Dear Crisis Management Officer, Would you like to measure your crisis response capabilities using the Pentagon Model?

"Sharpen Your Crisis Management Skills," which began in July.

At the same time, Fuji TV's "God of Risk" depicts the Crisis Management Office, led by Director Saigyoji, overcoming various crises.

At Dentsu Inc. Public Relations' Corporate Communications Strategy Institute, we believe that while experience is important, data is also essential to contribute to improving corporate crisis management capabilities. Therefore, we conducted a "Survey on Corporate Crisis Management" in collaboration with the University of Tokyo's Graduate School of Information Science and Technology, Comprehensive Disaster Prevention Information Research Center.

As mentioned in the first installment of this series, we received responses from crisis management personnel at 392 companies. We were surprised by the high level of interest indicated by the large number of responses.

Through this series, we will examine the current state and challenges of corporate crisis management capabilities based on the survey results.

■Dear Crisis Management Officer,

When conducting the survey, we sent the questionnaire to companies addressed to "Dear Crisis Management Officer." Where exactly in a company would a questionnaire addressed to "Dear Crisis Management Officer" end up? This was also a point of interest.

●Figure 1: List of Crisis Management Responsible Sections

The results show that General Affairs/Human Resources and Management Control are indeed the top two departments handling crisis management, accounting for over half of the responses. Specialized crisis management sections came in third, followed by Public Relations/IR/CSR departments. In a way, this suggests that the department responsible for "crisis management" is often not clearly defined.

It would be ideal if companies had dedicated sections like a "Crisis Response Office," as seen in dramas, but the vast majority do not. This ambiguity over which department should respond in emergencies may be why responses often lag.

■Developing the "Pentagon Model" for Instantly Assessing Crisis Management Capability

To evaluate crisis management activities across many companies, we developed the "Crisis Management Pentagon Model."

By quantifying five distinct capabilities—"Leadership," "Anticipation," "Avoidance," "Damage Mitigation," and "Recurrence Prevention"—and plotting these values on a pentagon, we enable a clear, visual assessment of a company's strengths and weaknesses in crisis management.

Figure 2: Crisis Management Pentagon Model

Each capability is defined as follows:

① Leadership Capability: The communication and execution capabilities of top management and executives in enhancing organizational crisis management.

② Forecasting Ability: The ability to foresee potential future "crises" that could impact the company and share this foresight organizationally.

③ Prevention Capability: The organizational ability to prevent or avoid crises before they occur, or to anticipate crises in advance and mitigate their impact.

④ Damage Mitigation Capability: The organizational ability to respond swiftly and appropriately when a crisis occurs, minimizing damage to stakeholders and the company itself.

⑤ Recurrence Prevention Capability: Organizational capability to confront the experience of a crisis occurrence and achieve more effective crisis management and restoration of social trust.

"Anticipation" and "Avoidance" refer to activities conducted during normal times before incidents or accidents occur. "Damage Mitigation" is an activity performed during a crisis, while "Recurrence Prevention" is an activity conducted afterward. These are positioned under the overarching "Leadership" capability.

■How does your industry rank in crisis management capability?

We calculated crisis management capability rankings for 15 industries based on a survey asking about 10 specific activities for each capability.

Overview here: http://www.dentsu-pr.co.jp/csi/csi-research01.html

Figure 3: Crisis Management Capability Rankings by Industry

The top spot was overwhelmingly held by "Electricity & Gas," followed by "Food" in second, "Transportation & Warehousing" in third, and "Finance, Securities & Insurance" in fourth. In a way, it seems industries frequently facing crises are clustered here.

After this survey, we visited various responding companies to hear their perspectives. As expected, companies that had experienced crises gave the impression of having robust crisis management activities in place. They implement countermeasures based on lessons learned from past crisis events.

The data also clearly shows that companies with crisis encounter experience possess significantly higher crisis management capabilities compared to those without such experience.

Figure 4: Comparison of Crisis Management Capabilities Between Companies Experienced and Unexperienced in Crises

■ Top Leadership Capability Influencing Crisis Response

However, the reluctance to invest in crisis countermeasures until actually facing a crisis may stem from many executives still viewing "crisis management" primarily as a cost. Whether a company can internalize crisis events occurring elsewhere and implement countermeasures represents a critical management decision.

Returning to the rankings, eight industries scored below average in crisis management capability. Notably, the "leadership capability" scores for "Wholesale/Retail" (69 companies), "Information/Communications" (19 companies), "Other" (17 companies), and "Machinery" (21 companies) languished at less than half the score of the top-ranked "Electricity/Gas" sector.

Leadership capability, defined as "the communication and execution skills of top management, including the CEO, in improving organizational crisis management," refers to the ability of crisis management executives like the president or CRO (Chief Risk Management Officer) to unite their company's employees. Crisis countermeasures won't succeed unless the organization acts as one. Whether a company can internalize crisis events occurring elsewhere and implement countermeasures also depends heavily on leadership.

In Part 3, we will explore this "leadership capability" within crisis management.
Stay tuned!

 

The Corporate Communication Strategic Studies Institute (CSI) is a research organization within Dentsu Inc. Public Relations. It collaborates with experts in corporate management and public relations (including university professors and researchers) to conduct surveys, analyses, and research on corporate communication strategies and systems.