Crisis Management vs. Risk Management
Risk managers seek to minimize the company’s risk. In some instances, it makes sense to deny liability, as when there’s a question of fault. However, in a public crisis, this might not be your best approach. Consider your reputation, your corporate philosophy and your customers when formulating your approach. It might make sense to accept blame to protect your most valuable asset —your good name.
Although people use the term “public relations” to describe everything from corporate image brochures to the duties of a sales clerk, “public relations” simply means using the mass media to get an organization’s message to the public. Used effectively, public relations can prevent a critical situation from turning into a disaster that can do irreparable damage to the business’s reputation and goodwill.
Effective Public Relations
Whatever type of crisis arises — whether it’s a scandal involving discrimination or harassment, a data breach or something else — taking proactive steps can reduce the potential damage to your company’s brand image, reputation and sales.
- Get informed. Instead of ignoring it, find out what went wrong.
- Get help. If it is a serious problem, hire a public relations consultant if you don’t have in-house expertise.
- Get in front of the issue. If the crisis is generating publicity, don’t ignore the media. Instead, get out in front of it. Appoint a qualified person, whether in-house staff or your consultant, to be your point person, and respond to media requests for information.
- Be honest. If the crisis occurred because of wrongdoing or negligence on the part of someone in your organization, be honest about it.
- Make it right. If people have been injured through your organization’s fault, make apologies and appropriate restitution. And let the media know you are making it right.
- Take corrective action. Take measures to prevent this situation from occurring again.
Although you may never be faced with life and death problems, any company runs the risk that a problem with its products or actions could affect its reputation. Having an action plan ready before crisis strikes will help you act quickly and correctly. To create a crisis communication plan, you must:
Before a crisis
- Identify your key audiences: These might include your employees, customers, prospects, stockholders, regulators, industry groups, local government, people in your community and the general public.
- Identify the media best able to reach your audiences in a crisis. This can include local and business newspapers, radio stations, local television stations, trade publications, investor publications, client newsletters, websites, emails to existing clients and telephone hotlines. Get the names, phone and fax numbers and e-mail addresses of reporters whose beat includes your area or industry.
- Develop a plan for identifying customers, employees, wholesalers, distributors and retailers who may be affected by the problem.
- Name a company spokesperson. Direct all media inquiries to this person. He or she should be able to handle press inquiries, make statements and work with your public relations firm (if applicable). This person should have the confidence of and immediate access to upper management.
- Train your spokesperson and CEO to deal with the media. Can they handle floodlights and intrusive questions? Role-play crisis situations.
- Prepare one-page fact sheets on the company, its products or services, its finances (if publicly traded) and its mission. Keep these updated for easy distribution when the media make inquiries. When a crisis occurs, prepare a similar fact sheet on the problem and what the company is doing to resolve it.
- Interview public relations firms. Even if your firm doesn’t use a public relations firm on an ongoing basis, you may want to have a public relations firm available to handle communications in a crisis.
After a crisis
- Alert the public and your key audiences to the problem.
- If people have been hurt by your company’s services or products, show compassion. Issue public apologies. Provide direct aid where appropriate.
- Recall faulty products and potentially faulty products immediately.
- Find the cause of the problem. Look at manufacturing, suppliers, distribution, etc.
- Mobilize other companies in your industry to look for a solution.
- Keep the media informed of your efforts to resolve the problem.
Tips for Handling the Press
- Respond to inquiries immediately. Reporters work on deadline, so if you fail to respond, your side of the story might not get told. A “no comment” or “the company failed to return inquiries” may be interpreted as evasiveness.
- Be honest. A company can survive bad news if it admits the problem and makes necessary corrections.
- Keep your answers short and simple. Think like an editor: long, boring speeches make bad news, whereas quick, pithy soundbites can make a story come alive.
Like your buildings or inventory, your company’s reputation is a valuable asset that deserves protection. Public relations, used properly, can help you protect this asset. Specialized policies can protect companies from liability costs related to breach of customers’ private information. Manufacturing and production firms can also protect themselves by purchasing product contamination/recall insurance to cover financial losses due to contamination, recalls or extortion by threatening to contaminate a product. Food processors can buy foodborne illness coverage to protect themselves from liability claims arising from contaminated food products.
Some insurers also offer limited coverage for crisis communications. This coverage can provide insureds with funds needed to help control bad news in a crisis.