The Troublesome Thing That Plagues Crisis Management Officers Global Risk Management

An incident, accident, or scandal has occurred at your company. And it happened overseas.

As the PR, or perhaps the general affairs/HR person, you scramble to gather information. What exactly happened? When? Where? Who is involved or caught up in it? Are employees safe? What is the local response? Who is doing what? How far along is it? How is the media reacting? Are reporters already on the scene?

Unlike familiar domestic situations, this is happening far across the sea. Information is hard to come by. That's only natural. Beyond the time difference, different countries mean different languages and cultures. Sometimes, it might even be happening in a place you've never been. You might not have even met the people at the local office. Driven by anxiety, you desperately try to respond, but chaos begets chaos. Eventually, fatigue sets in, and you're at your wits' end...

Just imagining this scenario is terrifying: crisis response at an overseas location.

Global risk management is an urgent priority for companies

As you know, corporate expansion overseas will only increase in the future. Moreover, in today's rapidly changing world where business demands speed, we can expect companies to establish local subsidiaries and achieve rapid growth almost overnight (many companies are already doing this). Naturally, companies prioritize the stability and expansion of their business. This focus on stability and expansion often leads to prioritizing various investments and communication efforts (advertising, promotion, PR) for sustained growth. It's not hard to imagine scenarios where crisis management ends up being neglected, only to be addressed reactively when it's too late.

However, it is crucial to always be aware that crisis management carries the risk that one misstep in response can cause everything built up over time to collapse overnight.

The Pitfalls of Headquarter-Driven Crisis Management

The Crisis Management Capability Survey (March 2015) conducted by the Corporate Public Relations Strategy Institute targeted companies with bases in Japan, including foreign-affiliated companies.

Here, we present data comparing the crisis management approaches of these foreign-affiliated companies and Japanese companies.

This graph makes it immediately clear: foreign-affiliated companies (Japan-based) show more areas needing improvement in their crisis management efforts.

Why is this?

Insights emerged from the survey's open-ended responses and individual interviews. We observed that due to headquarters-led crisis management, the Japanese branches were often perceived by headquarters as "already compliant."

The most common reason was a directive from headquarters stating, "Headquarters has sufficient measures in place, so it's fine. Instead, allocate your budget to maintaining and expanding the business." This created a situation unique to the local offices where they couldn't dedicate sufficient resources (people, time, budget) to crisis management.

There's so much that needs to be done. In that case, neglect is the greatest risk.

Now, let's consider the perspective of Japanese companies with overseas bases. For these bases, the primary goal is to establish the business and stabilize operations. They are told, "Don't worry, the Japanese headquarters will take responsibility and handle any emergencies."

Doesn't this represent how the entire company (or its executives) perceives things? If so, it might be wise to take a moment to think calmly.

• Have you decided on the minimum steps for handling situations when something happens overseas?
• Do you know exactly who is at each location and who will step up to handle risk response alongside you when the time comes?
• Do you have reliable local partners who can support crisis response?

If you can answer these three questions definitively, that alone is commendable.

However, that alone may not be sufficient. Yes, there are unavoidable variables unique to overseas operations: the specific culture, customs, political climate, and even the media environment of each country.

For example,

I sense an increasing awareness of crisis management, as consultations from foreign companies have grown recently. I often discuss matters with crisis management officers at headquarters. A common concern I hear is: "Headquarters has guidelines and standardized procedures for responses worldwide. But I hear Japan is unique (especially its media environment). What should we do?" This clearly shows how crucial it is to thoroughly understand local conditions, particularly in crisis management.

When faced with such inquiries, I can only provide careful explanations. Even so, there are limits to how much someone visiting Japan for just two or three days on a business trip can truly grasp about the Japanese media landscape and risk management in just one or two hours.

This applies equally to Japanese companies with overseas bases. Having an overseas presence makes it absolutely essential to strive to understand the "local" context as much as possible – including the country's culture, customs, political climate, and media environment. In fact, I feel this is the fundamental first step in overseas crisis management. However, as mentioned earlier, it's not something easily accomplished.

So, what should be done? As you might expect, there is no "secret technique" that solves everything in one fell swoop. It comes down to persistently continuing steady, groundwork efforts. But that sounds too vague, so here are a few starting points to begin tackling, even if only incrementally.

1. First and foremost: Information gathering

2. 1. Understanding the structure of overseas bases and establishing coordination systems

3. Regular training

First and foremost, information gathering

First, it's crucial to establish a system for gathering local crisis management information from overseas locations where you have bases. If you have multiple bases, you'll need to establish certain rules: how to filter and prioritize information, how to share it internally, and the protocols for doing so. It might seem tedious, but it's well worth the consideration. As a starting point, simply make it a habit to check overseas news sites from your desk computer, or ask employees at your bases to regularly send you important information.

If this proves difficult physically or time-wise, services exist that collect overseas risk information and provide regular email reports. Implementing such services offers an alternative way to gather necessary information while reducing the effort required.

Understanding Overseas Base Structures and Establishing Coordination Systems

Who is stationed where, and who can assist in an emergency? Establishing this framework is a critical crisis management task that must be addressed. It would be disastrous to find yourself scrambling to locate a counterpart only when a risk materializes.

Is there a designated crisis management officer at each location? What specific crisis management activities are they undertaking? Are there established rules for how to respond when risks occur? Are these rules properly documented in a manual?

There are many things to confirm and decide. Crisis management involves tackling each of these points one by one.

Regular Training

Once the information gathering system is established and the response and coordination framework is in place, the next logical step is, of course, training. Having manuals that prove useless in an emergency is one of the most critical situations to avoid.

If your headquarters has a crisis management officer or dedicated personnel, we recommend they periodically visit each overseas location to conduct on-site training.

As mentioned earlier, different countries mean that the approach to handling a crisis will vary slightly. In such cases, consulting local professionals is still the best approach.

In this case, it is crucial to establish a system from the outset that enables the partner supporting headquarters functions to collaborate effectively with the overseas partner. If partners cannot coordinate despite having contracts to provide support during crises, headquarters and the site become the sole hub for all information. This risks creating a continuous game of telephone, leading to delayed responses to incidents.

Crisis management is directly tied to the very essence of business operations. Therefore, as long as a company exists, this work never ends.
As overseas expansion increases and scale grows, the tasks and challenges only multiply.
Yet it is essential to persevere and methodically tackle what can be done. To avoid finding oneself in the situation described at the outset.