risk reduction

Oddsmaking and Crisis Planning Have Lots in Common

Oddsmakers do their homework to manage risk and make money on betting. Organizations should follow their example and understand their odds of facing various crisis scenarios and how to minimize their reputational risk.

Oddsmakers do their homework to manage risk and make money on betting. Organizations should follow their example and understand their odds of facing various crisis scenarios and how to minimize their reputational risk.

Savvy bettors don’t plunk down money without checking the odds. So why do CEOs risk their company reputations without considering the odds of facing a serious crisis?

Oddsmakers weigh the probabilities of just about everything from sporting events to reality TV winners. Crisis communications specialists are the oddsmakers of crisis scenarios for corporations, brands, nonprofits, individuals and public agencies. They help identify what can go wrong and the probability of it going wrong.

Unlike oddsmakers who earn money when people place bets, crisis counselors earn their money by showing how to reduce the odds of catastrophic or reputation-damaging crisis. 

Oddsmaking and crisis counseling have a lot in common. Oddsmakers simulate games, contests and anything people wager on to determine the ‘spread’. They talk to people and apply sophisticated algorithms. Crisis counselors employ issue audits to discover the ways an organization could become entwined in a crisis, even through no fault of their own. Part of that issue audit is to assess the likelihood of a specific crisis scenario and the consequence if it occurs.

A fast food restaurant could have a shooting in its parking lot or cause people to get sick from eating tainted or spoiled food. Both events would be serious, but not equally likely. It would be impractical for a fast food restaurant to employ an armed guard, but it would be prudent to install state-of-the-art food security systems because the odds and consequences of making customers sick are greater.

Back when, oddsmakers relied on ‘horse sense’ and ‘gut feelings’ to set odds. Now oddsmakers rely on computers and statistics. Setting accurate odds is critical for oddsmakers to manage risk and make money. 

Once upon time, organizational leaders may have relied on horse sense and gut feelings to assess risk and make money. Now they have access to risk insurance experts, marketing metrics and crisis counselors who can help identify risk, opportunity and smart management actions. 

Oddsmakers and organizations have notable differences. While oddsmakers have outsourced their statistical analysis, organizational leaders would be wise to in-source their risk assessment efforts. Oddsmakers spread their risk. Organizations bear the full weight of their risks.

Oddsmakers can make up for an upset loss in the Super Bowl with “wins” from other bets. Organizations immersed in a serious crisis can’t shift the cost or blame for the crisis somewhere else.

Getting the odds wrong is a business problem for oddsmakers. Getting the odds wrong in a crisis can be a business and reputational disaster for organizations. 

Whether or not you are a betting man or woman, be like oddsmakers and know your spread. For most organizations that means knowing what crisis scenarios they could face and how they can prepare in advance to reduce their odds of experiencing a crisis or dealing with a crisis if it occurs.

CFM Strategic Communications is a leading crisis counselor in the Pacific Northwest. We assist clients to anticipate and prepare for potential crisis scenarios. We help clients caught in a crisis situation deal with external and internal communications with an eye toward protecting an organization’s reputation. We provide media training for spokespeople. We have experience convincing higher-ups they need to understand their odds of facing a crisis. The  CFM Crisis Ebook  shares some of what we have learned and have to offer in addressing a reputational threat.

CFM Strategic Communications is a leading crisis counselor in the Pacific Northwest. We assist clients to anticipate and prepare for potential crisis scenarios. We help clients caught in a crisis situation deal with external and internal communications with an eye toward protecting an organization’s reputation. We provide media training for spokespeople. We have experience convincing higher-ups they need to understand their odds of facing a crisis. The CFM Crisis Ebook shares some of what we have learned and have to offer in addressing a reputational threat.

Gary Conkling Image.jpg

Gary Conkling is principal and co-founder of CFM Strategic Communications, and he leads the firm's PR practice, specializing in crisis communications. He is a former journalist, who later worked on Capitol Hill and represented a major Oregon company. But most importantly, he’s a die-hard Ducks fan. You can reach Gary at garyc@cfmpdx.com and you can follow him on Twitter at @GaryConkling.

 

 

The Secret Treasure Buried in an Issues Audit

A rigorous issues audit is critical to identify organizational vulnerabilities that can stunt operations and tarnish reputations in a crisis. But issues audits offer other benefits – targeting management actions to reduce risk and opening the eyes of colleagues to the challenges faced by their counterparts.

A rigorous issues audit is critical to identify organizational vulnerabilities that can stunt operations and tarnish reputations in a crisis. But issues audits offer other benefits – targeting management actions to reduce risk and opening the eyes of colleagues to the challenges faced by their counterparts.

The essential first step of a crisis plan is an issues audit. Identifying vulnerabilities is critical to developing a crisis plan based on likely crisis scenarios. It also can be a revealing look into management, operational and capital decisions that can mitigate or eliminate risk.

Unmasking potential management, operational and capital decisions to reduce risk is an unappreciated dimension of issues audits. The chance to zero in on ways to reduce risk should be reason enough to conduct issue audits.

An empty wallet is the most common excuse for postponing a rigorous exploration of organizational vulnerability. A close second is a lack of time. Both are pallid justifications for avoiding the hard, but not necessarily expensive work to pinpoint problems and think about how to address them. 

Too many executives lull themselves into believing a major crisis won’t occur on their watch, which leads them to shuffle their feet on a crisis planning exercise. They fail to recognize that identifying vulnerabilities can be a window into actions that would materially lessen exposure – or even gain a competitive advantage.

CFM’s approach to crisis plan development results into two deliverables – a strategy to address likely and consequential crisis scenarios and a list of smart investments to mitigate risk. This provides a very different approach to an annual capital investment plan. Instead of sets of competing priorities from different divisions, top executives would have a prioritized list of investments that would make a material difference in an organization’s risk profile.

A common compliment by managers after completing a CFM-managed issues audit is that it produces a lot more than an agenda of what to worry about. It also sheds light on what you can do to ease or even eliminate worries. This is the secret treasure buried in an issues audit. 

“I was skeptical that an issues audit would do anything more than show us what we already knew,” said one manager who participated in a CFM issues audit. “What I failed to see until I went through the process was what the issues audit told us about how we could avoid risk. That’s priceless.”

A crisis plan based on realistic crisis scenarios is reason enough to conduct an issues audit. An added plus is a roadmap to risk-reducing capital investments or management steps. A typical rigorous issues audit lasts four hours, including time set aside for coffee and donuts. How else could you get so much value for a four-hour investment of staff time? 

There is an even more subtle benefit from well-conceived issues audits.  Bringing together the full cross-section of organizational top management induces a learning moment and a collaborative spirit. The team participating in the issues audit leaves the session knowing more about the operational pain points of their colleagues than any seminar or staff meeting could teach.

“I came into our issues audit knowing about my problems,” one senior official recounted. “I left with a deeper understanding pf the problems my counterparts face. What I thought would be a perfunctory meeting turned into an eye-opening opportunity.”

An issues audit would be worth the time and expense just to pinpoint the crisis scenarios in a crisis plan. Added value as a keen-eyed management tool is a bargain. Strengthening the camaraderie and collaboration of your staff can be a priceless benefit.

If you haven’t undergone an issue audit to identify your vulnerabilities, what are you waiting for?

Gary Conkling Image.jpg

Gary Conkling is principal and co-founder of CFM Strategic Communications, and he leads the firm's PR practice, specializing in crisis communications. He is a former journalist, who later worked on Capitol Hill and represented a major Oregon company. But most importantly, he’s a die-hard Ducks fan. You can reach Gary at garyc@cfmpdx.com and you can follow him on Twitter at @GaryConkling.