xv) Crisis Management
Need to understand Crisis Management. Every organisation needs to prepare itself on how to handle a potential crisis. This involves planning, simulations and thinking about reputational risk issues. With the rise of social media and 24 hour news cycle, there are increasing risks, especially around reputation that are becoming harder to manage. One of the biggest challenges facing organisations is gaining executive approval and sign-off on how to immediately respond to the media.
Some tips include
- crisis responses need to be fed into the established channels of communications
- initially acknowledge the event (have some approved responses ready)
- have clearly established approval pathways through the organisations so that communications can respond quickly to the changing situation
- get the senior manager to respond with empathy to the event
- use social media like Twitter, YouTube, ie video is better at conveying emotion than the typed word
- maintain control of the narrative by continually communicating (even if little new information to report)
- never allow a public information vacuum to develop as it will be filled with misinformation.
It is a delicate balancing act defending your organisation and its financial interest without appearing disrespectful to the people impacted by the disaster.
How to Handle a Crisis
People are less likely to feel sorry for large, successful corporates when they have a crisis as they are well resourced and executives are highly paid.
The best approach for the corporate is to say 'I'm sorry' and say no more - saying any more can devalue the apology.
Playing the victim card, ie blaming the pandemic, etc, is usually counter-productive.
It is important to keep apologies and statements simple, especially at the start of the crisis:
"...When a crisis is happening customers have been impacted, so offering too much of a rational explanation is not going to be heard by an emotional audience. Which is why a simple and sincere apology to start with is important. There will be a time to offer the full explanation and context of what has happened, went wrong, etc, but in the initial period it won't be heard and can be misinterpreted..."
Andrew Hall as quoted by Sally Patten, 2022h
A simple and sincere apology needs to be repeatedly communicated.
Social media has provided a convenient communication vehicle for people to vent their dissatisfaction. Also, since the pandemic (starting 2020), people are more short tempered, ie
"...Covid-19 has shortened everyone's fuses..."
Sue Cato as quoted by Sally Patten, 2022h
After a crisis it takes time to re-establish the brands and win back confidence and trust from the community.
Furthermore, with a cyber attack, it takes time to rectify, ie
"...it takes 70 days to contain a cyber breach, which includes conducting investigations, determining what data has been accessed, eliminating the particular threat and trying to minimise the risk of further attacks..."
Brendan Read as quoted by Sally Patten, 2022h
Some Australian recent examples:
- Optus (cyber attack, 2022)
- Qantas (poor customer service, 2022).
- CBA, after the life-insurance financial advice scandals plus money laundering breaches and the Australian Prudential Regulation Authority's scathing report on the bank. One of the first actions from the CBA was to reset its purpose, ie
"...to improve the financial well-being of our customers and communities..."
Andrew Hall as quoted by Sally Patten, 2022h
This revised purpose gave the staff something to work towards; it resulted in simplifying their bank and divesting divisions such as life-insurance and wealth management; however, the revised purpose they needs to be more than just a marketing statement.
Need to focus on why you exist and on actions, not words, such as a shift to non-financial risk management by CBA.
The CBA came up with 50 actions to improve its performance, like removing $2 ATM withdrawal fee, be more helpful to vulnerable customers, etc
Handling Crisis Management
(source: https://infograph.venngage.com)