5 Leadership Skills Needed for Risk and Crisis Management

leadership risk management May 02, 2021
5 Leadership Skills Needed for Risk and Crisis Management

Good leadership does not come from a single skill, but rather a collection of skills such as team building, influence, patience,  empathy, and creativity. This article examines 5 leadership skills essential for risk and crisis management. 

Risk management and crisis management are closely related.  Good risk management may reduce or minimize crises, but it is inevitable that at some point in your project management career, a risk becomes not just an issue, but a full-blown crisis.

A favorite textbook example of this is the case of the Chicago Tylenol murders of 1982. Drug manufacturer Johnson & Johnson was confronted with an issue that Tylenol had been tainted with cyanide, leading to a number of deaths. Demonstrating their leadership, J&J management acted quickly and decisively to recall Tylenol and related products from all consumers and stores, and issue national warnings to those that might still have the products.

The J&J actions saved the company millions of dollars - within 6 weeks of the incident, a plan was presented to get the product back on shelves and restore consumer confidence. The 5 skills we will examine were all clearly evident in this case.

  1. Trust building:  Severe impacts of issues and crises can quickly erode trust.  "How could this happen?" is a question most stakeholders will have in this case.  Having trust in place ahead of time always helps.  At the time, J&J was already a trusted brand as evidenced by their higher market-share.  But it takes just one slip to erode that trust.  Leaders need to work hard on rebuilding trust once the issue comes to light.  Their actions and applications of these other skills helped to quickly restore their position as market leaders.
  2. Organizational change management: Good leaders know how to shape and influence an organization to change.  At times, these may only be small changes, but some projects require larger organizational change as well. J&J applied this skill after strategic thinking, applying lessons learned, and decision-making.  They called on the organization to make the changes necessary to prevent this type of product misuse from happening again.
  3. Decision-making: Sound decision-making is required when risks become threats and opportunities, or even crises.  Without sound decision-making to take the right actions, organizations can find themselves introducing new risks and getting into fire-fighting mode.  J&J made sound decisions at every step, even ignoring law enforcement agencies that advised them that a full product recall was not necessary.
  4. Applying lessons learned: Leaders need to be able to apply lessons learned both during and after risk responses.  This is important to avoid added risks and making the same mistakes over and over again.  J&J led the way by switching from capsules to caplets which are harder to tamper with and also introduced tamper-proof packaging.  Later, the FDA adopted these steps as norms, as well as promoting the escalation of product tampering to a federal crime.
  5. Strategic thinking: Leaders need to think strategically, especially in times of crisis.  For J&J, this meant going back to their Credo (a form of code of conduct and ethics) and observing that "We believe our first responsibility is to the patients, doctors and nurses, to mothers and fathers and all others who use our products and services. In meeting their needs everything we do must be of high quality." Reviewing this strategic document led them to understand that the best action they could take would be to recall all products until more was known about the situation.

For the leaders of J&J, these actions made the difference between losses of trust, market leadership, and billions of dollars and re-introducing the product in about two months.  For more about this incredible story (also one of today's top 10 unsolved crimes), the necessary skills, and the J&J Credo, please see the following articles:

Chicago Tylenol Murders

The Tylenol Crisis: How Effective Public Relations Saved Johnson&Johnson

Johnson&Johnson: Our Credo

Leadership as (Un)usual

 

 

 

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