May 19, 2010
When an issue turns into a crisis Comment by Anthony Payne
According to the cynic’s dictionary, a crisis is only a crisis if the media get hold of it. If they don’t, it’s just an issue. The media have been getting hold of lots of issues recently – Greek bonds, insider trading, anything to do with Bernie Madoff. Some of them have turned into fully-fledged crises. This, as well as the continuing focus on the financial sector by the media, demonstrates why hedge fund managers should hedge their reputational risks. Crises happen all the time and they are usually not foreseeable nor necessarily where you might expect them. A crisis could be a fire, it could be a robbery, it could be a high-profile sexual harassment case, or it could be a rogue trader. Given the odds, it’s highly likely that some kind of crisis is going to hit your firm sometime in the next couple of years. There are many aspects to being prepared for a crisis. Some, frankly, are not worth preparing for in advance because of their low probability of occurrence. If aliens do abduct your entire management team, you won’t have a crisis plan in place to deal with it, but at least it will be interesting. But almost all crises have a consistent element, which you can and should plan for in advance – how your company will communicate with the media during and after the crisis. Why? Because how well your company manages the media during a crisis could determine whether your company gets hurt, recovers, or even goes to the wall. Many companies who do not handle these issues suffer the ultimate fate – the death or reorganisation of the company. The fact is that if you don’t communicate to the press immediately, you lose your greatest opportunity to control events. This means that you need to get your message out quickly to prevent falsehoods becoming fact. In the recent insider trading allegations, one company took a week to verify that the accusations related to their employee’s personal trading account, and had nothing to do with his work for the firm. But by that time, the impression had taken root that the firm itself had been involved in dodgy dealings. In a breaking story, journalists look for anything new to continue fuelling the fire. They will examine
every aspect of your company in an attempt to uncover interesting and fresh angles that can be parlayed into a few hundred words worth of newsprint. Getting to them first with a prepared statement can dampen the fire. At the very least it will ensure that your spin on the situation will be aired. A sensible crisis management plan consists of just eight elements: SCENARIO PLANNING Identify worst-case scenarios and group them by category. Come up with broad strategies for dealing with each sort of crisis you might encounter. FACT SHEET Simply put, this is a generic list of facts about the company – useful in ensuring that everyone in the company is singing from the same hymn sheet, or indeed fact sheet. If your company hasn’t got one, create one. MEDIA LIST Know who you need to deal with. You should keep a list of all key reporters and journalists, with up-to-date contact information. ROLES AND RESPONSIBILITIES Work out who is going to be dealing with the media, who is going to be the spokesman for the company and who is responsible for messaging (creating and ensuring consistency in the company line). TRAINING The spokespeople should be trained in dealing with the press. REHEARSAL Role-play a crisis to test how the team responds, and keep role-playing until it seems to go right. Q&A Much like the fact sheet above, this contains an updated Q&A with all approved information that can be given to the press. MONITORING You should ensure that all media, including social media, are being monitored for any mentions of your company or key staff. All firms, even small ones, should take the time to set up a crisis plan. After all, you never know when a small issue will be blown into a threat to your company’s reputation.