A Fundamental Question: CM or Corporate ER? Part I By Peter Hill & Jim Truscott

Companies facing a crisis must know what they are doing in their boardroom or corporate think-tanks will miss the opportunities brought on by a crisis. Without an accurate knowledge of what is happening outside the boardroom, the crisis leader cannot act effectively; misjudging the time to snap out of Corporate Emergency Response (ER) and switch to Crisis Management (CM).

It is when you are in crisis that your competitors flourish. In some industries, businesses do not thrive on stability; in the oil industry, instability drives the oil price higher, especially when there are military threats to oil producing nations. Higher oil prices directly translate to higher company profits (gross) worldwide; however, if you are caught in the unstable situation, a crisis, your profits will diminish. This earnings imbalance, a marked drop in the share price, will put you higher on the take-over list. In such a position, your company will not survive if you only consider emergency management attitudes. At the corporate level this becomes Corporate Emergency Response or corporate ER.

The impasse is not the initial indulgence in Corporate ER, but missing the business opportunities with Crisis Management. In a crisis, it is natural to gravitate or converge toward the emergency effort; care and familiarity are strong aspects within the multifaceted human nature, this is further reflected in business through emergency management attitudes to typically 'protect people, the environment and assets'. There is the strong temptation for CM teams to concentrate and become caught in the domestic bearing of a crisis and act as a corporate ER team and not make use of CM.

Very dynamic and difficult business environments (characteristic of volatile countries) require pragmatic management, this is not so much different from crisis in a politically stable regime. To move your company beyond the crisis; you need to apply a pragmatic management style in a dynamic organisational structure: apply CM.

Crises can be good. Companies need to use the knowledge a crisis can bring use crises to catapult themselves into the future; they need a leader to begin cultivating the company's future. Ultimately, crisis leadership determines the focus at the corporate level. For a business to thrive on a crisis, it must have crisis leadership.

Crises are an event that challenges the survival of a company. For Multinationals this can apply to a geographically local company or globally across the entire company.

Crisis Management is a process involving three key principles at the corporate level: Business Continuity, Liability and Reputation (BCLR or "BeCLeveR"). They are utilised to advance a company from a crisis into a positive-growth future through strategic company manoeuvring and positioning.

Corporate ER considers the domestic impacts caused by a crisis; it is corporate support for the operational level ER. It typically has primary responsibility for communicating with media and critical stakeholders. Like the operational level, corporate ER aims to mend the crisis by protecting people, the environment and assets.

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