Mark Tarallo is a journalist and author

Crisis leadership differs from crisis management. Crisis management focuses on the immediate response; crisis leadership takes a broader view, starting with pre-crisis preparation and planning. Finance leaders can play a major role in the latter, and make the difference between success and failure in surviving the crisis.

Make a plan

The first step is to make a well-designed crisis action plan (CAP). Organisations vary in terms of the amount of time and resources they may devote toward developing such a plan, and they also differ in who specifically is assigned to formulate it. But involvement in CAP development will benefit nearly all crisis leaders.

A CAP may serve several valuable functions. It can outline decision-making responsibilities, and who-does-what duty assignments, in case of a crisis. It could also set out potential indicators of an imminent crisis, as well as proactive actions that could be put into play to avert the crisis before it begins.

The CFO may decide to include valuations of hardware assets that are most vulnerable in a disaster scenario

For example, the CAP may sketch out how staff engagement with suspicious emails, along with failures to update systems and cybersecurity programs in a timely manner, may indicate that a hacking is likely soon.

Moreover, the CAP may set out clear reporting procedures when team members detect potential problems. These detections may provide key advance intelligence, so crisis leaders should do their best to ensure staffers feel heard in these situations.

Exercises and brainstorming

Similarly, leading emergency response exercises is another way for a crisis leader to bolster the organisation’s resilience to an unforeseen event.

For example, let’s say a CFO is leading an emergency response exercise that simulates a serious data breach. The exercise is designed so that the simulated hacking leads to simulated information theft, as well as hardware destruction.

The exercise might reveal that certain hardware systems are vulnerable to attack. As a crisis leader, it is important for the CFO to follow-up on that discovery. For example, they may then decide to expand the annual budgeting process to include valuations of hardware assets that are most vulnerable in a disaster scenario so the organisation has a clear idea of what is at stake. The adoption of more sophisticated risk analysis programmes may also be considered.

An effective crisis leader strives to bring clarity to the chaos and not get lost in the complexity

Simulated response exercises often work well for the type of crisis that is well known, such as a cybersecurity breach. Preparing for a lesser-known crisis may call for brainstorming exercises. One example could be as follows: now that the pandemic has been experienced, what other unexpected large-scale crisis could affect the organisation?

Answers could include an unprecedented weather disaster, a deadly bacteria contamination, or widespread adverse health impacts caused by continual exposure to wireless signals.

Even brief brainstorming exercises such as these may yield key guiding principles or best practice tips for a planned response, as well as allowing for a better understanding of what needs to be done when an event happens.

From chaos to clarity

Since a crisis is often a complicated matter, an effective crisis leader strives to bring clarity to the chaos and not get lost in the complexity. To help do this, some experts advise dividing the response into a three-step process.

First, define the crisis as clearly as possible. Although this may seem obvious, too often crisis leaders fail to do this, only to later realise that they misunderstood the nature of the crisis.

This step is especially important when dealing with a more complex crisis. To extend our earlier example, a cybersecurity breach may contain different crises within it: the security breach itself, the loss of crucial information, the possibility of intellectual property theft, the reputational damage caused by the hacking, and the budgetary damage caused by the cost of addressing the crisis.

A crisis leader is a calming leader who provides guidance and insight in distressing situations

The second step is to define the ‘who’ – who is affected and who needs to be helped.

Thirdly, craft the actual response. Begin the process by considering a range of possibilities, then narrow the options into focused action. Knowing exactly what the crisis entails, and who is affected, will be invaluable in crafting an appropriate response.

Leading with agility

Once the response is put into motion, the one overriding principle that successful crisis leadership usually requires is agility. This principle plays out in many ways. Below is some best practice guidance for crisis leaders to remain agile:

  • Be open to reframing your initial definition of the crisis. New developments or information may require tweaks to the response. For example, a crisis that initially is very not public can become so very quickly due to social media.
  • Expect the unexpected. Under heavy pressure, team members may act differently, and relationships may be strained. This may require behavioural adjustments on your part.
  • Don’t act alone. Even great leaders have blind spots and limitations. Consult others and bring in outside parties if necessary.
  • Stay agile in working with intelligence. During a crisis, crucial information may come in from a variety of sources, but misinformation may also seep through. Whenever possible, double-check information with other sources to filter out potential inaccuracies.
Safe space

Finally, a crisis leader can increase his or her value by serving as a ‘holding’ figure – a calming leader who provides guidance and insight in distressing situations.

In the field of psychology, a therapist provides ‘holding’ by creating a space for a patient that is respectful, caring and facilitating. A crisis stirs emotions and the crisis leader helps settle those stirred emotions by remaining calm, orientating staffers, dispelling confusion, and remaining accessible and engaged, rather than detached and aloof.