This is according to the findings of a new Deloitte global survey which found that 60 per cent of respondents are keenly aware of the increasing threat of organisational crises, and a full 80 per cent having had to actually mobilise their crisis management teams at least once in the past two years.
Yet the survey found that only 17 per cent of the 500 senior crisis and risk executives surveyed actually test their capability.
Deloitte Australia crisis management leader, Tony Morris, said this is a risk.
“From experience we know that it’s the ability to test, rehearse and simulate crises that ensure organisations are ready to respond with skilled leadership and plans that work,” he said.
“Being prepared, knowing how best to deal with incidents or issues-led crises, and how to respond to them swiftly and appropriately, are all critical skills to successfully protect your customers and people, your operations, and of course, your reputation and brand.
“That goes for the external response in market with your customers, communities and third party providers, as well as, and often most importantly, internally, with your people and operators.”
The Deloitte study showed that the top types of crises worldwide are cyber attacks (46 per cent) followed by safety incidents (45 per cent).
The findings in this Deloitte 2018 crisis management survey, “Stronger, fitter, better: Crisis management for the resilient enterprise”, built on those of the comprehensive Deloitte’s 2015 study “A crisis of confidence”.
Mr Morris said that the report showed that organisations that take a systematic approach to avoiding potential crises are adept at crisis management and can swiftly manage those that happen.
He said the result is better care of their clients and better value in market.
Mr Morris said the stark fact, according to the Oxford Metric and AON Reputation Review, is that there is an 80 per cent chance of a company losing at least 20 per cent of its value in any single month over a five-year period, due to the impact of a crisis on reputation.
And that in each case researched, he said the value loss was sustained.
The Deloitte Crisis of Confidence survey also revealed that 70 per cent of board members said it took their organisations up to three years to recover reputation following a crisis. And 16 per cent said it took four years or more. Financial and operational crises had similar long recovery times.
It also found that many crises could have been averted according to almost 90 per cent of the organisations that conducted reviews after they had experienced a crisis.
Mr Morris said that platform delivered APIs (application programming interface) are very useful in both responding to crisis and conducting simulation exercises.
“They do this by collecting data on the organisation, and pointing to which teams are available, where, and when.
“Given the need to improve detection and early warning systems, and we now know, invest more effort in prevention, it pays to be able to do more to identify potential crisis scenarios.”