Does your board know how to respond in a crisis? Learn how to prepare.
Complex, quick-moving threats to companies can occur at any moment. From severe weather disruptions to global pandemics or cyber attacks, organizations need to adopt and follow a board of directors’ crisis management protocol. A crisis can also result from financial wrongdoing or a toxic environment or culture.
Any sudden occurrence that threatens an organization’s relations, reputation, or economic output with crucial stakeholders can turn into a full-blown crisis. If it’s not managed well, it can affect business continuity.
With intense scrutiny and the stakes high, the board of directors play a specific role in crisis management, putting policies in place to ensure the company is prepared for any impending danger. An unforeseen threat to a company’s top brand or business can activate a crisis response.
For instance, a crisis may involve alleged wrongdoing by a top executive, and the board must take the necessary steps to examine the claims and assess impact on the organization.
To help prepare for and manage a crisis, a company often depends on its board members to put the right tools in place to help streamline processes. The board of directors must have the knowledge, capability, and experience to proffer advice on crisis management, as well as provide meaningful governance, risk, and compliance to enable the team to focus on their most crucial tasks.
Most importantly, the board needs to identify and analyze hidden issues that caused the crisis or hindered the response.
Is Your Board of Directors Prepared for a Crisis?
Adverse circumstances, from industrial accidents to product recalls or cyber breaches, require the board’s attention and focus. These events can place instant pressure on the board and management teams to take swift and resolute action to rebuild trust.
A key to permanent growth lies in the board and management team’s ability to build support with top stakeholders. That includes investors, who they can call upon whenever a crisis occurs. But first, the board must create, evaluate, and analyze its board crisis management plan.
How to Respond Before the Crisis
The company needs to define the board of directors’ role in crisis management. The crisis management plan is different from industry to industry. Yet, the concept stays intact. Preparing and being proactive is the most crucial part of a crisis management plan. Use the following steps to develop a strategic, dependable response before a crisis:
Assemble a Team
Leadership is a vital element in handling crises. A group of internal or risk committee response teams should be assembled. They must consist of senior executive officers tasked with managing the organization’s response to a crisis.
The board of directors must identify suitable people for the task. Possible team members might include:
- Chair of a specific committee
- General counsel or assistant
- Senior management members
- Head of public relations
- One or more board members
The board or company might decide to adjust the crisis response team, depending on the type of crisis involved.
Declare a Spokesperson
After assembling the crisis response team, the board must declare a spokesperson. Note the spokesperson is subject to change depending on the nature of the crisis. The committee should determine if the situation creates a potential or genuine dispute with the company and management’s interest before appointing someone to lead in the event of a crisis.
How to Respond During a Crisis
The board of directors in crisis management needs to set predetermined roles, yet flexible strategies. That will help them make practical decisions according to shifting situations. The board must know what the company expects of them before a crisis strikes. They should be united in their decision-making while working toward a common goal.
Communicate Clearly and Regularly
The company needs information and a dependable, sincere communications plan during a crisis. The company should engage a public relations consultant to create a communication plan. The policy will keep the shareholders, media, and every other person involved updated on current occurrences. Regular communication between the CEO and the board is fundamental to the success of the organization.
Identify the Crisis
As soon as a crisis is identified, whether at the early stage or not, the crisis response team must spring into action. They can task specific board members to oversee the crisis with the support of senior managers. The appointed team investigates the basis of the crisis and assesses damages.
How to Respond After a Crisis
After a crisis, there’s a brief opportunity for improvement and collective introspection. There’ll be an unavoidable push to regain calm, control, and normalcy. At this stage, a crisis management board of directors needs to show its leadership, independence, and value. They might insist the company takes a short pause to learn the most crucial lessons from the crisis.
Prioritize Communications With Senior Executives
The recovery effort should prioritize timely, fact-based, and open communication with the following:
- Joint ventures
- Business alliances
- Key stakeholders
Communication will help promote a culture of integrity, restore trust, and create transparency.
Identify and Solve Any Systemic or Underlying Causes
Organizations should install some procedures to learn and improve incidence response. This may include scrutiny to spot reasons embedded in the organization’s practices and culture.
How OnBoard Software can Help You With Better Crisis Management
Board members should always be prepared to engage in crisis response when certain scenarios present themselves. Companies that use board portal software can streamline the crisis management process, along with all their other important tasks.
With OnBoard software, committees can easily adapt to their new roles with the right information at their fingertips. Features include:
About The Author
- Board Management Software2022.06.06Startup Board Member: 3 Critical Characteristics
- Board Management Software2022.06.03Vision Statement vs. Mission Statement: Differences and Examples
- Board Management Software2022.06.02The Best Board Meeting Agenda Template
- Board Management Software2022.05.31Risk Management for Credit Unions: 5 Important Considerations