A Miami drug kingpin is found dead in the trunk of a rental car. The murder prompts a federal probe of his criminal enterprise, which is quickly tied to a U.S. bank that had both Latin American connections and lax anti-money laundering safeguards. The feds eventually uncover the criminal complicity of bank insiders-meaning that fines, lawsuits and perhaps jail time await senior executives and board members.
These are extraordinary circumstances, but crisis management consultant Davia Temin sees this happening all the time. That's because she helped craft this bank-meets-Scarface scenario as a wargame to teach bankers how to navigate through a sudden crisis.
In this Miami druglord case, each bank executive acts out multiple roles, so they can experience the crisis from the perspective of the troubled bank's CEO, chief counsel and other senior positions. They decide how to respond to unfolding events-in particular, working with authorities and regulators, reaching out to clients, and protecting the bank's image.
The point isn't about learning to limit public relations damage or escape culpability, but getting CEOs and other leaders to see their shortcomings in risk management or to recognize business practices that can lead to trouble, says Temin, founder and CEO of Temin and Co.
What CEOs often take away from the simulated crisis is "how denial can destroy themselves and their organizations," she says.
By role-playing through this situation-and doing so in the shoes of various C-level and legal positions-executives at Temin's seminars also learn about the missteps that can occur in a crisis.
In the Miami scenario, for instance, many CEO stand-ins decide early on to turn the incident over to their chief legal counsel and COO. It's only later they learn those officials had themselves signed off on weak AML or know-your-customer controls that allowed the druglord's scheme to prosper. And the COO was also found to have had personal ties to the criminal underworld.
The bankers who played these lead roles in the mock crisis understood they leaned too heavily on their lieutenants to make the problem go away, rather than looking deeper at the facts for themselves. CEOs better understand afterward they cannot take so much for granted, says Temin. They realize that "they need to be much more hands on."
Richard Torrenzano, CEO of Torrenzano Group, also stages crisis discussion panels around reputation management, and says he finds institutions most often must overcome denial-both about the seriousness of a problem as it develops, and how much a lack of planning hurts effective response efforts.
There are any number of crises-a stock market crash, an executive's death or a major client's bankruptcy-that could lead to the need for emergency response actions, says Temin.
Role-playing is a way for bank leaders to gauge their team's crisis attributes, and "see who's really good at thinking on their feet and who isn't," she says.
Role-playing is especially effective because it can simulate anxiety, uncertainty, and rapidity of a crisis more than other preparatory exercises, she says. The goal is to make senior bankers "cooler under pressure when the real thing happens."