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As companies go through a tough phase amidst the coronavirus pandemic, a PwC survey says that companies should separately allocate funds for crisis management.
The Crisis Survey by PwC India titled ‘Crisis Preparedness: An imperative to stay competitive' said: "Globally, almost 37 per cent of companies better-placed post-crisis had allocated a crisis management budget before it hit – and nearly 50 per cent saw their revenue grow due to this."
It also said that companies should have a plan to deal with a crisis situation. When a crisis hits, a documented crisis management plan is indispensable, it added.
"By a margin of 54 per cent vs 30 per cent, organisations that had a crisis response plan in place fared better post-crisis. And those with up-to-date crisis plans were four times more likely to come out on top," as per the survey.
Vishal Narula, Leader Crisis Managament, PwC India said that being prepared doesn't mean that companies can anticipate every eventuality.
"While being mindful of the specific kinds of triggers that could pose risks in your industry, make sure your crisis response plan is not tied to just one or two scenarios. Make it holistic and flexible. Test it and revise it. Then test it again. It is this preparation that sets apart organisations that make confident decisions from those that show knee-jerk reactions," Narula said.
The survey also suggests adoption of a fact-based approach. I said that around 87 per cent of the respondents recognise the importance of gathering facts and realise the benefits of garnering accurate facts quickly.
Companies should also carry out a ‘root-cause' analysis. Respondents who are better-placed post-crisis had done a root cause analysis of their crisis response, it said.
The report said that crises hit companies by penetrating every layer and affecting both internal and external stakeholders in unique ways, including business relationships, reputation, workforce, financial strength, operations and legal and regulatory aspects.
"Irrespective of organisational size, business relationships – vendors and customers – financial strength and workforce morale are the worst hit, sending the organisation on a downward spiral. Regulators and law enforcement agencies also step in as news spreads fast, causing immense reputation damage," the report noted.
As part of crisis preparedness, it is important to have a sound understanding of the stress fractures and gaps in the organisation to prevent a crisis from branching out into several ancillary crises.
The survey comes at a significant time when businesses across the globe are going through troubled times in view of the coronavirus crisis. Further, in India the 21-day nation-wide lockdown also has impacted their operations and their financials.