Crisis management essentials: Preparing for the unexpected

What are the key strategies organisations need to effectively prepare for crises, manage stakeholder expectations and protect their corporate reputation?

There has been no shortage of crises in the business world in recent times. From cyberattacks and data breaches to financial collapses and natural disasters, organisations across the globe have faced a myriad of challenges that have tested their resilience and crisis management capabilities.

In this complex landscape of potential crises, effective management and response strategies are more critical than ever. One expert who has been at the forefront of guiding organisations through their most vulnerable moments is Sue Cato, one of Australia’s leading crisis management specialists. With decades of experience under her belt, Ms Cato has helped numerous Australian and international corporations navigate business-critical issues and corporate challenges.

In an interview for The Business Of, a podcast from UNSW Business School, Ms Cato spoke with Dr Juliet Bourke, Professor of Practice in the School of Management and Governance at UNSW Business School, about the importance of preparation, truth-telling and understanding stakeholder expectations in crisis management. Ms Cato’s approach, honed through years of hands-on experience, offers a roadmap for organisations seeking to build resilience and effectively manage crises in an increasingly volatile business environment.

Preparation is key to crisis readiness

While it’s impossible to anticipate every potential crisis scenario, Ms Cato told Dr Bourke that having a solid foundation of preparedness is crucial. This includes identifying key team members, establishing clear roles and responsibilities, and ensuring external advisors are in place before a crisis hits. While organisations might try to prepare for numerous scenarios, the focus should be on having the right people and processes in place.

Ms Cato emphasised the importance of regularly reviewing crisis management plans to ensure they remain relevant and accessible: “People think that you could do 500 different scenarios. Quite frankly, you could do 1000 different scenarios and maybe not map the right one. But what you need to do is actually say, if I do have an issue, who are the people? Are they prepared? Are they the right people? Do you have external advisors in place?” said Ms Cato, who also highlighted the need for crisis management plans to be easily accessible and up-to-date. “And if you do have a crisis management plan, and it’s in the bottom drawer, when was the last time someone read it?”

According to Ms Cato, different types of crises require different teams. “You do have options, but not all of them are going to be relevant,” she noted. “So for instance, if it’s a cybersecurity issue, that’s one specific area, you know. If it’s sexual harassment and bullying, that’s a different team that you’re looking at. If it’s a market performance issue or a safety issue, different people.”

Read more: As cyberthreats evolve, businesses need more than just tech solutions

Not everyone is cut out for crisis management

Not all leaders perform well under pressure, Ms Cato asserted. She recounted an experience preparing a major bank executive who, within seconds of a practice session, demonstrated he was unsuitable to face the media. “I remember prepping a major bank executive on one occasion, and within about three seconds, I had him swearing at the camera. And I literally came out of it and went, ‘He’s never to front the media. Ever, ever, ever, ever,’” Ms Cato recalled.

This anecdote underscores the importance of identifying the right spokesperson and having backup options in place. To help prepare, she advised running scenario tests to identify which team members perform well under pressure and which may need additional support or alternative roles during a crisis. “You know we quite often run scenarios for clients, and it’s amazing – everyone thinks they’re totally prepared, but the moment when you actually test it, you can see the people who should be involved and the people who shouldn’t be involved.”

Ms Cato emphasised that crisis response is not just about having a plan on paper, but about understanding how individuals will react under intense pressure. Some people who excel in their day-to-day roles might struggle in crisis situations, while others may unexpectedly rise to the challenge.

Truth-telling: The foundation of effective crisis management

Throughout the interview, Ms Cato repeatedly emphasised the importance of truth-telling in crisis management. She advised against making assertions without certainty and highlighted the dangers of filling information voids with unverified statements. Making unfounded statements can severely damage trust, making it difficult to recover credibility later, and Ms Cato advocated for transparency, even when full information is not available.

“Don’t say stuff to the media or your stakeholders unless you know it’s true,” Ms Cato cautioned. “And sometimes people feel this desperate need to fill a void and so they’ll go out to the media and or other stakeholders and make an assertion about a situation which is then found out not to be correct. Now, where that gets you is you either didn’t know or you’ve lied, and it’s incredibly hard to get trust back.”

It’s acceptable to acknowledge a situation, outline the steps being taken to address it, and commit to providing updates as more information becomes available. This approach helps maintain credibility and prevents others from filling the information void with potentially harmful speculation. “Often, it’s totally fine to say, ‘This is occurring. This is what we’re doing about it, and you can trust us and we’ll come back to when we know more,’” she said. “You’re not leaving a void, you’re actually getting your voice out there. The other issue that people talk about is if you leave a void, other people will make up their own minds about what’s going on and fill that void very unhelpfully for you.”

Read more: Australia should adopt 'gold standard' in data laws after Optus leak

Managing reputation in crisis situations

Reputation is fundamentally about meeting expectations, and when individuals or organisations behave in unexpected ways, Ms Cato said this can lead to reputational damage. “What reputation is really all about is people have an expectation of how you’ll behave in a certain situation, and it’s when people behave in a manner that’s not expected, is when you get a dislocation,” Ms Cato explained.

“So if someone you expect them is an absolutely shocking human, drug runner, et cetera, and suddenly turns into Mother Teresa that’s shocking and dislocating. But equally, when you’ve got somebody who expect the most fabulous performance and integrity and all of that stuff and you find out that, in fact, there’s a fatal flaw, that’s when reputations get damaged.”

Ms Cato noted that while rebuilding a damaged reputation can be challenging, it is possible with the right approach. “I used to think that some people’s reputations could never be rebuilt, but actually, as I’m getting more mature I actually think people can be brought back no matter how bad the situation is,” said Ms Cato. “But it depends on being able to embrace what the problem was – acknowledge the issue and be able to give people a reason to believe that it won’t happen again.”

The importance of consistent values in crisis response

How an organisation handles a crisis is a direct reflection of its values, Ms Cato explained. Importantly, if an organisation claims to prioritise certain values, such as environmental, social, and governance (ESG) principles or employee welfare, but fails to live up to these commitments during a crisis, she said its reputation will suffer.

“Once again, it comes back to reputation – if you’re going out there and saying that you are absolutely committed to, you know, ESG and looking staff first and all of those sorts of things and then you don’t actually deliver on that, your reputation, whether you’re an individual or a corporation, will be damaged,” Ms Cato warned.

This underscores the importance of aligning crisis response strategies with an organisation’s stated values and principles. It’s not enough to have values on paper; they must be lived and demonstrated, especially during challenging times. As such, she suggested that organisations should view crises as opportunities to demonstrate their commitment to their values. By doing so, they can potentially emerge from a crisis with a stronger reputation and increased stakeholder trust.

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Proactive risk management to prevent crises

To avoid finding oneself in the midst of a crisis, Ms Cato recommended implementing robust risk management processes. She stressed the importance of creating an organisational culture where potential issues can be flagged early, even if they may not develop into significant problems.

Organisations should encourage their members to voice concerns about potential issues, no matter how small they might seem, according to Ms Cato, who said this proactive approach to risk management can help prevent small issues from escalating into full-blown crises. “I think it’s really important to make sure that your organisation is very aware of where problems can come from and be able to actually flag something,” Ms Cato advised. “So to be able to say, ‘Look bit worried about X, it might go absolutely nowhere, but can we have a look at it?’”

She emphasised that this approach can help organisations address potential issues before they become unmanageable: “So it’s an organisation that wants to know what’s going on, and if you can catch things early, often they don’t become massive problems. So the ability for proper risk management – smaller and bigger risk management – is really critical to actually keeping a calm life.”

This proactive stance on risk management aligns with Ms Cato’s overall philosophy of preparation and transparency in crisis management. By fostering an environment where potential issues are openly discussed and addressed, she said organisations can reduce the likelihood of being blindsided by a crisis.