Crisis Management: Why the First 72 Hours Matter Most

Throughout the exercise, Martin Pergler, risk expert, and Becca O’Brien, crisis management expert, both from McKinsey & Co., stressed that while crises and ‘black swan’ events cannot actually predicted, there are several key ways that organisations can get ahead of the game when an incident occurs.

The first 72 hours in a crisis are so incredibly important, because they can dramatically impact the next months or years for your organisation, O’Brien noted. “In our experience, we found it useful to organise those decisions into six dimensions: Regulatory or legal, financial, reputational, operational, market or industry, and leadership,” she said.

O’Brien provided attendees with a list of key actions that pertain to each dimensions that treasury and finance professionals can take to keep a bad situation from becoming a catastrophic one.

  • Regulatory or legal: Engage regulators in your jurisdiction of operation and the government leaders to avoid them taking stances or making statements in the early hours that they then can’t go back on. Announce an internal investigation with a credible leader in charge of it.
  • Financial: Estimate your ‘worst case’ cash needs in the next three months, and identify the sources that you’ll go to if things become dire. Ensure that you have continued or emergency access to sources of credit, depending on how the crisis unfolds.
  • Reputational: Identify the critical executives who have the bandwidth, the leadership experience and the knowledge of the company, the industry and its stakeholders to lead you through the crisis. Make sure you backfill them so that they’re not trying to do two jobs at once. Engage aggressively with a day one stakeholder message for both top allies and also your top threats.
  • Operational: Ensure the safety of your operations as they are still running. Consider shutting down any operations that could worsen the crisis. Identify resources that could solve the crisis faster. Delay, suspend or accelerate your strategic agenda as needed; nothing makes you look more out of touch than continuing a series of press releases or announcements when all they associate with your brand is the crisis. Create a two-way dialogue with your employees, as they are both stakeholders and an important asset.
  • Market or industry: Preempt competitor activity. Identify the competitors that stand to gain from this crisis and think about how you might counter their likely courses of action. Call and reassure your top customers immediately to keep the dialogue running with them so they can maintain as much confidence as possible.
  • Leadership: Define and drive the strategic end state that you desire. Let your core values guide you in your actions. It is important in moments of crisis for teams to touch back on the core values that have guided them previously. 

“What we find over and over again when we go in and help somebody who is in a crisis, is that one of these pillars has somehow been forgotten,” said Pergler. “It’s not that they decided that their priorities had to be two or three of the others, but one just somehow fell to the wayside because of the discussions that happened in the first 10 minutes.

“So if there’s any chance that something could go wrong, we would encourage you to somehow put in place the tags in your organisation’s brain so that when things are happening, you stop and look at the big picture.”

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