BrazilPwC releases corporate crisis analysis covering 4,500 events
Professional services firm PwC has released a first-of-its-kind Global Crisis Survey, described as most comprehensive repository of corporate crisis data ever assembled.
Spanning more than 2,000 companies across 40-plus countries worldwide, a bold, new survey from global professional services firm PwC has sought to better understand the ins and outs of real-world corporate crisis management, examining over 4,500 of the worst crises recounted by its respondents – seven out of ten of whom had experienced a crisis in the past five years, with 80 percent of those in turn having dealt with multiple events.
The first take-home from PwC’s Global Crisis Survey is the actual scale of the disruption occurring at corporate enterprises around the world, with survey respondents averaging three crises over the five-year analysis period – a crisis defined here as a major disruption to multiple functions of the enterprise and with the potential to significantly harm reputation. Almost all of those surveyed expect crisis to strike again or for the first in the future.
“Crises don’t discriminate. Like companies themselves, they come in all shapes, forms, and sizes – and no one, and no region, is immune,” state the authors. “What’s more, the very definition of a crisis will vary by industry. For example, consider a wind storm: for a financial services company, it’s a meaningless event; for a utility, it could trigger a catastrophe.” Indeed, PwC further notes the diversity of crisis types and that the most disruptive aren’t necessarily the most newsworthy.
The survey found that financial/liquidity issues and technology failures (at 23 percent) were the equal most common event types, with crises triggered by ethical misconduct, workplace violence or viral social media at the other end of the scale. Grouping the event types into seven broad categories, an operational crisis had been experienced by over half of the respondents, whereas reputational and human capital crises were confined to one out of five.
The rate of past occurrences didn’t however correlate with fears of a particular future event, with under 7 percent of participating companies experiencing cybercrime as their worst crisis for example and nearly 40 percent fearful of its potential impact. There was also considerable regional difference in crises experienced to date, with financial/liquidity events followed by competitive/marketplace disruption the two most common right across Asia.
Although it probably goes without saying, the impacts of a crisis can be severe, with the majority of respondents (57%) citing economic loss among a number of impacts felt from a crisis and large numbers stating that the crisis spilled over into other areas such as business relationships (74%), workforce morale (59%) and legal issues (57%). And, says the firm, a crisis is never more dangerous than when it spins into ancillary crises, each spinning off anew.
PwC points to three ‘bedrock elements’ for successful crisis management; a fact-based approach, stakeholder communications, and preparedness. But the firm contends that further insights can be gained by reverse-engineering the survey data. For this task, the consultancy assessed the 42 percent of companies which self-identified as having emerged stronger following a crisis against the 19 percent which had fared worse – coming back with five common factors.
The first two of these fit with preparedness – allocating a budget to crisis management and having a plan and testing it before an occurrence – while the latter concern actions during and after an occurrence; adopt a fact-based approach and don’t neglect key stakeholders; act as a team, and hold to your values, and, after an event; perform a root-cause analysis and follow up – which, considering the likelihood of a crisis reoccurrence, is in effect a form of preparedness.
