– More than two thirds of the companies surveyed do not carry out crisis exercises that are based on experiences from past crises
– Around 60 percent of the in-house lawyers surveyed said they were more involved in the company’s crisis management strategy
– Almost 70 percent of companies surveyed do not have a cross-functional crisis response team or selected external consultants
Companies are least prepared for the crises that pose the greatest threat to their business. This is the result of a survey by the think tank Economist Impact on behalf of the management consultancy FTI Consulting (NYSE: FCN). Companies are also slow to learn from experience so that they can better deal with crises in the future.
Economist Impact has 600 primarily legal decision-makers (General Counsel and senior in-house attorneys) in North America, Europe, the Middle East and Africa (“EMEA”) and Asia-Pacific.
When asked which crises pose the greatest risks to their company, almost 30 percent of those surveyed cited crises that are due to damage to their reputation or disruptions to operations. These areas ranked among the top three of a total of twelve possible crisis types. At the same time, reputational and operational crises are also among the three most frequently mentioned danger situations, which the companies surveyed are least prepared to deal with. Around 30 percent of general counsel stated this.
More than two thirds of the companies surveyed did not incorporate lessons from past crises into their training and crisis exercises. This gap leaves many companies vulnerable to the impact of a crisis or even a black swan event, particularly in the context of events such as cyberattacks and data breaches, macroeconomic shocks, political disruptions and geopolitical conflicts.
„The best way to deal with crises is to have prepared intensively beforehand for companies – for example through crisis exercises and the realistic simulation of possible threat scenarios“ says Renato Fazzone, Senior Managing Director and Managing Director of FTI Consulting DACH. „These companies foster a culture of taking risks seriously and developing and playing out “what-if” scenarios, giving them an advantage in difficult situations. Strong leadership support for crisis planning and preparation is critical. Otherwise, there may be a disconnect between business continuity teams and senior management decisions, resulting in conflicting, fragmented or delayed decisions.“
Given the increasing frequency, complexity and unpredictability of crisis events over the last five years, approximately 60 percent of in-house lawyers surveyed said they were more involved in their company’s crisis management strategy. However, their participation is not the same all over the world. A higher proportion of general counsel are involved in the development of business continuity plans and financial contingency planning in North America (64 percent) and EMEA (60 percent) than in Asia Pacific (42 percent). Similarly, almost twice as many lawyers surveyed in North America (63 percent) as in Asia Pacific (33 percent) are more involved in monitoring and analyzing early warning signals that go beyond legal issues, such as the company’s reputation and brand .
Artificial intelligence (“AI”) and machine learning (“ML”) can now be particularly helpful when it comes to creating comprehensive, granular and precise crisis impact assessments. Nevertheless, more than half of the organizations surveyed have not yet used these technologies in crisis management. A possible reason for this is the lack of qualifications in this area. Three in 10 general counsel cited this as one of the top five challenges preventing their organizations from being better prepared for crisis events.
Almost 70 percent of the companies surveyed do not have a cross-functional ad hoc crisis team or a selection of pre-selected external consultantsthat are immediately available in the event of a crisis. This is despite respondents citing the creation of a well-equipped crisis response team as one of their legal departments’ top three priorities (42 percent). Increasing the budget for crisis preparedness measures, technological tools and external consultants or providers (40 percent) and adopting modern technologies such as AI for crisis monitoring and impact analysis (33 percent) were the other two top priorities.
Lars Faestewho is responsible for FTI Consulting’s EMEA business, says: „I can’t remember a time when the stakes were higher when it comes to managing crises or even black swan events than today. The fact that a majority of companies in this survey stated that they have not yet used the lessons of the past to improve their handling of crises is worrying. Management very often recognizes that something needs to be done – but it doesn’t always decide quickly or decisively enough. Others lack the necessary resources and tools that enable a comprehensive understanding of potential crises. General counsel play an important role in helping their companies close these crisis preparedness gaps. So that companies are better informed, more flexible and more effective when dealing with future crisis events.“
Other key findings from the survey include:
- More than two-thirds of top lawyers in the financial services, banking and insurance industries have expanded early warning monitoring and analysis beyond the legal department to strategic partners – compared to less than half of all companies surveyed (including other industries).
- In the manufacturing industry, corporate lawyers are more involved in dealing with crises and their effects (72 percent) than their colleagues in the areas of financial services, banking and insurance (68 percent), IT/technology, media and telecommunications (64 percent), and energy , oil and gas (63 percent), retail (62 percent), and healthcare and life sciences (54 percent).
- Nearly 40 percent of respondents said they lack a contingency plan for a cyberattack or outage in their supply chain.
For more findings, see the full report:
Turbulent waters, trusted anchors | The general counsel’s evolving role in navigating crises
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Demographic data and methodology
The think tank Economist Impact carried out this research on behalf of FTI Consulting. This survey-based study examines the perspectives of key legal decision makers regarding the nature of today’s crisis landscape, their organization’s preparedness to deal with crises, and the evolution of their role in managing such events.
The survey was conducted between April and May 2024. It included a total of 600 primarily legal decision-makers in North America (25 percent), EMEA (50 percent) and the Asia-Pacific region (25 percent). All respondents worked at companies with annual revenues of more than $1 billion.
About FTI Consulting
FTI Consulting, Inc. is a global consulting firm that helps companies manage change, mitigate risk and resolve conflicts: financial, legal, operational, political and regulatory, as well as reputational and transactional issues. With more than 8,000 experts in 33 countries, FTI Consulting works closely with clients to identify and address complex business challenges and make the most of opportunities. The company had revenue of $3.49 billion in fiscal 2023. In certain countries, FTI Consulting’s services are provided through separate legal entities that are separately capitalized and independently managed. Further information can be found on our website: FTI Consulting
