The unpredictable nature of crises has the potential to shake up any organization. From cybersecurity breaches to proxy fights, and from natural disasters to reputational scandals, crises can impact your company’s operations, finances, and reputation. A well-prepared Board of Directors is crucial for managing these situations effectively. This blog post offers insights on how to prepare your Board of Directors for crisis management and provide guidance on how to create a proactive and resilient approach to potential threats.
Establish a Crisis Management Working Group
Designate a dedicated crisis management team to work with your Board of Directors. This working group should be comprised of members with diverse skill sets and backgrounds, including legal, finance, communications, and operations. Their primary responsibility is to anticipate potential crises, develop response plans, and ensure that the entire Board is informed and prepared to take action when needed. Don’t wait. You can’t build the Red Cross during the hurricane.
Develop a Crisis Management Plan
Developing a comprehensive crisis management plan is a crucial step in preparing your Board of Directors for crisis situations. This plan should include:
- A clear definition of what constitutes a crisis for your organization
- An outline of the roles and responsibilities of Board members during a crisis
- A communication strategy to ensure accurate and timely information sharing
- A process for evaluating the effectiveness of the response and adapting the plan as needed
Provide Enough Agenda Time to Prepare
In order to effectively manage a crisis, Board members must be well-informed about the various types of crises that may affect the organization. Provide regular training sessions and educational materials to keep them up-to-date on industry trends, potential threats, and best practices for crisis management. This will help them make informed decisions and respond effectively in high-pressure situations.
Encourage Open Communication and Collaboration
Encourage open communication and collaboration among Board members, especially during crisis situations. This includes:
- Regularly updating each other on potential risks and emerging threats
- Sharing information and resources to address potential crises
- Establishing clear channels of communication for urgent decision-making
Conduct Regular Crisis Simulation Exercises
Conduct regular crisis simulation exercises to test your Board’s readiness for crisis management. These simulations will help identify areas for improvement, increase familiarity with the crisis management plan, and build confidence in your Board’s ability to navigate challenging situations. Be sure to debrief after each exercise to assess performance and make necessary adjustments.
Monitor and Assess Risk
Continuously monitor the risk landscape for new or evolving threats. This includes staying informed about industry trends, technological advancements, and regulatory changes that may impact your organization. Conduct regular risk assessments to identify potential vulnerabilities and make necessary adjustments to your crisis management plan.
The Art of Deviating from a Meeting’s Planned Agenda
Rigid adherence to an agenda in the face of a crisis – or even a significant development – is simply wrong-headed. But deviations should be purposeful and proportional. Many examples readily come to mind – including a significant product or facility incident, a credible offer for the company (or a large segment of the company), a sudden change in leadership forced by a resignation or a need for the board to act regarding an executive’s bad behavior.
When faced with whether an issue is worthy of board agenda deviation from plan, here are three questions that can help you frame the best approach:
- What information is available now that can be shared with the board?
- Is the board simply being informed or being asked to make a decision?
- How to gain alignment between the board and CEO on the cadence for updates and more information?
Dealing with a Crisis That Isn’t Company-Specific
When 9/11 occurred and when the 2008 financial crisis hit, boards had to quickly and effectively deviate from their planned agenda to address the immediate impacts of these challenges while still keeping their eyes on the long-term. Healthcare companies added the impact of SAR impact to their agenda when that outbreak occurred. The results of the Brexit vote found its way onto quite a few agendas – and evolved into an ongoing business planning topic. Unfortunately, coronavirus was and still is on the agenda for most boards today. The list goes on and on.
Dealing with a Crisis That Is Company-Specific
Recognizing a board-level crisis in the moment is the critical first step. The crisis team should assemble and then follow these steps:
- When a crisis emerges, first “stop the bleeding.” Don’t do more harm.
- Second, under attorney direction, seek to find the root cause.
- Third, under attorney direction, learn more about who may have been harmed already, and if warranted, make reparations.
- Fourth, make changes to guard against this kind of crisis in the future. Think broadly about this stage, not narrowly.
The crisis team should meet frequently until the scope of the problem is clear, then decide how often to pool information.
A major cyberbreach certainly warrants a change in agenda – and depending on how well the board has been educated about the company’s protocols and the impact, that item may be the focus of that next meeting and others that follow.
A key executive’s health crisis can also prompt a board to consider whether to implement interim succession plans, revisit longer-terms plans or even replace an ailing executive. One of the trickiest disclosure issues is when to disclose an executive’s health issue – and how to balance that with the executive’s right to privacy.
When the board makes a change in agenda to take up something quite unexpected, it should also consider the possible disclosure implications that arise from it. Hopefully, the company’s management team – and lawyers – already have been thinking about that.
Preparing your Board of Directors for crisis management is a proactive and essential step in ensuring your organization’s resilience. By establishing a dedicated working group, developing a comprehensive plan, providing enough agenda time, encouraging open communication, conducting simulations, and monitoring risk, your Board will be better equipped to navigate any crisis that may arise. This preparation will not only minimize the impact of potential crises but also help maintain the trust and confidence of stakeholders, employees, and customers.
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Get your agenda priorities straight!:
