now.

How do you physically account for your employees, partners and customers at the factory? Has anyone been severely injured, or worse? What is the immediate impact to the environment? Can you begin to calculate financial losses, both immediate and long-term? How much information do you need to release to investors today? What do you say internally? What do you tell journalists? Do you shut down the factory? If so, for how long? Do you launch an internal investigation?

Luckily, the accident occurred only on paper as part of a crisis simulation exercise.

Forward-thinking companies routinely run crisis simulations like these to prepare for the major categories of risk they face. Here, we’ll explore best practices around crisis simulations and how you can better prepare for your company’s next crisis.

Time Is Golden

It’s virtually impossible to avoid your next corporate crisis.

In a 2019 survey from PwC, seven out of 10 senior leaders said their company had experienced at least one major crisis in the past five years. The risk of a company experiencing a crisis grows with its size; that same survey suggests companies with 5,000 employees or more experience an average of one corporate crisis per year.

After a crisis, the one thing that leaders consistently say is that they wish they had more time to make key decisions.

That’s not always possible, however. Physical events, like industrial accidents, workplace shootings and natural disasters, happen immediately and without warning. Other risks grow over time and develop in the popular zeitgeist for hours, or even days, before a company realizes they’re facing a crisis.

For example, there are numerous recent examples of consumer brands that face a slow burn of criticism for launching a culturally offensive product, providing terrible customer service or launching an insensitive ad campaign. By the time the crisis dominates the public discussion, the company can find itself on its back foot already.

The fundamental lesson of crisis simulation is understanding how important it is to be notified of a crisis as soon as possible, via internal and external channels, to drive sound decision-making. During unpredictable, kinetic events, that means receiving accurate, detailed information quickly about the situation on the ground – as it unfolds. For brand crises, that means investing in the tools to catch crises while they’re still nascent, to give leaders more time to build a response plan.

There are solid building blocks for formulating and running a meaningful crisis simulation, as practiced by leading risk management practitioners around the world.

Understand Your Risk Exposure

In a previous era, where information flows were slower and less frequently updated, risk was more confined to a centralized risk management team. Today, risk is more broadly dispersed across multiple, disconnected departments, occupying significantly more “space” across the organization.

For example, the operations team is responsible for the physical security of locations and assets; marketing and communications teams protect the brand; employee protection capabilities are often tucked away within physical security teams; and IT mitigates cybersecurity threats and protects virtual assets.

Consider a direct threat against a retail store location. This would trigger an operational response to secure the site and protect its employees and customers, but it could also threaten reputational risk and business risk. It might even elevate the risk of a cyberattack.

Make a Baseline Risk Assessment

Every company should build a baseline risk assessment, identifying the most common types of risk scenarios they face. Here, it’s helpful to look at corporate crises in the company’s recent past and whether those risks continue to exist.

Continually test your assumptions, particularly as new risks emerge. Here, it’s helpful to stay informed about the corporate crises occurring elsewhere in your industry and asking, are we prepared if we faced a similar crisis? Examining how competitors handled certain crisis scenarios is helpful.

Build Small Response Teams with Wide Latitude

After identifying common risk vectors, pull together a small team of internal stakeholders who sit in decision-making functions across the business. The exact mix will depend on the type of risk you’re testing against — decision-makers commonly include people from operations, legal, communications, security and risk management.

Empower this group to make quick decisions without a lot of corporate red tape. In the middle of a crisis, your rapid response team will be responsible for protecting human life and limiting damage to the environment, the company’s reputation and its brand. In certain risks, the leaders your company typically relies on to make decisions might be directly implicated or affected by the crisis themselves.

Under a “hub and spoke” model of crisis management, this team forms the “hub” of activity and decision-making, assigning out tasks and communicating to the wider team sitting along the “spokes.”

Perform Inconvenient Simulations

Do your best to replicate complex, real-world conditions during your crisis simulation sessions. A crisis can occur in the middle of the night or in a corner of the world where your team doesn’t speak the native language. It could occur over a holiday, when the members of your primary response team are out of the office and unable to physically convene a meeting. It could also affect a much wider swath of your employees or customers around the world than anticipated.

Indeed, some of the most extreme scenarios that unfold in real life seem unimaginable when conducting risk simulations. Consider the current pandemic caused by the coronavirus, leading the global spread of the COVID-19 disease. Impacts to businesses and individuals are taking unexpected twists and turns as countries and cities adopt very different approaches to managing the spread of the disease and operating businesses safely as some employees return to their customary workplaces. Public health and economic outcomes will vary widely around the world – an especially important consideration for global enterprises operating in multiple countries

Use Technology to Your Advantage

Finally, you’ll want to have the right technology in place to help capture an advantage in any crisis, complementing the work of risk analysts, security professionals and others who monitor external communications channels for signs of high-impact events. For example, AI solutions that process enormous volumes of public data in real time can help synthesize relevant signals across social media, blogs, information sensors and more – and deliver critical, early warnings to companies.

Integrating real-time information into your crisis workflows, across response teams and functions, will enable each team to gain a common understanding of what is happening and provide a few extra minutes or even hours to craft an appropriate response.

The most effective crisis simulations bring together disparate teams and diverse expertise to foster a common perspective and action plan for how to respond when a real crisis takes root. But they also help build confidence in the information flows and decision-making processes that underpin sound crisis management.


Tags: Crisis ManagementRisk Assessment
Previous Post

Pulling Strings in the Fight for Justice: Getting Real

Next Post

C-Suite: The Key to Preparing Your Services Business in a Post-COVID-19 World

Michael Affronti

Michael Affronti

Michael Affronti is a seasoned executive in product strategy, design, & development with over 15 years of experience building and leading high-performing organizations across the entire product life cycle from incubation to more than $1 billion in revenue. He specializes in the critical interlock between sales, marketing and product management to generate aligned and effective go-to-market strategies. He is currently the SVP of Product at Dataminr, recognized as one of the world’s leading businesses in AI and machine learning innovation. Dataminr is pioneering groundbreaking technology for detecting, classifying and determining the significance of public information in real time. Previously he was the SVP of Product at Fuze, the world’s leading enterprise cloud collaboration platform, where he ran the product management and design organization while driving Fuze’s strategy. He joined Fuze (formerly ThinkingPhones) via the acquisition of his startup, Contactive, where he was employee #7 and the VP of Product for two years. Contactive was a mobile sales productivity platform that used machine learning and publicly available information to show a detailed dossier of any customer or individual calling your phone in under two seconds. Prior to Contactive and Fuze, Michael spent 10 years at Microsoft in Seattle, working in Product & Design building social collaboration experiences in Lync, Office365, Outlook, Exchange and Yammer that were used by over 500 million customers.

Related Posts

credit score gauge

Sales at All Costs? Unified Credit Risk Management Can Squash Bad Deals Before They Happen

by Matthew Debbage
March 15, 2023

The collapse of a business doesn’t usually happen all at once. There are warning signs. Late payments, legal filings and...

risk tunnel

From Regulation to Volume, There Is No Light at the End of the Data Privacy Tunnel

by Jim DeLoach
March 15, 2023

Data proliferation and data privacy regulatory activity across the globe have created the need for focused boardroom discussions. An underpinning...

red flag warnings

Fostering Risk Transparency in the Organization

by Jim DeLoach
November 9, 2022

Serious risks to your company’s financial and reputational health probably aren’t going to walk up and introduce themselves. Protiviti’s Jim...

NAVEX regional whistleblowing hotline benchmark report_f

Navex 2022 Regional Whistleblowing Hotline Benchmark Report

by Corporate Compliance Insights
November 9, 2022

Explore benchmark data and regional comparisons for Europe, APAC, North America and South America. Regional Benchmark Report 2022 Regional Whistleblowing...

Next Post
illustration, gallery view of a team on a videoconference

C-Suite: The Key to Preparing Your Services Business in a Post-COVID-19 World

Compliance Job Interview Q&A

Jump to a Topic

AML Anti-Bribery Anti-Corruption Artificial Intelligence (AI) Automation Banking Board of Directors Board Risk Oversight Business Continuity Planning California Consumer Privacy Act (CCPA) Code of Conduct Communications Management Corporate Culture COVID-19 Cryptocurrency Culture of Ethics Cybercrime Cyber Risk Data Analytics Data Breach Data Governance DOJ Download Due Diligence Enterprise Risk Management (ERM) ESG FCPA Enforcement Actions Financial Crime Financial Crimes Enforcement Network (FinCEN) GDPR HIPAA Know Your Customer (KYC) Machine Learning Monitoring RegTech Reputation Risk Risk Assessment SEC Social Media Risk Supply Chain Technology Third Party Risk Management Tone at the Top Training Whistleblowing
No Result
View All Result

Privacy Policy

Founded in 2010, CCI is the web’s premier global independent news source for compliance, ethics, risk and information security. 

Got a news tip? Get in touch. Want a weekly round-up in your inbox? Sign up for free. No subscription fees, no paywalls. 

Follow Us

Browse Topics:

  • CCI Press
  • Compliance
  • Compliance Podcasts
  • Cybersecurity
  • Data Privacy
  • eBooks Published by CCI
  • Ethics
  • FCPA
  • Featured
  • Financial Services
  • Fraud
  • Governance
  • GRC Vendor News
  • HR Compliance
  • Internal Audit
  • Leadership and Career
  • On Demand Webinars
  • Opinion
  • Resource Library
  • Risk
  • Uncategorized
  • Videos
  • Webinars
  • Well-Being
  • Whitepapers

© 2022 Corporate Compliance Insights

No Result
View All Result
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe

© 2022 Corporate Compliance Insights

Welcome to CCI. This site uses cookies. Please click OK to accept. Privacy Policy
Cookie settingsACCEPT
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT