How a hospital board can prep for crises

Hospitals, like any organization, are prone to unannounced crises, whether they be cyberattacks, active shooter incidents, severe weather events or management scandals. Still, a recent report from the National Association of Corporate Directors found less than 20 percent of directors surveyed felt confident that management could handle unpredictable crises.

In an article published by the Harvard Business Review, Eric McNulty, associate director of the National Preparedness Leadership Initiative at Harvard University in Cambridge, Mass., and Leonard Marcus, founding co-director of the NPLI, wrote that in an ideal situation, boards would earmark time each year to prepare for major unknown business threats. But, as the NACD study found, almost half of directors surveyed said their focus on known risks blocked greater understanding and preparation for unpredictable threats.

"This should be considered integral to their fiduciary duty to represent the shareholders who inevitably will pay for the consequences of a poorly handled disruption. But given that most board agendas are already packed more tightly than a subway car at rush hour, attention to crisis preparedness tends not to get much attention," the authors wrote. "Often, it is only after the fact, when a board is consumed with repercussions it could have ameliorated, that preparing for a crisis suddenly seems important."

Post-crisis questions usually fall on the shoulders of upper management. Most institutions are faced with questions like, "Where was top management?" and "Where was the board?" especially if the crisis involves a CEO or other senior executive.

Mr. McNulty and Mr. Marcus recommend management and boards follow two strategies to avoid fallout from an unforeseen crisis.

"The first is to ensure that the company is prepared to handle the likely threats it could face; the second is to prepare the board itself to act, if needed," they write. The authors added: "In general, boards should not become directly involved in most crises. Responding to these is best left to senior managers who understand the details of the business. However, board members represent the shareholders and must be prepared to engage if needed. In our turbulent world, any board that is not paying attention to crisis management is courting disaster."

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