As the global market grows more complex and interconnected, organizations are increasingly vulnerable to the threat of a sudden shock. Our Global Crisis Survey gathered responses from 2,084 senior executives in organizations of all sizes across 43 countries, including Canada. The results make it clear that being ready for a crisis can not only mitigate damage but also help organizations emerge stronger than they were before the crisis hit. But our survey also highlights several dichotomies between Canadian and global respondents, including how we aren’t as worried about or prepared for crisis as those in other markets. Do we have a false sense of security?
We surveyed industries ranging from financial services and government to technology, automotive and industrial manufacturing. When it comes to crisis response and recovery efforts, our survey shows it’s all about seizing potential opportunities. While it’s important to focus on getting the organization back on track after a crisis, an organization can strengthen its resilience and build competitive advantage in the marketplace if it properly manages its incident response.
Canada has benefited for decades from having access to natural resources, stable politics, a major trading partner along its border and geographic isolation from major threats. These realities might explain why our survey shows Canadians aren’t as worried about or prepared for crisis compared to those in other markets. At best, this means we’re less prepared to capitalize on a crisis—and at worst, we may be leaving ourselves more vulnerable.
Explore the Canadian insights from our Global Crisis Survey:
Living with crisis
No one is immune. Among Canadian respondents, 58% said they had experienced at least one crisis during the past five years. While that frequency is significant, Canadians seem to feel less exposed to crisis than their global counterparts: 69% of global respondents said they had experienced a crisis during that period; and in the United States, it was as high as 79%.
The discrepancy may be the result of how Canadians think about and define crisis, having a higher threshold for what constitutes one than people in other parts of the world do. Looking at one industry, for example, a large number of Canadian respondents reported working in the financial services sector, which has a reputation as being more stable and conservative than those in other countries. Indeed, Canada’s approach to economic policy has been stable and risk conscious. These conditions may have promoted a can-do attitude for our respondents regarding any challenge that may come.
58% of Canadian respondents said they had experienced at least one crisis during the past five years.
Compared to global patterns, Canadians experienced significantly fewer crises in two particular areas: financial/liquidity problems and the grouping of ethical misconduct, fraud, corporate malfeasance and corruption. These statistics stood out because we recognize that increased economic uncertainty promotes rates of financial misconduct and because recent global economic indicators increasingly forecast a global market correction. Meanwhile, Canada has largely avoided major financial/liquidity crises and has maintained consistently lower levels of corruption through its history. But while these macro realities have helped insulate us from many global threats, risks to our Canadian economy are real and, even on a micro level, can disrupt your organization.
Looking deeper, crisis triggers were similar between Canada and the rest of the world, with technology disruption or failure landing at the top of the list. By comparison, the United States is significantly more concerned about natural disasters and cybercrime.
Does this mean that Canadian businesses should sound the alarm and prepare for a wave of frauds and disruptions? Likely not, but it’s never a bad time to build organizational resilience to prevent and be better prepared for a crisis should anything occur.
The chain reaction of crisis
The effects of a crisis can be great and far reaching, touching many aspects of a business, from valuations to employee morale. In fact, ancillary crises can often deliver equal, if not even greater, damage to an organization than the initial event. 21% of Canadian respondents who experienced crises said their business reputation suffered. Other leading ancillary crises include operational disruption, challenges in the marketplace and environmental damage.
No matter how, when, or where it hits, a crisis will constitute an organizational stress test. The cumulative chain reaction of crisis can wreak havoc over time, but it also reveals the stress fractures and gaps in the organization, whether—cross-functional or cultural. These are the starting points for strengthening your defences, improving preparedness to yield better outcomes.
The cost of crises looked similar in most regions, with economic loss as the most common result (49%), followed by new laws and regulations (24%) and environmental consequences (20%).
Emerging stronger
Many executives surveyed report that crises can prove beneficial to businesses in the long run. In Canada, more than one-third of respondents (36%) said they emerged from their most serious crisis in a better place. These findings fit with research we gathered three years earlier. In our 2016 Pulse on Crisis survey, 83% of global CEOs said crises that were well managed internally didn’t hurt revenue growth. In fact, 47% said these events actually helped businesses expand growth.
Benefiting from a crisis is not about luck. It comes from businesses having the poperating with the same set of facts, people across an organization are able to work as a team to make better decisions and have a higher chance of success. These companies are also invested in spending the time and money to analyze the root cause of a crisis and any secondary impacts so they can be better prepared for the next event.
The future of crisis
Crises are occurring more frequently today and their nature is changing, making preparedness more important than ever. Our survey finds that 90% of Canadian businesses expect to face a crisis, and the top four crises are: cybercrime, competitive/market disruption, technology disruption/failure, and operational disruption/failure.
Experience matters, too. Respondents who have experienced one or no past crises put cybercrime as their top concern—but those that have gone through two or more crises are more worried about marketplace disruption, leadership transitions and technology disruption. Also, crises logically vary by industry. For example, cybercrime tops the list for businesses in the financial services and consumer market sectors, but transportation is more focused on terrorism and financial crises.
When can crisis be good for you?
Among Canadian businesses, there are real opportunities for improving processes to better prepare for when crises strike. Our global survey shows that in the wake of crisis, organizations who emerge stronger and create competitive advantage do five things:
- 1. Allocate budget to crisis management
- 2. Have a plan—and test it
- 3. Adopt a fact-based approach—and don’t neglect key stakeholders
- 4. Perform a root-cause analysis and follow up
- 5. Act as a team, and hold to your values
1. Allocate budget to crisis management
More than 4 in 10 (41%) of Canadian respondents who came out in a better place post-crisis allocated budget to crisis management before the crisis hit—and a nearly identical share (39%) actually saw their revenue grow after a crisis as a result. This underscores the benefits of investing proactively in having a clear crisis response program and governance structure.
2. Have a plan—and test it
When a crisis hits, there’s no substitute for “muscle memory”. By a margin of nearly two-to-one (54% versus 30%), organizations that had a crisis response plan in place fared better post-crisis than those who did not. And those that keep their crisis plan up to date and implement the lessons learned are four times more likely to come out on top. But make it holistic and flexible. Test it and revise it—then test it again.
3. Adopt a fact-based approach—and don’t neglect key stakeholders
Three-quarters of those in a better place post-crisis strongly recognize the importance of gathering accurate facts during the crisis. As you focus on your fact-finding and communications strategy, cast a wide net on the perspectives of every important stakeholder, both internal and external. Carefully consider their wide diversity of needs and interests, as well as the appropriate mechanisms for two-way communication for each stakeholder.
4. Perform a root-cause analysis and follow up
Those who ended up in a better place performed a root-cause analysis of their crisis handling. That substantial action takes the form of:
identifying and following through on key remediation initiatives to prevent or reduce the impact of the same type of crisis
looking around the corner by scanning the longer-term horizon for key risks and opportunities related to the crisis
5. Act as a team, and hold to your values
There is a strong correlation between great teamwork and great outcomes. A large majority of global companies who self-identify as being in a better place indicate that they responded to the crisis as a team, with similar majorities agreeing they had acted with integrity.
Most Canadian companies surveyed did not express a lot of confidence in the transparency of their communications during a crisis. Only 28% strongly agreed with the statement that they had responded with a fact-based approach, compared with 34% globally. Furthermore, about half of the Canadian respondents described themselves as being overwhelmed by the crisis and admitted that they had responded slowly.
Perhaps because Canadian businesses report suffering fewer crises than those abroad, they invest less effort in being prepared for an unexpected event. More than one-third (34%) of respondents reported that there was no executive who is designated to take charge in a crisis. And only 17% said they had put an executive in charge who has significant crisis experience and authority to direct an enterprise-wide response. These results differ noticeably from the global responses, which measured 26% and 22%, respectively.
More than one-third (34%) of respondents reported that there was no executive who is designated to take charge in a crisis.
Just as telling, almost one-quarter of Canadian respondents said their organization does not have any crisis response plan, and 42% reported that they do not conduct any crisis simulations or exercises (vs 33% global). Following a crisis, only 7% said they performed a root cause analysis, defined a remediation roadmap and committed staff and money to achieve it, while the global survey results is double the Canadian figure.
Here are a few takeaways as you begin your journey to crisis preparedness:
1. Crises will be more complex and harder to contain. Virtually all respondents expect to face an operational crisis in the future.
2. Assume everybody is always watching. With the hair-trigger attention of outside stakeholders—and the belief that whistleblowing is an ethical obligation—you will be expected to handle any crisis instantly and effectively.
3. You need a crisis leader. The future of crisis management requires a broad, tested response plan, ready to deploy from Day One. This can’t happen without one central person given the clear mandate and authority to develop a crisis management program and to be the final decision maker in an active response.
4. Crisis is a human event. Physiological and psychological impacts can be real on any of us when faced with a crisis. The needs and expectations of all your responders as well as your internal and external stakeholders are constantly evolving, and so should your welfare and communications strategies.
5. Be a crisis optimist. You can choose to see crisis as an element of strategic risk intelligence: an opportunity for maturity and economic growth that presents challenges as well as opportunities to inorganically advance.
Take our pop quiz based on our Global Crisis Survey
Canadian businesses need to prepare by defining who will lead their organization, what will be the expectations of various staff and how they will operate in a high-pressure environment.
Determine your organization’s crisis profile by answering six questions about crises—and compare your results to executives from around the world.
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