We all know the expression of the elephant in the room, and certainly most of us have heard of the black swan, a term coined by bestselling author Nassim Nicholas Taleb, referring to the occurrence of an unpredictable and rare catastrophic event.
In fact, the publication of Taleb’s book correlated with the outbreak of the financial crisis in 2008, and, as a consequence, the concept was happily used to explain the emergence of the crisis.
Since then, labelling crises as black swans has unfortunately become a convenient excuse for irresponsible financial practices, political failure and crisis mismanagement. It seems that every unforeseen catastrophe or crisis is called a black swan—even the COVID-19 pandemic—without further explanation as to why the crisis was so unpredictable.
However, the pandemic and many other crises are so-called grey rhinos. Michele Wucker, who created the expression, draws upon the imagery of a rhinoceros—a powerful and notable creature—representing an identifiable, imminent, and impactful risk that is neglected or downplayed until it becomes a crisis.
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The “grey” aspect highlights the tendency to overlook or downplay these obvious risks, despite their clear presence and potential harm
In short, the grey rhino highlights neglected but predictable risks. The elephant in the room signifies the simple acknowledgment that a problem exists, but which is consciously avoided. The black swan represents an unforeseen event that is inherently unpredictable. It’s, however, all too often used because it gives us a moral loophole since, because of its unpredictability, we weren’t really able to see what was coming our way.
But actually only the rarest of crises are unexpected and go beyond the scope of normal expectations. We all know better that anything is possible. It’s therefore crucial that we are well prepared.
But how can one be prepared in the face of the multitude of types of crises? In this blog, we are summarising for you the key insights gained at PwC Luxembourg’s 5th Annual Conference Health & Beyond “Building Back Stronger – Preparing For Future Crises”.
First, some theory
At its core, crisis management involves a set of fundamental principles and practices aimed at effectively navigating and mitigating the impacts of a crisis. And while there are a myriad of different steps and dependencies that can form a crisis management strategy, we can identify six fundamental steps of crisis management.
1. Preparedness
Crisis management starts with proactive measures to anticipate potential crises. According to the European Civil Protection and Humanitarian Aid Operations, this includes developing robust emergency response plans, establishing clear roles and responsibilities, and conducting regular training and drills to ensure readiness.
2. Risk Assessment
It’s crucial to identify and assess potential risks and vulnerabilities specific to an organisation or community. This involves evaluating internal and external factors that could lead to a crisis, such as natural disasters, technological failures, or security breaches. Taking this task seriously and anticipating different risk scenarios reduces the probability of the emergence of a black swan event.
A simple yet very effective way of assessing a risk or a potential vulnerability is using a Risk Assessment Matrix, which helps identify high-risk scenarios.
Let’s see how this matrix can be used with an example:
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Alexandra, who is a fictional character in this fictional scenario (we named her so because her name means “Protection/Protector of Humans” in Greek), is working at the Luxembourg Ministry for Home Affairs, in the Department of Civil Security, which is responsible for the coordination of the rescue services at ministerial level.
Following the devastating floods in Luxembourg in July 2021, she is asked to update the level of severity of the risks that are to be expected in the context of climate change in Luxembourg. Alexandra begins by checking the existing list of risks and by identifying new potential ones, such as climate change-induced heavy rainfall and storm surges of the past years.
She then assesses the potential consequences of these hazards, considering various factors, including property damage, infrastructure disruption, displacement of residents, environmental impact, and potential loss of life.
Next, Alexandra proceeds to assign different severity levels to each combination of hazard and consequence. She establishes a rating system, such as a scale of 1 to 5 for likelihood (1 being unlikely, 5 being highly likely) and a scale of 1 to 5 for impact (1 being minor, 5 being severe).
For example, a medium rainfall in a non-inhabited part of Luxembourg might be very probable, but wouldn’t entail a severe impact. Alexandra multiplies the likelihood rating (in this case 4 out of 5) with the impact rating for each risk (1 in this case), resulting in a risk level for this scenario.
In the case of a medium rainfall in a non-inhabited region, the risk level would be 4 (4 x 1 = 4). At the same time, a heavy rainfall at the Grund would have a rating of 15, since the severity would equal a 5, while the likelihood would be 3.
Note: This is an entirely fictional example to show you how the matrix works.
After finishing this exercise for all scenarios, Alexandra prioritises the risks by sorting them in descending order. This helps her focus on addressing the risks with the highest potential impact that needs appropriate mitigation strategies.
Also, being the excellent Crisis Manager that she is, Alexandra recognises the dynamic nature of climate change and its associated risks. She plans to regularly monitor and review the risk assessment matrix to identify changes in hazard probabilities, consequences, or emerging risks. This will allow her to adapt and update the mitigation measures accordingly.
3. Communication
Effective communication is vital during a crisis. Clear and timely communication helps to disseminate accurate information, address public concerns, and maintain transparency. It’s important to have designated spokespersons and established communication channels to ensure consistent and reliable messaging.
4. Response and Recovery
When a crisis occurs, swift and decisive action is required. This includes activating the crisis management plan, coordinating resources, and implementing appropriate response measures to mitigate the impact and protect lives and assets. Once the crisis subsides, efforts shift towards recovery, which involves restoring normal operations, providing assistance to affected individuals or communities, and conducting post-crisis evaluations.
5. Flexibility and Adaptability
If crises have something in common, it’s that they are dynamic and often unpredictable. It’s essential to remain flexible and adaptable in response strategies as circumstances may change rapidly. Regularly reassessing the situation, adjusting plans, and seeking feedback are key elements of effective crisis management.
6. Learning and Improvement
After a crisis is before the next crisis: thorough evaluations to identify strengths and weaknesses in the response efforts, which includes assessing the effectiveness of the crisis management plan, communication strategies, and operational procedures, are therefore an existential part of the process. Learning from past experiences helps in enhancing future crisis management capabilities.
How does this apply in practice?
In an increasingly interconnected and complex world, crisis management and preparedness have become unignorable elements for governments, organisations and individuals alike. With the emergence of global health crises, it has become even more crucial for actors like the European Union (EU) and its Member States to develop sound and agile strategies to handle crises effectively.
And indeed, crises are game changers with many lessons coming out of them, and we can especially leverage on these learnings for our preparedness strategy.
The European Commission defines crisis or disaster preparedness as a set of measures undertaken in advance by governments, organisations, communities, or individuals to better respond and cope with the immediate aftermath of a disaster.
The objective is to reduce the loss of life and livelihoods. Furthermore, the aim of preparedness is to improve resilience, being the ability of an individual, a household, a community, a country or a region to withstand, adapt and to quickly recover from stresses and shocks.
Europe is facing simultaneous and cross-border risks, including the effects of climate change, pandemics, conflicts, as well as natural hazards:
European Union Disaster Resilience Goals
The Union Civil Protection Mechanism (UCPM) is at the forefront of Europe’s response to disasters and crises. In recent years, there has been a significant surge in the demand for assistance. In the past three years, the UCPM was activated over 320 times, both within and outside the EU. Member States alone accounted for 104 activations, marking a fivefold increase compared to the previous 10-year average.
In the face of such numbers, also as a result of a rise in emergency operations driven by war, geopolitical instability and security threats, it becomes clear that the current disaster and risk landscape in the EU is concerning.
The hybrid nature of these emerging threats amplifies their impact across multiple sectors, such as IT, energy, and supply chains. And to complicate matters even more, the population density and urbanisation are adding up to the difficulties faced.
Cross-border, European and international cooperation and the importance of interoperability
Crisis management and preparedness happens on multiple levels, from regional, national to global. And health crises especially are transcending national borders, necessitating close collaboration and solidarity among EU Member States. In this regard, a significant challenge is the concept of interoperability.
Interoperability is needed in many forms. From the coordination of communication between all stakeholders to the harmonisation of procedures and protocols: interoperability cross-border crisis management is a key element for successful cross-border cooperation.
On the operational level, it ensures that different systems, platforms, and devices used by various entities can seamlessly exchange information, enabling efficient communication and coordination among multiple organisations and jurisdictions involved.
Furthermore, it enables different agencies and organisations to access and utilise each other’s assets, such as personnel, equipment, supplies, and specialised capabilities. By leveraging interoperable systems, responders can identify available resources, request assistance, and coordinate resource allocation based on the evolving needs and priorities of the crisis. This collaborative approach improves resource utilisation, avoids duplication of efforts, and maximises the overall effectiveness as well as rapidity of the response.
According to the participants of the conference, there have been notable advancements in the cooperation between Member States, exemplified by the rapid development of rescEU, a fully EU-funded initiative.
It was established as a reserve of European capacities that includes firefighting and medical evacuation planes, shelters, logistics assets, and many more. By working together and channelling the Member States’ resources and capacities for times of distress, the rescEU reserve ensures a faster and more comprehensive response to crisis inside and outside of the EU.
Furthermore, Luxembourg is regularly in contact with the civil security, fire and rescue services of its neighbouring countries. Bilateral agreements regulate mutual assistance in case of an emergency or disaster in the border area as well as mutual training or exchanges. These measures are serving the security needs of the country itself, but also of the Greater Region.
Stronger together
However, cooperation isn’t only a responsibility of governments and states. Indeed, the best chance of further advancing preparedness for any type of crisis is to create a strong engagement and communication channel between governments and the private sector.
Organisations and firms of the private sector have a significant ability to mobilise rapidly and to leverage on already existing infrastructures. Moreover, their resources consist of goods and services, but also include expertise that could help solve problems and crises. In this regard, a game changer could also be the opportunities that AI could bring to crisis management, especially for model building and long-term planning.
Conclusion
We want to close this blog by summarising some recommendations:
Build agility and innovativeness, both in preparedness and day-to-day operations;
Interoperability of minds, teams, industries and in the public sector—at local, European and international level;
Public and Private partnership—dialogue needs to be maintained and even enhanced to boost our responsiveness when crisis strikes;
Workforce of Healthcare Professionals —invest to withstand the future disruptions, and ensure that a healthcare workforce crisis doesn’t occur in the future;
Healthcare will change significantly in the coming years – we need to build a more proactive and preventative healthcare model;
With opportunity (for example, if we think of AI) comes different types of crisis, thus preparedness should be built in.
What we think
Guy Brandenbourger, Partner, Government and Public Sector Leader, Health Industries Leader at PwC Luxembourg
One thing is certain: crises will occur. Occasionally or often, severe or with minor consequences, as a singular event or during an extensive period of time. Investing in crisis preparedness is a must to foster the resilience of our communities, enabling us to protect lives, minimise disruptions, and navigate health crises with agility and effectiveness.
Dr. Hannah Felstead, Manager, Industries and Public Sector, Health Industries at PwC Luxembourg
Preparedness for crisis is an important investment for individuals, businesses, communities and countries. From business continuity plans, to broader National and European public health policy: crisis preparedness is not expecting the unexpected, but preparing for what is on the horizon and ensuring you are able to weather the storm.
