Filed Under:Claims, Catastrophe & Restoration

Smart strategies for effective crisis management

Preparing for the unexpected is a “must do” for every business

Every business needs to prepare for unexpected crises, but sometimes insurers are so busy helping their insureds that they forget to prepare their own companies. (Photo: Shutterstock)
Every business needs to prepare for unexpected crises, but sometimes insurers are so busy helping their insureds that they forget to prepare their own companies. (Photo: Shutterstock)

We live in an unpredictable time, and in the business world, things can turn upside down in a hurry and without warning. When a crisis hits, unpreparedness often results in problems ranging from a complete lack of a crisis plan to a failure to adhere to the plan once a crisis occurs. The most effective way to handle a crisis is to have a plan and not only update it, but make a regular practice of putting it into action.

Businesses should explore the various potential crisis situations they can face. Emergencies such as weather-related disasters, violence, fire and cyberattack plans should be charted out and regularly examined; however, business leaders should also be regularly looking out for business-oriented risks in their occupational areas. Vulnerabilities such as a public relations disaster, marketing, operations or IT crashes, or even the sudden death of key individuals can throw companies without a plan in place into full crisis mode.

Preparation trumps panic

It is important that businesses prepare like true emergency responders. Teams should not go into panic, but should be able to smoothly enact the plan. Think of it like a fire station: Firetrucks are constantly serviced and polished, hoses are hooked up, tools and equipment are properly organized and ready to be pulled from the shelf. That way, when the bell rings, they are fully prepared and can quickly move into action at a moment's notice. Business crisis plans should be no different. Every plan should be well-prepared, practiced and each individual should know their role and be ready to perform it at any time.

Crisis management plans should include an immediate response to a crisis, a business operations plan, and finally, a contingency plan for each potential situation. The particular defenses for each situation should be well-known and easy to apply once needed. Individuals throughout the company should know their roles and be able to execute them without hesitation.

Safety is the first priority in dealing with a violent or disaster-related situation. Weather emergencies and active shooter plans need to be practiced regularly so employees know not only their roles, but the role of the employee in the cubicle next to them to lend assistance if needed. Businesses with higher turnover should revisit and test their plans more frequently to ensure every staff member on any day is prepared to face challenging situations.

Damage assessments

Once everyone is deemed to be safe, companies should assess the damage from the situation and shift to the business operations plan to determine whether or not they can still meet the current needs of the enterprise. Can operations resume immediately or do you have to shift to a business contingency plan?

A key element to answering this question and handling any potentially disastrous situation is to maintain an up-to-date and comprehensive inventory. A regularly updated inventory and equipment audit is also crucial during the insurance claims process for crises such as theft or the destruction of a business. Video or paper inventory documentation is recommended to be updated at least annually. This is especially true for insurance providers servicing high net worth individuals or larger corporations.

An inventory and equipment audit not only helps during a claims process, but it becomes extremely valuable when entering the next stage of the crisis management plan – the business contingency plan. This plan will vary based on the company and industry, but typically includes factors such as alternative locations in case the company needs to relocate operations, the data recovery process, and how to source any needed equipment.

Recovering after an emergency

Essentially, if a brick and mortar business is impacted by a disaster, what happens next? Do you know where to go and how to get the assets needed to get the business back up and running? If so, how quickly can you do it?

Fundamental components of contingency plans need not only identify employee roles, but also individuals to take over certain areas in situations such as the sudden death of a company president or chief financial officer. Who is going to temporarily fill the role and the duties to keep the company moving forward? Will one individual be able to do so, or should it include a team completing the different tasks?

A contingency plan should also answer questions such as: What do we do if our IT system crashes, our company data is hacked, or one of our locations is burned to the ground? All of these are extreme and difficult circumstances, but far too often in news headlines companies say, “We didn't think this could happen to us.”

From an insurance perspective, businesses need to evaluate if they are able to self-insure or if they need to obtain insurance for different potential disasters or crises. If the need for insurance is identified, businesses should look for a policy that covers their unique needs with as few limitations as possible.

Prioritizing protection and fewer conditions will prove much more beneficial in the business recovery process than a plan with a lower upfront cost but strict coverage limitations that will either prevent or delay benefits. Securing benefit claims and receiving as much capital as possible early on is crucial in recovering from any crisis situation.

In order to be fully prepared, crisis management plans should be developed by the company's leadership team and a full cadre of advisors. Asset managers, legal counsel and insurance providers should work hand-in-hand in developing aspects of the plan to account for all possibilities of a potential crisis. The breadth and depth of these threats are constantly evolving and new crises arise every day. With this continuous cycle, crisis management plans should be updated and tested accordingly.

Crises come in all shapes and sizes and, although they can be forecasted to a degree, they are unpredictable. The best and only solution is to prepare accordingly with a team committed to developing and constantly evaluating the crisis management plan to ensure the business survives and continues to thrive.

Bill Kowalski ( is a principal and director of operations for Rehmann Corporate Investigative Services.

Featured Video

Most Recent Videos

Video Library ››

Top Story

20 safest airlines to fly with in 2018

To recognize those leading the way, released its annual list of the world's safest airlines. Of the 409 airlines it monitors, 20 stand out as the 'best of the best.'

Top Story

11 ways cars will be smarter in 2018

Connected vehicle technology, better electric batteries, and 'infotainment' systems are just three of the trends for insurers and claims specialists to watch.

More Resources


eNewsletter Sign Up

Claims Connection eNewsletter

Breaking news on disasters, fraud, legal trends, technology, and CE initiatives for the P&C claim professional – FREE. Sign Up Now!

Mobile Phone

Advertisement. Closing in 15 seconds.