Nothing destroys shareholder value like a botched crisis response. Having a crisis management plan in place is as important as SOX 404 compliance. Tylenol’s CEO led a stellar response and ended up making the brand even more trusted. You should insist on an annual run-through of the company’s crisis management plan as part of “good corporate hygiene” to protect the shareholders.

Crisis Management and Your Board—Five Lessons from BPWhen a major company combines extensive disaster management expertise with a world-class board of directors, what happens when a crisis strikes? Try asking BP. Although the company’s Gulf Coast oil spill debacle now makes BP seem like the butt of crisis management jokes, just a year ago any corporate observer would anticipate the best from this massive multinational’s board and management. Certainly the BP directors, with their global vitae and savvy, would insist that a company facing huge potential environmental exposures should have immediate plans to both prevent and manage a disaster. The board’s fundamental risk management duties alone should see to that.

But no such sound crisis response plan was found at BP. Even in a sector where the company was most vulnerable to a disaster, a major oil spill, essential crisis planning was lax. In congressional hearings on the BP Gulf Coast disaster, U.S. Representative Ed Markey noted that BP’s emergency oil spill plan was a near-duplicate of ineffective, boilerplate plans from several other petro companies—right down to a telephone number for an expert who’d died years earlier.

Yet no board of directors should feel smug about how well their company has prepared for a crisis. As a member of many boards, from startups to major public companies, I’ve seen wide variation in how well management plans cope with a crisis. Worse, there are too many boards that never even ask about crisis plans. They have never properly considered and weighed the risks the company faces, much less how to respond.

This won’t do anymore. Increasingly, the media, shareholders, regulators, and the wider public expect that a crisis should bring out the best in a corporation. The company’s leaders should take center stage to prove themselves competent, in charge, concerned, and working effectively towards resolution. Further, “company leaders” today will include your board of directors. While BP CEO Tony Hayward was blasted for his public fumbles in dealing with the oil spill, the BP board (especially chairman Carl-Henric Svanberg) drew massive negative attention for their cluelessness. Solid crisis management planning can literally save your companies at such moments.

Crisis plans have several major elements, but the main two are internal and external. The internal crisis plans (what to do if the CEO dies, if your plant or product causes serious harm, if the company faces a major legal action, etc.) focus on technical, operational elements. Reviewing these is obviously a board duty. But then there is the external crisis management plan, dealing with investors, the media, and regulators, as well as company employees, suppliers, and the overall public. Here the board not only has an oversight duty, but, in today’s corporate climate, a tactical, even personal, responsibility. While BP directors were probably wise not to head to Louisiana and offer to roll up their sleeves, they did have an important public role in the external crisis management. Their failure should serve as your example…”