Recently I was contemplating some year-end messaging for a company with operations affected by the late summer 2017 hurricanes that hit the U.S. Gulf Coast. Happily, company staff were all safe and accounted for after these disasters. While clean-up and repair costs and significant supply chain disruption, including freight/logistics challenges, negatively impacted EBITDA, through it all the company continued to support customers and delivered quarterly EBITDA growth in a challenging industry.
Coincidence? Effectively navigating a crisis while still delivering strong results? Sure, a lot of things have to go right to deliver strong results, but without an effective crisis plan it could have all been derailed. Sadly, not all companies are as well prepared.
CRISIS COMMUNICATIONS READINESSSource: Freshfields Bruckhaus Deringer, Containing a Crisis, 2013
In my view, there are two very broad crisis categories – Operational and Corporate – each with several subcategories. For example, an operational crisis can relate to a company’s ability to conduct business within its own facilities as well as events at critical suppliers or customers (e.g., supplier performance issues or customer bankruptcies). Corporate crisises can relate to reputational, financial or regulatory issues, such as allegations of harassment, fraud, environmental violations or an inability to access credit.
Every crisis is potentially a financial crisis with reputational, profitability and valuation implications, that’s why Investor Relations should be imbedded in process. Companies should have a holistic crisis plan with well-crafted, relevant decision matrixes that reflect key guiding principles such as protecting people (employees, customers and communities), preserving assets or minimizing disruption, etc. The decision matrixes should be broad and flexible enough to handle an array of contingencies and include an outline of roles, responsibilities and, where necessary, information and work flow. The crisis team should encompass a variety of disciplines and expert resources to guide and execute a response. The people involved may be different depending on the crisis and decision matrixes can help identify this.
Now, having a plan is not enough. It’s essential to practice it to identify gaps and enable the crisis team to build relationships and trust with each other. Whether you do a table-top simulation or a robust fire drill, the experience will make you faster and nimbler when the need is real – an important consideration in today’s 24/7 news and social media cycle.
Practical Tips for IROs:
- Crisises aren’t always a surprise. Warning signs often abound. Develop a bullet-point outline for top of mind issues. Yes, there will be holes and you can’t anticipate everything, but it will be faster than starting from scratch.
- Keep a key contact list with you – at home, the office, your briefcase. Even better, save a PDF copy to your phone, tablet and laptop – you’ll almost always have one of these with you.
- Be prepared to handle a crisis remotely. Develop a process checklist or reference sheet (see sample template attached) that contains emergency contact information and login IDs for key vendors such as your newswire service. Again, keep a copy with you and on your electronic devices.
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Lead-IR Advisors, Inc.