Forecast 2023

A new year is here, and while only time will tell what the future holds, the past has taught our industry that there will always be an element of risk and uncertainty in this world. More importantly, the unimaginable occurs when you least expect it.

Crisis does not distinguish its victims. No one is safe or immune, whether your business is an international giant, a national corporate chain, or a mom-and-pop shop. The scale and magnitude of a crisis may differ, but the potential consequences can be devastating to all.

In some cases, crisis means tragedy in the form of mass casualties; in others, it can mean massive property damage, widespread health consequences, or large-scale interruptions to businesses. The economic consequences of a crisis have an incredible impact measured in billions of dollars.

Crisis by the Numbers

In 2022, there were a number of catastrophes, both natural and man-made, with devastating results. According to an article in Yale Climate Connections, “At least 29 billion-dollar weather disasters have rocked the planet in 2022.” This includes:

•    Hurricane Ian, which caused 137 deaths and an estimated $50 billion and $65 billion according to Swiss Re.

•    Severe droughts/heat waves across Europe, China, the U.S., and Brazil, which resulted in an estimated $38.4 billion in damages globally.

•    Devastating flooding in Pakistan that killed nearly 1,700 people (with an estimated 20% of those deaths related to disease/malnutrition), with damages estimated at $5.6 billion.

•    Earthquake in Indonesia, which killed more than 160 people.

Last year’s mounting extreme weather costs reflect an increasing trend in billion-dollar disasters across the U.S. Each decade since the 1980s has experienced more billion-dollar disasters and higher costs than the decade before. Over the past five years (2017 to 2021) alone, a total of 89 events caused an estimated 4,557 deaths and more than $788 billion in damages. That is about 35% of the $2.27 trillion in total costs of U.S. billion-dollar disasters from 1980 to 2021, and 2022 is the eighth consecutive year with 10 or more billion-dollar weather- and climate-related disasters. The long-term (41-year) annual average is about seven billion-dollar disasters per year.

Last year’s events follow the record-shattering annual totals of 2020 and 2021, which saw 22 and 20 billion-dollar disasters, respectively. For 2022, we witnessed:

•    An April storm system in the Southeast that spawned 88 tornadoes.

•    A May storm that dropped golf ball-sized hail across Minnesota, Wisconsin, and South Dakota.

•    70+ mph wind gusts that pummeled the lower Midwest.

•    Hurricane Fiona, which wreaked havoc across Florida.

•    7.2 million acres burned from 61,390 wildfires nationally as of Nov. 11, 2022, according to the National Interagency Fire Center—the most wildfires reported to date in the past 10 years. The 10-year average is 6,859,200 acres burned.

Infrastructure crises were also prevalent in 2022:

•    A collapsed bridge in India killed 134 people.

•    In January 2022, a major bridge collapsed in Pittsburgh hours before President Biden arrived to promote the new infrastructure law.

•    A residential building collapse in Jordan resulted in at least 13 deaths.

Man-made catastrophes were problematic, as well. Mass shootings continued to plague our lives. A list of the most recent and notable ones from 2022 include:

•    Uvalde, Texas, where 19 children and two teachers were killed at an elementary school.

•    Buffalo, New York supermarket shooting that killed 10.

•    Colorado Springs, Colorado shooting at an LGBTQ nightclub that killed 5 and injured 25.

•    Three University of Virginia students on a football team who were killed—and two others wounded—when a former football player opened fire.

•    Brooklyn, New York, where a gunman opened fire in a crowded subway car, wounding 10.

•    Tulsa, Oklahoma, where several were shot and five killed at a medical building.

•    Highland Park, Illinois July 4 parade shooting, where seven were killed and dozens wounded.

In 2023, we can expect catastrophes coast to coast and around the globe. We must prepare now. The forecast for the coming year is more of the same and possibly more severe than in 2022. Although we could hope the crises are fewer and less severe, hope is never a strategy. However, crisis management is a proven strategy and we can be ready. The key to handling a crisis is pre-crisis planning and then executing that plan during a crisis.

Pre-Crisis Planning

Why plan by investing the money, time, and resources for something that may not occur? If you and your team do not know what to do or cannot react quickly enough in a situation where people die, economies are shattered, reputations are destroyed, and jobs are ruined, then you will be defenseless when litigation ensues and billions are lost.

An organization may be able to anticipate the probability of a crisis occurring and contain the related risks. A good strategy is to look to the past to help plan for the future. The following items and steps should be considered in planning for a potential crisis:

•    Create a proactive, crisis-specific plan. Are there certain triggers that set off a crisis? Any common themes?

•    Designate a crisis management team (CMT) with discrete roles for each individual outlined and key contact information readily available.

•    Familiarize the CMT with the history and the plan, and train them to mobilize quickly and react swiftly to the potential issues and threats activated with each crisis.

•    Hold drills to train the CMT and staff responsible for managing the crisis and identify the plan’s strengths and weaknesses.

•    Develop good relationships between the CMT members designated to communicate with the public/media and the key contacts, and have contact information readily accessible.

•    Plan the key messages internally and externally, subject to some modifications as needed, regarding the unfolding crisis. Include assurances that things are being handled/monitored/investigated appropriately and that timely updates will be provided.

Fortunately, all will benefit from the increasing role of technology in crisis management, such as artificial intelligence (AI) and its valuable assistance in crisis management planning.

Many readers will be aware of the AI algorithms hard at work to support them in their everyday personal lives through services like Alexa, Spotify, and TurboTax, to name a few. But AI is also becoming one of the most useful, efficient, and valuable tools in a lawyer’s arsenal for handling crises and/or mass casualty events, including mass shootings, wildfires, building collapses, and major transportation accidents.

AI for Effective Crisis Management

At its core, AI encompasses algorithms, software, and hardware that are programmed to mimic past or projected human decisions. It involves teaching computers how to perform tasks that, until recently, required human intelligence to complete.

According to a January 2022 Law 360 article, “How AI Can Transform Crisis Management in Litigation,” (written by Stratton Horres, co-author of this article), there are three areas in which AI can be applied as a tool for effective crisis management: prediction, data management, and problem-solving. We will discuss those three areas below.

Prediction. AI can be used as a predictive tool before a crisis occurs. Specifically, AI can:

•    Identify potential crises and pave the way for creation of a crisis communications plan that will help an organization to avoid, or at least reduce, the negative impact of such crises.

•    Conduct a vulnerability study and assessment.

•    Create a crisis management plan based on results of the vulnerability study and tailor the plan to the crises identified.

Companies using AI technology should adopt an AI policy that incorporates best practices to identify and guard against liability risk and ensure that the company is prepared for potential catastrophic events, as well as the inevitable litigation arising from them.

Significantly, when a crisis occurs, speed and accuracy of response are essential, as it is a rush to the truth, and the first one out of the box with a reasonable response usually wins—or at least has a huge early advantage. AI can provide that significant advantage.

Data Management. AI is a superior data management tool for archiving, detection, records retention and destruction, data loss prevention, and breach notification functionality in its most sophisticated forms.

AI can be used to:

•    Collect and analyze vast amounts of social media information about an event and the victims, injuries, and potential damages; this invaluable free discovery can be used in analyzing exposure and creating damages models.

•    Collect, analyze, and store real-time news reports and information online.

•    Update all of the above, and communicate results to the CMT.

•    Easily manipulate and retrieve data quickly.

•    Assist in evidence preservation efforts and establish chain of custody.

•    Create targeted reports at a touch on any subject needed.

•    Keep track of the members of the legal team, experts, and consultants.

•    Create and preserve witness statements and other critical evidence used in defense.

Problem-Solving. AI also is a significant problem-solving tool during a crisis:

•    Research, create, and suggest legal strategies to combat the crisis.

•    Test legal theories and strategy— what works and what does not.

•    Execute the strategy and facilitate communications among the team members so everyone has access to the same information and is on the same page at all times.

During a Crisis

Execution of the plan by the CMT is critical to get through the actual crisis once it occurs. Proper management of the crisis will determine the length of recovery and, in some instances, whether recovery is even possible.

The response to a crisis should be commensurate with its severity. While major steps are outlined in the crisis management plan, the team should be ready to adapt to any changes in circumstances that are unanticipated or otherwise deviate from expectations.

Communication is critical. Members of the CMT must communicate constantly with one another. It also is important to keep key stakeholders informed, including the organization’s employees. Externally, the team must track media reactions and media developments on the crisis, but also be proactive about getting ahead with those key contacts to control the narrative. You want people to avoid panicking. Panic brings chaos, business disturbances, and worse.

Post-Crisis

If you prepared for the first two stages, the time, money, and effort to recover from a crisis should be reduced significantly. The transition to a state of normality is something that everyone will crave sooner rather than later. However, as eager as everyone will be to go back to business as usual, the organization must remain prudent and safeguard the situation from a false sense of security. Management needs to learn the lessons from every crisis to better prepare for the next one.

Thinking and planning for the crises we’ve described is a difficult and depressing task, but one that is absolutely necessary and achievable. While one can and should do as much as possible to plan for all key potential crisis occurrences, crisis management should always be regarded as a work in progress.

Survival of the three key stages of crisis management—the trifecta—is integral to the survival and growth of any organization.