Your Company May Already Be In A Crisis?

July 8, 2016

You may already be in a crisis and not know it----One of the main problems with managing a crisis is that the crisis event may have occurred long before a company realizes it is actually in the middle of a crisis. Companies tend to disregard the warning signs of a crisis up until the very end, leaving very little room to maneuver and limiting a company’s options. If you scratch the surface of a corporate crisis you will find the signs were there months in advance.  Yes,  there was indeed trouble but departments don’t like to raise red flags.  People don’t want to lose out on bonuses-it human nature.  Who wants to rock the boat and get blamed ? That is precisely why you should think of your company as already being in a crisis or in a pre-crisis stage.  Because, it probably is.

When talking to your staff or to other departments, how often have you heard the phrase “That the way we have always done things.” Just because corporate processes have been done one way doesn’t mean that the best way or even in todays’ fast changing world- the right way.  Even after 2008 many companies continued to use the failed metrics that got them into trouble in the first place.  Even the credit markets haven’t changed as much as you would think after 2008.  Why?

I truly believe that once processes are created in a corporate or bureaucratic environment, it is as if the processes have been set in stone. They are very hard to change.  Even if the world around the company has changed.  It is human nature to accept what has been done in the past.  Few people want to “rock the boat” even if the proverbial boat is actually sinking.  Companies get into real trouble because of this.  What happens if the company’s business model actually is out of date and is no longer viable?  Just because it worked in the past doesn’t mean it will work in the future.  What about your company’s products and services?  If your company relies too heavily on a particular product and that product is found defective or non-conforming that could spell catastrophe.  Has your QC department verified all production protocols have been met?  What about sub-components?  Does your company rely on third parties to provide key components?  Have you outsourced your service department to a third party service provider? Are you monitoring your third party suppliers?

I therefore caution everyone not to blindly accept the status quo even when it appears things are humming along. What about your company’s risk management processes? Are those up to date?  Risk managers as well as in house counsel and other managers should be challenging risk management metrics on a regular basis.  Counsel should be auditing departments on a regular basis.  Does your compliance program really work?  Maybe it did 5 years ago.  But what about today

If local or national laws have changed maybe the current manufacturing processes are out of date. If the products that your company manufactures or the services it provides have changed maybe the internal processes surrounding the review of those products and services are out of date.  What about the current social environment?  When reviewing your current product liability review processes have you factored in the new risks created by the Internet of all Things?  These risks are real.  Are you ready for them?

It is a fundamental truth that all things change. Some change faster than others.  Regardless, don’t rely on your old or standard risk management processes to continue to provide the same level of comfort they did in the past.  Continue to review and to modify them if necessary. Dont rely on your manufacturing processes- they could also be out of date.

Remember; whether you know it or not, your company might already be in a crisis. Maybe it is time for a crisis management review.


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