When it surfaced that the top executives of Adelphia, WorldCom, and Tyco had engaged in criminal and fraudulent behaviors, added to the previous crises, the stock market plummeted. Furthermore, corporate heroes and major cultural icons such as Martha Stewart and General Electric's Jack Welch had their reputations seriously tarnished as the result of "corporate improprieties." While none of these events necessarily "caused" the others--with the possible exception of the relationships between the loss of confidence in the auditing and stock analyst professions, the criminal behavior of a few highly visible CEOs, and precipitous drops in the stock market--they led nonetheless to major drops in consumer confidence and a general lowering of trust in all of our major institutions, as evidenced by the wealth of stories in the major news and business publications.
The question "In which individual, organization, or institution, public or private, can one really trust?" is no longer moot. If the major business and popular press are to be believed, more and more Americans are asking this very question. The general feeling is one of serious and massive betrayal by prominent individuals, major organizations, and institutions. The fact that the previous crises are unrelated causally does not diminish the general feeling that we are suffering from a psychological overload--in effect, a massive trauma to the nation's psyche. Indeed, overwhelming feelings of vulnerability are, in fact, prominent among the typical outcomes associated with every major crisis. These feelings are magnified and compounded when catastrophes are experienced in quick succession.
The near-simultaneous occurrence of major crises is no longer the exception. Instead, it is indicative of an ominous trend that has been developing over the last 20 years. It has been found repeatedly that a single crisis rarely, if ever, occurs in isolation. Indeed, any crisis can be either the cause or the effect of any other. In other words, every crisis is capable of setting off a chain reaction of other crises. For instance, consider 9/11. Not only was Sept. 11 a "psychopathic act" of unparalleled magnitude, it triggered all sorts of additional crises. For example, it directly affected the entire airline industry in general and the tourism business in particular. The moral is that. in today's world, it is no longer sufficient to plan for the occurrence of individual crises in isolation.
For this very reason, a highly select set of companies known as crisis-prepared construct multiple scenarios and carry out simulations that include the simultaneous occurrence of widely varying crises. These companies stress the importance of crisis capabilities over crisis plans. The reason is that, more often than not, such plans sit on shelves and are not rehearsed until they are necessary....