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Navigating through Crises: A Handbook for Boards

Navigating through Crises: A Handbook for Boards

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Published by IFC Sustainability
"Navigating Through Crises: A Handbook for Boards" has been prepared as part of IFC's overall crisis-response program, with funding from the Oesterreichische Entwicklungsbank (OeEB), the Development Bank of Austria. The handbook presents crisis response from the perspective of boards and non-executive directors, with a focus on companies in emerging markets.
"Navigating Through Crises: A Handbook for Boards" has been prepared as part of IFC's overall crisis-response program, with funding from the Oesterreichische Entwicklungsbank (OeEB), the Development Bank of Austria. The handbook presents crisis response from the perspective of boards and non-executive directors, with a focus on companies in emerging markets.

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Published by: IFC Sustainability on Jul 08, 2011
Copyright:Attribution Non-commercial

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10/08/2013

In the process of reviewing the causes, origins, and further dynamics of the crisis as well as the
responses and actions taken by the board and the management, the following questions can
be raised to identify general lessons from the crisis:

• Were the causes and driving factors of the crisis on our radar screen? Have we
identifed these factors before and prioritized them correctly? If not, why not?
Will these factors be dangerous and important to watch in the years to come?

• When did the crisis emerge and when did we recognize it (earlier or later than
everybody else)? How long did it take us to respond? Were there any delays?
Can the response time be shortened for future crises?

• Was the fow of information timely, relevant, and complete throughout the
organization? Was the necessary and relevant information readily available
(the litmus test for control)?

• Was the communication with key stakeholders (e.g., employees,
banks, media) effective? Did we get our message across? Where were
communication bottlenecks located?

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NavigatiNg through crises: a haNdbook for boards

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• If a crisis-response team was set up, did that choice make sense? What was the
impact on the normal chain of management? Were the right internal and external
people hired? Were competences, accountabilities, and reporting lines clear?

• What were the fnancial implications of the crisis? Should the balance sheet
structure and the liquidity planning be redesigned? Was the diversifcation of
funding appropriate?

• How did the shareholders react? Were we able to convince them of our ability
to deal with the crisis? Do we need to adapt our funding options (e.g., loans)?
Was the communication with shareholders appropriate? Did we listen to them
properly?

• What are the implications for our risk prioritization and the related
management systems? Are revisions needed?

• Was the board functioning well? Did we work together as a team? Did the
non-executives and the executives have aligned interests or did we squander
time and resources by squabbling?

• What are the consequences in human resources? Is our personnel apt to
move the company forward, past the crisis? Do we need to adapt our human
resources (hire or release people)?

• And last but not least: Have the heroes of overcoming the crisis and the
partners whose cooperation was especially valuable been identifed and
rewarded? How can relations with these people be strengthened?

Finding answers to these questions can take a while in board discussions, and the temptation
to pass blame or point fngers must be strongly resisted. Once they are found, the answers
and lessons should be minuted and implemented. The crisis management lessons should be
formalized into a lesson-book that can be used in future crises, so that nothing learned is lost.

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