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Crisis Management -Sudden Crisis-
Recently, we have encountered sudden crises caused by accounting frauds, recalls, violations of laws and regulations, and so on. Several of these incidents have occurred at listed companies, which are strengthening internal compliance and internal controls, and crisis management has become an important management issue.
Difficulty in responding to crises
The difficulty of responding to a crisis lies in its nature.
- Employees at the site where the crisis occurred and management are strongly motivated by the following: "I want to respond internally and keep this closely held as much as possible" and "I want to minimize our level of effort as much as possible." As a result, they may underreport or underestimate the situation.
- Even in the event that a number of difficult decisions are required that could affect the survival of a business in a short period of time, ordinary companies frequently do not possess the special know-how to deal with such situations.
All possible preparations should be made in advance. Without underestimating and taking all possible measures in the face of a situation
- The most important issue in responding to crises is preparation and prevention, such as the expansion of compliance and internal controls, the development of risk management and response systems, the development of crisis response and management manuals, and simulations of crisis responses.
- There are many cases in which the situation is underestimated, the initial response is erroneous, and the rapid expansion of damage makes it difficult for the business to continue. In the event of a crisis, it is important to recognize the importance of the initial response and to manage following events accordingly.
Examples of Support for PwC's Crisis Response
Major automakers
The company lost social credibility due to recall concealment, etc., and became in a critical situation in terms of cash flow. PwC provided crisis response support, including a detailed analysis of cash flow.
Automotive part manufacturer
The company found that a recall related to safety parts had occurred, resulting in a large loss and financial burden. PwC provided crisis response support, including cash flow management and stabilizing financial transactions.
Large electronic manufacturer
Although the company made a large-scale investment prior to the Lehman Shock, demand declined sharply thereafter, and it became difficult to secure funds to repay loans. PwC prepared a structural transformation plan based on a close examination of the client’s cash flow and assisted with crisis response.
Major global airline
The company experienced a variety of risk events, and in addition, the impact of the Lehman Shock and other factors caused financial performance to deteriorate, leaving the company in a critical situation. PwC provided crisis response support, including the development of a restructuring plan.
Food manufacturer OR products company
The company was facing a critical situation after being prohibited from operating due to a violation of laws and regulations. PwC supported the client’s crisis response by operating its crisis management steering committee.
PwC's crisis response service area
In the event of a crisis, there is a sudden increase in non-daily operations related to management, financial, and legal matters. PwC works with legal counsel and other specialists in specific areas to provide comprehensive support for efforts to manage the crisis and return to business as usual.
PwC's Strengths
- World-Class Global Business Revitalization and Crisis Response Capability
- Japan's top-level crisis response and business recovery experience with proven methods
- Deep insight into a wide range of businesses and industries
- Hands-on crisis response and management support
- High level of expertise in finance and accounting
- High level of expertise on loans and financing
- Our team’s wide range of backgrounds and expertise (bankers, accountants, lawyers, industry employees, strategy consultants, etc.) capable of responding to diverse crisis situations
Overview of PwC's services
Preparation (avoidance and preventive measures) prior to the occurrence of a crisis
Efforts to avoid and prevent crises are of paramount importance. We identify potential risks and assess the potential impact through risk scenario and controls analysis. We also help our clients prepare for crises through simulation and training, the development and enhancement of, crisis management playbooks,, the assessment and enhancement of existing crisis management programs, and the improvement of compliance measures and internal controls.
Prompt and effective response in the event of a crisis
In the event of a crisis, critical stakeholders need to respond promptly and appropriately.
We provide critical support to our clients, including internal and external communications (media, regulators and other stakeholders) necessary for effective crisis response, investigation of the root causes, operation of crisis management steering committees, formulation of measures to prevent recurrence, enhance business continuity plans, risk assessment, impact analysis and mitigation, formulation of crisis response plans and playbooks, and financing and equity reinforcement.
Business recovery measures after crisis response
After the crisis, it is essential to restore trust with critical stakeholders such as employees, shareholders, regulators and the public, and to restore the value of the business.
We provide consistent support, from consideration of KPIs and restoration of business value to implementing and monitoring the effectiveness of enhanced controls.
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Our Team
Partner, PwC Advisory LLC
Partner, PwC Advisory LLC
Partner, PwC Advisory LLC
Masato Yamagami
Partner, PricewaterhouseCoopers Japan LLC
Partner, PwC Risk Advisory LLC
