Understanding the difference between business continuity and crisis management

Depending on whom you ask, there is a fairly widespread view that business continuity planning is the same thing as crisis management; and for many years, this may have been an acceptable mainstream perspective. However, the democratization of information through smart phone technology and social media – coupled with the importance of public opinion and reputation to bottom line profitability, brand value and operations; has necessitated a much broader view of crisis management beyond the boundaries of business continuity planning.

According to an opinion piece by Tony Jaques[i], “Any organisation which imagines that a business continuity plan makes them ‘crisis prepared’ is due for a big and costly surprise. Business continuity is just one element of strategic crisis management and failure to recognise this,  can leave you dangerously vulnerable to operational and reputational risk.”

The purpose of this article is to highlight the difference between business continuity planning and crisis management and why organizations should look beyond business continuity planning to a more holistic view of crisis management.

Crisis definition

There are many schools of thought on what constitutes a crisis. According to Zamoum and Gorpe (2017), “crisis situations share six characteristics which are rare, significant, high impact, ambiguous, urgent and involve high stakes. A crisis involves a period of discontinuity, a situation where the core values of the organization/system are under threat and this requires critical decision-making.

There is a destabilizing effect to the organization and its stakeholders and an escalation of one or more issues, errors or procedures expected in this period.”[ii]

A crisis is therefore a period of severe disruption, uncertainty and a threat to operations at a fundamental level. Business continuity planning is therefore an essential starting point in crisis management.

Business Continuity Planning

A business continuity plan (BCP) is defined as a “proactive business process that lets a company understand potential weaknesses and threats to their organization in times of crisis. The creation of a continuity plan assures that company leaders can react quickly and efficiently to business interruption”,[iii]

A BCP allows a company to continue to serve customers during a crisis, decreases business downtime, and outlines the steps to be taken — before, during and after an emergency to maintain the company’s financial viability. A core objective of the process is to protect and preserve operations and profitability.

Crisis Management

On the other hand, Crisis management is a process designed to prevent or lessen the damage a crisis can inflict on an organization and its stakeholders.[iv]

A purely financial risk management and investment-driven perspective often gives the impression that organizations with an effective business continuity plan can mitigate the effects of any negative event that occurs. It is also sometimes believed that the process of having a continuity plan in place in the event of a crisis is the same thing as crisis management.[v]

However the reality of a digitally connected smart-phone and mobile-first social media age renders this perspective somewhat dated because it takes a purely internal view of the crisis and does not factor in external stakeholder complexity, public opinion and/or reputation risk that may emerge during or after the crisis – sometimes and fairly often as a direct result of “tone-deaf” actions taken by the company or organization as part of its business resilience efforts and internal response to the impact of the crisis. The focus on everything else apart from reputation, societal license to operate and public opinion is arguably the biggest blind spot of business continuity planning.

Social License to Operate

The concept of a social or societal license to operate is well understood by companies in the oil mining and extractive industry but less so in organizations operating in less environmentally hazardous sectors. However, the reality of social media and the global neighbourhood-news-at-your-fingertips-age means that every business and organization needs to pay attention to the social license to operate or evolving public sentiment within its immediate community and overall sphere of influence. And also to how its well-intentioned business resilience actions may play to some broader negative themes emerging in the wider society during the crisis.

According to Investopedia, social license to operate refers to the ongoing acceptance of a company or industry’s standard business practices and operating procedures by its employees, stakeholders, and the general public. It is created and maintained slowly over time as the actions of a company build trust with the community or society it operates in and other stakeholders.[vi]

In order to protect and build social license, companies are encouraged to:

1.    first do the right thing

2.    and then be seen doing the right thing.

And this is where a broader view of crisis management comes in.

An effective business continuity plan should be focused on doing the right thing but is by design not fully equipped to enable the organization to be seen to be doing the right thing by a broader set of stakeholders.

It also may not fully understand or anticipate the potential impact of an evolving or shifting view of what “the right thing” is from the perspective of wider society during a crisis; and how it may be potentially relevant to ongoing business resilience actions.

A business continuity plan would focus on customers, employees and key stakeholders but is not likely to pay much attention to emerging relevant trends and sentiments in the general public or wider society and this could be a massive reputation risk or minefield for any organization or big brand in a fluid and complex crisis situation.

The ongoing pandemic has provided several examples across countries – of significant reputation backlash faced by big international brands that were slow to factor in public sentiment while implementing business continuity plans

In April, Bloomberg reported three notable incidents in the UK, where business continuity actions by Big Brands prompted significant backlash; Richard Branson’s request for a government bailout for his airline, staff dismissals at Philip Green’s retail empire and Sports Direct’s attempt to keep its stores open in defiance of government lock-down guidance,  provoked furious responses from politicians and the public.[vii]

There have been examples in Nigeria as well. In May and June 2020, a big brand in the financial services sector faced backlash over employee staffing decisions and customer charges that were aimed at protecting cash flow and profitability but were completely out of sync with public sentiment and the mood of the moment. The attendant social media backlash eventually led to a very public reversal of both actions.[viii]

Also in June, a leading PAY TV company in Nigeria, attracted negative attention when it raised tariffs – four months into the pandemic; in a bid to align its price structure with a new hike in value added tax. The social media conversation and negative media response that erupted as a result, led to the National Broadcasting Corporation issuing a directive for a reversal of the price hike, [ix]as well as a statement from the Federal Minister of Information, threatening to break the international sports broadcast monopoly of the company which currently has an estimated 60% of the PAY TV market share in Nigeria.

These are some of the brand and reputation risks (with potential bottom line impact) that businesses and organizations are exposed to in running a business continuity plan in a crisis – without including a symbiotic board-led crisis management process that is focused on reputation, social license to operate and public sentiment in the context of the company and its operations during and after the crisis.

A business continuity planning-mindset is severely limited in managing a crisis for the simple reason that it is unable to pre-empt or mitigate impact of externally-driven reputation backlash; due to the fact that it has a largely internal view of a crisis or views the crisis from the internal lens of business operations while crisis management views the crisis from the external lens and perspective of society, stakeholders and evolving public sentiment.

The crisis management process also ensures that business continuity plans are not out of sync with any emerging and relevant external trends and if potentially so – are not implemented in a way that could pose a significant risk to the brand or business.

Managing Reputation during a crisis

In summary, the role of crisis management is to manage and mitigate long-term or irreparable brand, reputation, societal and stakeholder risk. Conversely, the role of business continuity planning is to manage operations and profitability in the immediate to near and medium term.

The Institute for business continuity management describes Crisis Management as the overall coordination of an organization’s response to a crisis, in an effective, timely manner, with the goal of avoiding or minimizing damage to:

1.    Profitability,

2.    Reputation,

3.    Ability to operate. [x]

• Business continuity planning takes care of the profitability plans, while the crisis management process manages reputation and societal risk while also maintaining a coordinating overview of all three elements.
• A good crisis management plan should be directed and executed by senior management to ensure there is good alignment with business continuity plans; and  roles and responsibilities do not overlap.

In terms of structure and process, business continuity managers should sit on crisis management teams but the focus of the CM team should be reputation risk and societal license to operate only. Profitability and resilience/contingency planning conversations should stay on the BC teams. However the CM team retains the responsibility of ensuring that BC plans are not implemented in a way that could attract negative publicity or impact long term profitability as was/could have been the case with some of the examples referenced earlier.

The crisis management team should therefore be well-resourced with a board-level senior leader, a crisis administrator as well as an experienced crisis communications strategist and stakeholder management expert who will advise on business-relevant societal trends and ensure that brand value is protected and reputation risk is actively managed during and after the crisis.