The Power of Foresight in Crisis Management

Hindsight Isn’t All That

If anything, the current crisis has taught us that hindsight is not as great as it is made out to be.  However, by now it should be evident that foresight is a wonderous thing that is not used as much as it should. Crisis Management based on foresight is proactive and those based on hindsight are reactive. Proactive Crisis Management will assist in quick resolution, but reactive Crisis Management will leave companies ‘chasing’ the crisis. So why is it that many companies lack foresight when it comes to threats and risks?

Business welcomes foresight when it delivers positive business indicators that tell a good news story so foresight in business is a well-exercised ‘muscle’. Threat and risk foresight are more problematic for several reasons including:

• Threat and risk foresight usually bring bad news, businesses do not like bad news.
• It is a natural human disposition to look on the bright side and ignore the downside.
• Many companies suffer from short-termism being focused on the next quarter’s figures
• It is hard to justify contingency plan spending to stakeholders for something that may never happen
• Some crises seem so daunting that it is easier to ignore them and hope
• Overconfidence in management ability to deal with the unforeseen

Where threat and risk foresight takes place, its scope is often bound to issues that can be seemingly addressed by insurance, legal defence, or clever communication.

Was COVID Really a Shock?

The COVID crisis raises some interesting questions from a crisis management perspective.  COVID should not have come as a shock and was entirely predictable, there were at plenty of warnings and indicators.  In the early 2000s, there was the Severe Acute Respiratory Syndrome (SARS -COVID 1) and in 2012 there was an outbreak of Middle East Respiratory Syndrome (MERS).  So why weren’t these taken as warnings and opportunities taken to plan for the next outbreak?  Governments and some companies seemed to take reassurance from the fact that neither developed into global pandemics rather than seeing them as a warning.  In partial defence of business, governments did little to set the context or expectations for businesses to take the threat of a pandemic seriously, though the evidence was there.  Of all the sectors, it is a little surprising that hotel companies and airlines were not at the forefront of pandemic crisis planning because their businesses facilitate global travel and would be on the commercial frontline. 

Hopefully, this crisis will help change crisis management culture to one of constructive pessimism rather than dangerous optimism.  Some questions that could assist positive change:

• Is your Crisis Management program proactive or reactive?
• Is there a Crisis Management Working Group consisting of representatives from all parts of the business?
• Does the Working Group work up crisis management scenarios using their insights and foresight?
• Are your crisis scenarios based on intelligence and evidence?
• When scenarios are discounted, is the decision based on intelligence and the reason for discounting recorded?
• Does your intelligence and horizon scanning capability provide effective foresight on which to build effective crisis management and inform decision making?
• Does the business have the resources to provide intelligence analysis and assessment to extract value from the intelligence and enhance foresight?
• Are crisis lessons learnt used to inform foresight?

Business leaders need to step up and provide leadership to their Crisis Management programs

Critically Crisis Management culture depends on active engagement, interest, and oversight by senior leadership. Senior leadership should:

• Drive the crisis management agenda and empower their Risk Managers and Crisis Teams.
• Hold their subordinate leadership teams accountable for Crisis Management within their area of responsibility.
• Challenge their businesses’ crisis plans and play the devil’s advocate.
• Facilitate a culture of open dialogue that enables subordinate managers to speak truth to ‘power’
• Direct Risk Managers and Crisis Teams to plan for a range of impacts for each crisis from worst to best.
• Be mindful of the ‘Emperor’s New Clothes Syndrome’ when subordinates tell senior management that everything is good/under control when it is not.

The COVID crisis has given all the reasons required for companies to conduct root and branch reviews of their resilience programs and come out of this situation more resilient and confident. We wish everyone in the hospitality industry good luck and we’re rooting for you all. 

David Langhorn

Senior Director

David Langhorn is a Senior Director for Risk Resiliency. He focuses on delivering imaginative and effective services combining his extensive military and commercial experiences.