Ready for Darkening Skies: The Power of Black Swan Preparation
Prepare for the Unpredictable
In the field of risk management, the term “Black Swan” is often associated with events that are hard to predict, carry a high impact, and after occurrence, are rationalized by hindsight as if they could have been expected. This term first surfaced in reference to the perceived impossibility of the existence of a black swan in 1697 and popularized by scholar and statistician Nassim Nicholas Taleb, provides a useful conceptual tool for crisis communication planning.
Many organizations neglect the importance of preparing for Black Swan events in their crisis communication planning, considering them improbable and hence, not a priority. However, it is precisely this improbability that underscores their potential impact. When they do occur, these rare and unexpected incidents can cause significant damage to an organization’s reputation and stakeholder relationships.
Examples of Black Swan events:
1. The COVID-19 Pandemic: Its impact was felt globally, affecting all aspects of life and business. The sheer scale and universality of the crisis left many businesses scrambling to communicate effectively with their stakeholders. What effect did it have on commercial real estate and the workplace in general, with work from home becoming normalized? What about the Great Resignation? Nobody saw it coming.
2. The 2008 Financial Crisis: Triggered by the collapse of the subprime mortgage market in the United States, it quickly spread across the globe. Failure to communicate effectively during the crisis led to a significant loss of trust in many major banks and financial institutions. Certainly there were warnings, but banks and mortgage lenders were drunk on easy profits and chose to ignore the red flags.
3. The Fukushima Nuclear Disaster: In 2011, a magnitude 9.0 earthquake off the coast of Japan triggered a tsunami that led to a major nuclear accident at the Fukushima Daiichi Nuclear Power Plant. The company TEPCO was heavily criticized for its handling of the crisis communication, which exacerbated the loss of trust and reputation. Sure, earthquakes are to be expected — but their preparedness measures were found to be insufficient in handling the magnitude of such a disaster.
These examples underscore why integrating Black Swan scenarios into crisis communication planning can significantly enhance an organization’s resilience and readiness.
The Reality of Unpredictability
We’re living in an era where the business landscape is evolving at a dizzying pace, thanks to rapid advancements in emerging technologies such as AI, blockchain, and IoT. Coupled with significant geopolitical shifts like trade wars, regulatory changes, and the ongoing environmental transformations due to climate change, the stage is set for an increase in the complexity and unpredictability of crises. These conditions may catalyze Black Swan events that can catch organizations off guard, and without proper planning, can lead to disastrous outcomes. Therefore, when formulating crisis communication strategies, it’s essential to consider the inherent unpredictability of such events.
Enhancing Organizational Resilience
Incorporating these unpredictable scenarios into crisis communication planning allows organizations to strategize and plan for a wide range of potential crises. This proactive approach enables organizations to create and implement detailed action plans ahead of time, thereby reducing the time needed to respond effectively when a crisis occurs.
Moreover, preparing for extreme events can result in ‘stress-testing’ of systems, leading to a stronger, more resilient organization. A resilient organization is characterized by its ability to minimize damage from unexpected crises and bounce back quickly.
Better Stakeholder Management
The inclusion of Black Swan events in crisis communication planning also plays a vital role in managing relationships with stakeholders. This preparation signifies your organization’s commitment to maintaining transparency, accountability, and swift responses during crises. It shows stakeholders — employees, customers, investors, media, and even the general public — that your organization is equipped to handle the unexpected. Such foresight can foster trust, maintain positive relationships, and enhance your reputation, even amidst challenging circumstances.
Opportunity for Innovation
Despite the significant challenges they pose, Black Swan events also present unique opportunities for organizations to showcase their adaptability, problem-solving skills, and innovation. A Black Swan event often requires unconventional thinking and innovative solutions, pushing organizations to think creatively and outside their comfort zones. Such circumstances can catalyze the development of novel crisis management and communication strategies, fostering innovation that could be beneficial in the long term.
Hindsight Bias Avoidance
Hindsight bias, also known as the “knew-it-all-along” effect, is a common psychological phenomenon where people believe, after an event has occurred, that they predicted or expected it beforehand. This bias can cloud the post-crisis narrative and erode stakeholder trust.
By acknowledging the possibility of Black Swan events and integrating them into crisis communication plans, organizations can preemptively address this bias. This proactive approach can help manage post-crisis narratives, emphasizing the organization’s preparation for even highly unexpected scenarios, and thus, aid in maintaining stakeholder trust.
While the rarity and unpredictability of Black Swan events make them challenging to anticipate, ignoring them in your crisis communication planning can be detrimental. That’s why I insist on incorporating Black Swan scenarios into every crisis com plan I supervise for clients. In so doing it ensures the organization remains resilient, adaptive, and prepared for the unknown.
After all, in the world of crisis communication, it’s usually not if, but when. And even if your most dreaded Black Swan never darkens the skies, you and your organization are stronger having prepared for it.