Are We Losing the War on Corporate Crisis?
Recent data paints a mixed picture
I don’t know about you, but as of late, it seems that corporate crisis is on a troubling upswing. We’re not just seeing more crises in raw numbers. The qualitative shift in the nature of crises is just as troubling. Crises are becoming more intense in impact and more costly to recover from.
In turn, businesses are boosting their investments in safety and security management. The sub-market for incident and emergency management technologies, for one, is scorching hot. The growth picture looks robust well into the future, with analysts forecasting industry growth topping out at nearly USD 125 billion by 2023.
These investments are critical, no doubt. But where’s the evidence of their impact? After all, the corporate crisis picture still looks gloomy, the news coverage of business crises particularly stark.
How bad is it for companies out there? The Institute of Crisis Management (ICM) counted no fewer than 790,000 negative stories in 2018, according to its Annual Global Crisis Report.
Those quarter of a million-plus negative stories represent a slight decrease from 2017. Right below the fold, however, statistically significant increases in key corporate crisis categories mean that businesses have plenty of work left to do.
Disasters and catastrophes doubled. An ominous shift, as that category accounted for less than one percent of headline-grabbing crises two years ago. Now, the percentage verges on ten. The financial impact of those disasters is likewise huge. Last year, catastrophes like the California Camp Fire pushed the overall cost of natural disasters to more than USD 155 billion.
Cyber incidents also saw a major bump. Big ticket stories like the Facebook, Google+, and Marriot disclosures contributed to a staggering 65 percent jump in the number of reportable cyber-crime stories. What’s more, the relatively high incidence of those data breach stories in the technology sector has made that industry one of the most crisis-prone.
Another sharp increase in headline-grabbing crises came in education. In the U.S., specifically, the education sector was hit by a wave of labor disputes, culminating in mass teacher strikes in the states of West Virginia, Oklahoma, Arizona, Kentucky, Colorado, and North Carolina. Deadly school shootings, like the mass casualty shootings at Marjorie Stoneman Douglas High School in Parkland, Florida, also dominated the headlines.
Workplace violence incidents didn’t just happen at schools, though. We also witnessed public shootings at the YouTube campus in Silicon Valley, the Baltimore offices of the Capitol Gazette, and at the Tree of Life Synagogue in Pittsburgh.
So, what are the takeaways? Are we just fated to lose the war on corporate crisis? The stubborn persistence of so-called smoldering crises, crises which originated from critical issues left unattended, offers a clue on how to move forward.
It was smoldering crises, in fact, that dominated corporate crisis news coverage. A full two thirds of negative new stories could be traced back to smoldering crises. Sudden crises, on the other hand, accounted for a mere third.
Businesses might be investing in crisis management tools and practices. But those firms can’t afford to neglect the business risk that comes from critical issues, as well. Crises aren’t just abnormal events; critical issues fall under the banner, too. And, if your crisis management tool can’t prepare you to respond to both, don’t be surprised if you end up on next year’s report.