Commentary From Crisis Management Expert Edward Segal, Bestselling Author of the Award- Winning Book “Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies” (Nicholas Brealey)
If business leaders need any more reasons why their companies should prepare for a crisis, then a new dire warning about the economic impact of climate change and a report about the frequency of crises could move them to act now.
“The head of the European Space Agency (ESA) has warned economic damage from heatwaves and drought could dwarf Europe’s energy crisis as he called for urgent action to tackle climate change,” Reuters reported.
“Director General Josef Aschbacher told Reuters successive heatwaves along with wildfires, shrinking rivers and rising land temperatures as measured from space left no doubt about the toll on agriculture and other industries from climate change.”
“Today, we are very concerned about the energy crisis, and rightly so. But this crisis is very small compared to the impact of climate change, which is of a much bigger magnitude and really has to be tackled extremely fast,” he said.
Crisis News And Trends
Then there are the findings of a new report from the Institute for Crisis Management that was released earlier this month.
The 2021 ICM Annual Crisis Report is a compilation of news, trends and highlights industries that were most prone to the crises last year. According to the report, the catastrophes category again took the top spot at 36.6% of all news items tracked, followed by whistleblowers, consumerism/activism and executive dismissals.
“My advice for business leaders remains steadfast: invest in crisis planning and training,” Deborah L. Hileman, president and CEO of the Institute for Crisis Management, said via email.
“The cost of preparedness is a drop in the bucket compared to the price of a crisis that strikes absent a strategy. Evaluate risks and vulnerabilities objectively, without bias. Make sure the plan addresses the risks that are deemed highly probable or highly impactful on the business,” she advised.
The list and nature of crises that can threaten a business seem to increase by the day. They include the following, according to a survey of CEOs and crisis management experts and observers.
Weaponization Of Energy And Food
“Among the most serious crises facing businesses is Russia’s weaponization of energy and food, resulting in the damaging global impact of petroleum as a precursor for plastics, fertilizer, and a multitude of industrial and consumer products,” said Michael Susong, senior vice president of global intelligence at Crisis24 and a former CIA officer, via email.
“We’re about to see many businesses hobbled by the developing supply chain snapback,” predicted Corey Donovan, president of Alta Technologies, via email.
“Companies have been filling shelves with side chain materials in order to address recent backlogs, but their traditional product allocations are going to flood their docks as manufacturing comes back online and shipping channels loosen up.
“Brands who have over-indexed on their procurement will face the most pain, as they take losses on liquidated inventories alongside write-downs on unsold product,” he said.
“The most serious crises facing businesses in 2022 and beyond is cyber security and how most companies are totally unprepared for a cyber attack,” said Alex Harrington, co-founder and CEO of SecureCo said in a statement.
“After a long period of complacency and perfunctory cyber defense, it has now become abundantly clear that most businesses are susceptible to cyberattacks and the hacking of proprietary information.
“Most businesses are completely outmatched, and high-profile hacks like Solar Winds and Colonial Pipeline have clarified that the stakes are very high. In fact, in the case of SolarWinds no alarm bells went off, as this was clearly about espionage with no intent to disrupt, taking 14+ months to discover,” Harrington observed.
“Inflation causes all prices to rise, and that includes commercial space rent,” Baruch Labunski, CEO of Rank Secure, noted in a statement.
“Inflation on gas, products, utilities [and commercial rent space] has risen more than 200% since January of 2021. That must be figured into pricing, and businesses are finding it challenging to keep customers interested with higher pricing. After all, they are also suffering from high prices [on] everyday items,” he said.
“Taxation is one of the biggest concerns for businesses,’’ Labunski pointed out.
“Congress just passed a bill that raises taxes significantly and includes the additional 87,000…IRS agents to be added to government coffers. Many businesses can’t afford such increases or defend themselves against audits. Audits, along with [the] seizure of computers and documents, could easily close many small and mid-size businesses,’’ he said.
Pandemic And Rising Business Costs
“A turbulent economy, the long-term effects of the pandemic, and rising costs for businesses are all serious financial crisis situations facing businesses in 2022. Tackling one of these factors alone would keep CFOs and financial professionals awake at night,” observed Daniel Docherty, director of strategy at Advanced Financials.
“Yet when they all play out at once, it becomes more crucial than ever to protect your business’s financial health. In times like these, it’s easy for the mind to stop/start without really putting down any concrete solutions for belt-tightening, reassessing ship-steadying, and fresh thinking that the current climate requires,” he noted.
“Peering into the uncertain future, businesses need to think beyond traditional bottom-line metrics and put purpose and trust at the forefront of their strategies. The time is now for them to take the initiative to transform the finance function into a strategic and value-driven powerhouse both now and in the future,” Docherty recommended.
Allegations Of Misconduct
Employers must recognize that they are in an increasingly binary position as it relates to allegations of misconduct—especially those around allegations of discrimination based on race, ethnicity, sexuality, and gender,” Kia Roberts, principal and founder of Triangle Investigations, said via email.
Impact Of Discrimination Tactics
“The discrimination tactics that attach to these prejudices within an organization can literally be devastating for the organization—as related to productivity, employee turnover, and overall employee satisfaction,” according to Roberts.
“Employers must realize that larger aggressions and microaggressions are still occurring while employees work remotely or in a hybrid working arrangement. Managers can still display discriminatory behavior while employees work remotely, and for an organization to not recognize this and create mechanisms for combating against this opens the organization to tremendous liability, both legally and reputationally,” she warned.
“It is very wrong-headed for employers to think that the risk of this exposure has diminished because of so many employees working remotely. Cultural competence, sensitivity, and emotional intelligence [are] still very much required as it relates to the employee experience,” Roberts counseled.
Edward Segal is a crisis management expert, consultant and the bestselling author of the award-winning Crisis Ahead: 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies (Nicholas Brealey). Order the book at https://www.amazon.com/gp/product/B0827JK83Q/ref=dbs_a_def_rwt_bibl_vppi_i0
Segal is a Leadership Strategy Senior Contributor for Forbes.com where he covers crisis-related news, topics and issues. Read his recent articles at https://www.forbes.com/sites/edwardsegal/?sh=3c1da3e568c5.