Background: AMF, one Sweden’s largest private pension providers, turned to 4C Strategies for support in developing an innovative crisis management training and exercise program.
Challenge: Effectively testing, evaluating and developing crisis management capability with an objective-based approach to training and exercises.
Solution: A series of distributed crisis simulation exercises; planned, delivered and evaluated using Exonaut’s exercise management software.
Benefits: By using real TV cameras and journalists to deliver the crisis scenario, the exercise was both realistic and fun. Exonaut also provide a structured, data-driven overview of the exercise evaluation against a series of objectives.
Customer: With €63 billion in assets managed for approximately 4 million customers AMF is one of Scandinavia’s leading pension companies. AMF is a limited liability life insurance company that is owned equally by the Swedish Trade Union Confederation (LO) and the Confederation of Swedish Enterprise.
Can something positive really come out of a serious crisis? Yes, says Ella Shoshan, who works with financial-sector clients at 4C Strategies. With preparations and systematic work, a crisis is a chance to reinforce confidence if it is managed in the right way. One of 4C Strategies’ newest clients is AMF. With €63 billion in assets managed for approximately 4 million customers AMF is one of Scandinavia’s leading pension companies. We met their crisis management team to sound them out on training and exercising for emergency situations.
Hi Ella, you’ve recently conducted a crisis exercise with AMF, what did you do exactly?
“We performed a ‘distributed simulation exercise’. In a simulation exercise, you try to create a situation that is as close to reality as possible. And ‘distributed’ means that the training audience, in this case the crisis management team, are in different places geographically, a situation that is common in reality and that also makes the exercise more complicated. This exercise also contained a realistic media simulation element.
Interesting situations arise when a crisis management team, working at a distance, have to delegate tasks, communicate constantly and establish and visualize a common operating picture, something which is much more difficult than you might think.”
How do you practise media management in such an exercise?
“We build up as real a situation as possible. In this case, a simulated press conference was included in the exercise where we had huge camera spotlights, a TV camera and a journalist doing an introductory announcement and people who played the role of reporters asking critical questions. For that part of the exercise, there were about 40 people in the room, so the entire scenario felt very real.”
It sounds a bit stressful. Do people think it is fun to practise?
“Most participants do, but it can all become rather intense, especially when we do simulation exercises. One of the aims is to test one’s own mental reaction under stress and how cooperation is affected when we are super-focused and our adrenalin is really pumping. Exercises are a chance to test-drive yourself and your team. During the exercise, you can often go that little bit further than during a real crisis, which gives you the chance to test new working methods or work out the most effective solutions.
When we evaluate afterwards, we can see that many new thoughts, challenges and ideas are generated by a simulation exercise and that those involved often want to practise for a longer period of time.”
We met AMF to hear their thoughts about risk and crisis management, as well as their cooperation with 4C Strategies. Malin Görhammar and Erik Löfgren work as Chief Risk Officer and Chief Communication Officer respectively and are a part of AMF’s crisis management team.
What particular risk challenges are there in your industry?
Malin: “There are many different kinds of serious events that can happen, but, like all financial companies, we work in a highly integrated IT environment, so cybersecurity is important. Other than that, maintaining confidence is crucial along with how we work our way through a crisis. It is very important that we have good communication skills if something happens so that we do not make the crisis worse than it needs to be.”
What is the background to your partnership with 4C Strategies?
Malin: “We had got a good impression from references and requested a few bids. We were particularly keen on 4C Strategies’ bid. It felt solid and well prepared. It is the first time we have worked together and we have been very satisfied. 4C Strategies also had a robust training tool [Exonaut] that we wanted to test; it made the exercise very realistic.”
Erik: “The conclusion of the crisis exercise, where we simulated a press conference, felt like a smart way of rounding things off and it was an exciting end to the entire exercise.”
What do you want the partnership with 4C Strategies to lead to?
Malin: “Our crisis management team is strong and experienced. Because we have experience we also recognize the importance of continuously maintaining and improving our crisis management abilities. Training is a helpful way of taking the team’s skills even further. And everyone needs training; it shouldn’t just be a question of those with experience stepping up to the plate. New employees also need training so that they come up to the same level.”
From your perspective, at what point did you realize that it was time to bring in third-party support for your crisis management team?
Malin: “Preferably in advance, before the crisis arises. This gives us time to get help with setting up a sound crisis organization and crisis contingency plan and then we can get help with exercises to keep everything top of mind. With good preparation, you can be sufficiently independent to not need external help if a crisis strikes.”
Erik: “It’s also valuable to have a third party who is used to doing similar exercises, so that it is as realistic as possible, and who can stress-test your routines to see if they are robust enough.”
We return to Ella to conclude the interview about AMF’s crisis management work.
How often does a company need to practise?
“My advice is to work on three integrated components; crisis prevention through risk management, recovery planning through business continuity management, and crisis management through training and simulation exercises.
The most important thing is to have a long-term training and exercise strategy with clear goals. This enables you to work in a structured and systematic way, and to create awareness within the organization as a whole about the routines and methods that apply before, during and after a crisis.
A typical interval is to carry out a larger-scale simulation exercise every year and do training programs and more elementary table-top exercises in-between. Crisis management capacity is like physical fitness, you need to train continually to stay in shape. New people need regular training and crisis plans may need updating, especially if there is a reorganization or changes occur in the world around us.”
How does one decide where to put the emphasis in the training?
“The scenario you choose is not the most important thing. You can have a crisis file with all the crisis scenarios you can think of that is thicker than War and Peace, but if you have prepared for 79 different crisis scenarios, you can be sure that your next crisis will be number 80. But it certainly is the case that the probability of certain things happening in particular industries is higher, and they practise a crisis management methodology that is adapted to such scenarios.”
In what way is 4C Strategies’ Exonaut software used in the exercise?
“We made and then documented observations or evaluations in Exonaut during the exercise. Thanks to having the software to support us, we achieve better control and obtain a detailed overview. With observers’ comments and all the statistics in Exonaut, we can get a structured, data-driven overview to evaluate the exercise effectively. We can do it both in real time during exercise delivery and as a planning tool for the next exercise.”
Finally Ella, do you have any advice to companies who want to improve their crisis management?
“Yes, I have two pieces of advice I’d like to highlight:
- If top management gets involved and displays a commitment to solid crisis management capacity, this increases confidence in the organization as a whole. Furthermore, customers, owners and business partners will all have more confidence in an organization with a robust crisis management capacity. A company that manages a crisis successfully can even strengthen its brand.
- It is important to have a long-term resilience strategy that stretches beyond exercises. An exercise is a live test of a company’s crisis management – it shows whether it has prepared well enough and whether there are things that need changing.”
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