Top 10 management crises in Latvia in 2024 and their lesson

Crises are not only a problem but also a source of knowledge. Especially when they happen in another country, and you can analyse them calmly without feeling emotional pressure.

Latvia is a small country, but its crises reflect common familiar challenges: management problems, lack of communication, and bad decisions.

How are Latvian situations like those of other countries? What are the differences? Most importantly, what lessons can be learnt from other people’s mistakes rather than our own?

To find answers to these questions, Ukrainian reputation and crisis advisor Sergii Bidenko spoke with Ojārs Stūre, a Latvian crisis management expert who has been researching major corporate crises in Latvia for several years.

The Latvian Crisis Top 10 was first compiled in 2019 based on a survey of experts with experience managing public and private sector organisations. Respondents rated the social importance of each event on a scale of 1 to 10.

Sergii Bidenko: Ojārs, what are peculiarities of the 2024 crises in Latvia that made it to the top 10?

Ojārs Stūre: Every year, we rank the most high-profile crises involving organisations, not individual politicians or personalities. This time, we have collected the following ten cases:

1. Uncertainty over the financing of Rail Baltica.

This is Latvia, Lithuania, and Estonia’s ‘project of the century’. It is a railway connection from Tallinn to Vilnius via Riga, to be used for civilian and military purposes. During the planning process, our politicians added additional facilities around the railway, counting on EU funding. Some of them have already been built, but it turned out that it was unclear how they would be financed. But the EU said: ‘We only agreed on financing the railway, not the infrastructure around it!’. That’s what caused the crisis.

2. The Russian drone.

In autumn, a Russian drone flew into our country. The problem was that our military did not notice it and did not shoot it down; it fell by itself. It also turned out that the official version was not entirely true, and this outraged the public.

3. Re-election of the President of the Bank of Latvia.

After the bank’s president term ended, politicians disagreed on a familiar candidate for his successor. At the last minute, they withdrew all candidates, so there was no one to choose from. As a result, the bank was left without a full-fledged leader, and the Bank of Latvia’s work slowed down. This caused another problem: the bank temporarily had no representation in the Central Bank of Europe.

4. The law on motor insurance.

The parliament passed a bad law requiring insurance even for idle cars. When it came into force, people were outraged. Eventually, the mistake was recognised, and the law was amended. The insurance was not cancelled, but the procedure for deregistration and registration was simplified so that people would not have to pay premiums without registration.

5. Data leakage.

There was minimal discussion of this, although it was written that this was the most significant data leak in Latvia’s history. There is a feeling that this case has been ‘hushed up’: 42 municipalities were affected, they reported that no classified information was lost.

6. The problem with the Latvija.gov.lv portal.

This is a portal where the state communicates with people. All citizens’ information and documents are stored there. VDAA manages it. Usually, if you receive any official communication, you will receive a notification by email. However, in May, the VDAA sent out a letter to everyone: “Please register or verify your email address. Otherwise, you will not receive notifications”. Many people missed this and stopped receiving notifications, missing out on essential data. Some earned significant fines; others lost their businesses. The president and the prime minister assured us they would investigate and compensate the victims. Instead of apologising, the head of the VDAA began to make excuses, but in general, the state behaved responsibly and admitted that it was to blame.

This is a rare case, and we will be able to see what happens in the future.

7. New electric trains.

The procurement of new electric trains was very long and painful. It lasted almost ten years, and when the trains finally arrived, they had technical problems. In winter, they broke down in the cold, and sometimes, they stood in the middle of a field, preventing passengers from getting off.

8. Museum of the Occupation.

One ‘rashist’ wanted to set fire to the Museum of Occupation. The attacker was detained. I wonder why this case was so highly praised.

9. The scandal of sexual harassment.

In the spring, female students accused two teachers at the Music Academy of sexual harassment. Journalists talked to the girls and prepared a story, and there was a huge uproar. The consequences were significant: the dean resigned (although he was not directly involved), and other universities revised the principles of relationships between teachers and students.

10. Terminating a contract between a large hospital and a construction company.

For the first time, one of the largest hospitals in Riga cancelled a contract with an influential construction company due to missed deadlines and poor quality work. The order was to construct a new building, which is a national project.

Usually, state and municipal institutions try to see things through, but here, the hospital said, ‘No, it won’t work that way,’ which had a powerful resonance.

Sergii Bidenko (SB): What is common in these crises?

Ojārs Stūre (OS): Organisations face governance issues in almost every case. Then, there were communication failures: internal inconsistencies and a lack of communication with the public.

It is also noticeable that the first reaction is often to remain silent or make excuses rather than provide clear information and offer immediate solutions.

SB: Are there any examples of crisis management in this list that can be assessed as positive?

OS: The story of the Latvija.gov.lv portal can be considered relatively positive. The president and prime minister promised that people would be compensated for their losses, and civil servants ‘took the blame’.

In addition, attempts were made to resolve the problems with electric trains and the Music Academy scandal. The train service, albeit ‘with incidents’, was eventually improved to an acceptable level. After the sex scandal, educational institutions began revising regulations to prevent similar situations.

SB: Have these crises improved the country, or is this just a list of ‘how not to do it’?

OS: I am sure some of these cases have made a difference. For example, for the first time, the parliament has investigated the problem with Rail Baltica in a quality manner, although it has not fully clarified the issue of financing. Also, the Russian drone incident forced us to modernise our air defence system quickly.

SB: Is there a ‘cultural code’ for crises in Latvia?

OS: There is a certain psychological closeness: until the situation is splashed out in the media, it is not considered a crisis. But we are seeing changes: more and more government agencies and businesses are trying to act more transparently and make statements quickly. However, there is still a lot of sweeping under the carpet. ’ This is especially true when it comes to security-related topics. We can say that the ‘cultural code’ in Latvia is either to avoid escalation or to provide minimal information if there is a risk of panic.

SB: What is the main conclusion or recommendation of the study’s authors regarding the crises of 2024?

OS: This study has shown how different crises can be. It teaches us the importance of acting constructively and responding to a situation, not just making excuses.

Our message has been the same for several years now: crises are diverse and can come from anywhere. Organisations should prepare an action plan in advance, so they don’t waste time making excuses or finding fault but rather move quickly to a constructive solution.

A crisis kit is needed — from well-coordinated internal procedures to open communication with people. Managers who know how to respond to the first symptoms of a crisis are usually better able to cope and reduce the negative consequences.

A crisis can show who’s who: if you know how to do the right thing, it’s hard to do wrong. And if you lack knowledge and courage, you lose time for self-justification. So, our key recommendation is to develop knowledge, procedures, and skills in advance so that you can act quickly and confidently when needed.

My task as a crisis management expert is to offer the knowledge and skills necessary to reduce risks and increase the chances of success.

Knowledge is power. If a person understands that 90% of problems come from themselves and simultaneously acquires the necessary tools, it is like a ‘complete winning ticket’.