Crisis Management

Recent events in Japan offer many lessons for those prepared to learn them; among them, the importance of preparedness.  The laws of probability dictate that on a long enough timeline, anything that can possibly go wrong, will go wrong.  The question is when, not if.  Some things we can usually predict within a few decades, like death – and some things are random enough to be almost completely unpredictable, like earthquakes, floods, fire and theft.  But each of these crises happen in most businesses at some point.

As lawyers, we are often actively involved in our clients’ crisis management strategies.  And because of this, we have some expertise in the field.  Here are some tips from our experience:

Being Organized in Crisis Means Being Organized Before a Crisis.

If your organization flies by the seat of its pants, things aren’t suddenly going to shape up when the content of those pants hit the fan.  Get organized now.  Develop business plans, policies and procedures that make sense for your business and are sound and reasonable.  Communicate those plans, policies and procedures throughout the organization as appropriate.  Make sure everyone knows what to do on a day to day basis.  That’s the starting point.

Develop a Comprehensive Plan for Crisis

In addition to your daily operating plan, develop contingency plans for various crises.  Spend more time and energy for those crises that are more probable (think sudden loss or departure of key personnel) and less time and energy on the less probable scenarios (think Alien invasion).

Think about what you do and who does it and what will happen if they can’t.  Think about what will happen if your business location becomes inaccessible or is destroyed.   What will you do to continue your business?  What happens to your documents?  Are you insured?  Where is your insurer’s contact information kept?  Is your data safe and backed up offsite?

Put Plans in Writing

Communicate your plans and put them in writing.  Make sure people know what to do when something goes wrong, or where to go to find out what to do.  Make sure that documents that should be public are accessible (from multiple locations) and make sure the right people know where confidential documents can be found.

If you’re a sole shareholder and sole director of a corporation there are some things you can do to ensure an orderly transition in the event of your incapacitation or death.  Have your lawyer prepare a resolution naming another director in the event that something extreme happens and you’re not able to make decisions for the company.  Ensure that you appoint a trustee who is competent to actually run your business when you die.  Prepare powers of attorney giving legal decision making powers to those who might need it.  Powers of attorney can be crafted so as to take effect on any number of occurrences.

Run through your plans with peoplpe who know your business and who can help you troubleshoot omissions.  Talk to your professional advisors – lawyers, accountants, and others who might be able to help tighten up the plan.

And when all is said and done, if you make it through a crisis and you’re in a position to help others, please do so.  Text redcross to 90999 if you’d like to donate $10 to help the relief effort in Japan.

Scott R. Young