Bouncing Back from Disaster

A startling study by PricewaterhouseCoopers suggests that nearly half of U.S.-based multinationals were struck by a high-level crisis in the past three years. Some type of catastrophic event was reported by 49 percent of the 104 CFOs and managing directors interviewed. The good news is that 71 percent of them said their companies responded well and bounced back.

The first most common disaster mentioned was a natural one, such as hurricane or flood (53 percent). The second most common was shutdown of a major business unit (31 percent), and tied for No. 3 were problems related to Sarbanes-Oxley or the Securities and Exchange Commission and major management upheavals (20 percent). Apparently, business cycles—or regulatory cycles—can be just as devastating as weather cycles.

Hearteningly, more than a quarter of respondents (26 percent) described their company’s response to crisis as “outstanding,” and 45 percent awarded their employer “high marks.” Nevertheless, 66 percent are at least somewhat worried about their company’s overall preparedness for a future disaster. And 26 percent say they’re sure a disaster is in the cards for at least one major business unit in the next three years.

When executives whose companies suffered a major crisis in the past three years were asked whether they were prepared for another one, the answer seemed to be, “Depends on which business function you’re asking me about.” They expressed a lot of confidence in their corporate counsel and in their insurers. They have significantly less faith in their marketing staff.