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The shock waves from a crisis can travel far and wide — and then back again. So how do you contain the damage?
Crises hit without discrimination — penetrating every layer of the organisation, and affecting both internal and external stakeholders in unique ways.
Our data confirms the layered nature of crisis impacts. It crossed over from business relationships (74%), reputation (61%), and workforce morale (59%), to legal issues (57%) and beyond. Companies cited, among other effects, economic loss (57%), environmental consequences (20%), and long-tail fallouts such as new laws and regulations (25%) and political change (18%), as a result of their worst crisis.
But crises often travel in packs. And a crisis is never more dangerous than when it spins off one or several ancillary crises — each of which can create its own feedback loop of consequences, both internal and external.
Understanding the 3D dynamics of how a crisis might impact your organisation — and taking steps to forestall or at least minimise its secondary effects — is an essential part of crisis preparedness. That’s why we examined whether secondary crises (or crisis accelerators) followed or spun up in the wake of the initial crisis experienced by our respondents.
Here’s what crisis-experienced leaders told us: Regardless of the nature of that initial crisis, nearly half (47%) suffered an ancillary crisis that was operational in nature. The largest piece of that operational turmoil? Competitive/marketplace disruption (20%). Additionally, more than a quarter had to deal with reputational issues; 22% faced legal complications.
In keeping with our goal of creating an actionable crisis survey, we dove more deeply into the data we collected on 4,500 real-world crises. We created this powerful interactive tool to map the full range of impacts and secondary crises experienced for each category of initial crisis. For the first time, you can see the likelihood of specific impacts and ancillary crises that could arise from any initial crisis you might face.
Marketplace disruption is the most-mentioned ancillary crisis across all types of initial crisis. But it is significantly more common for those who had experienced a severe financial crisis (35%), suggesting that a liquidity problem can seriously hamper an organisation’s competitive position over many years.
Reputational crises seem especially treacherous, with one in four (24%) companies reporting at least one subsequent reputational crisis, and one in five (20%) seeing it cascade into another, connected to fraud or ethical misconduct (20%), or leadership transition (14%).
No matter how, when, or where it hits, a crisis will constitute an organisational stress test, capable of disrupting your company’s operations, both internal and external. And as it does, it will almost invariably distort your perception of what is actually happening and slow your response — exactly when you are most in need of accurate facts with which to take appropriate action.
The cumulative “chain reaction” of crisis can wreak havoc over time. But it also will reveal the stress fractures and gaps — be they cross-functional or cultural — within the organisation that made it more vulnerable in the first place. These are your starting points for strengthened defences, improved preparedness, and better future outcomes.