Imagine the worst-case scenario of a crisis that could strike your business. A plane crash, a disastrous fire in your office or factory, a scandal caused by an unethical executive, a smear campaign against you by an activist group, a terrorist threat, the urgent need to recall thousands of faulty products...
How prepared are you to deal with such a crisis? Have you assessed the likely risks that your business faces? Do you have effective policies and procedures in place, and does everyone in your organisation understand them? And has your CEO been trained to handle tough questions from news-hungry journalists, worried employees and angry members of the public?
Here's some practical advice about crisis preparedness, issues management and crisis communications from the CPRFHK.
Crisis? What crisis?
What's the definition of a crisis? Martin Spurrier, Senior Vice President, Asia Pacific, of Edelman Public Relations Worldwide (HK) Ltd., explains: “It's any issue or occurrence that profoundly affects the ability of a business or organisation to operate. It could be a physical disaster, but it could also be the imminent passage of a new piece of legislation. For some companies, a crisis is when a journalist calls them!”
Crisis management and communications
According to David Ketchum, CEO of Upstream Asia and the Chairman of the cPRf/HK, there's an important distinction between crisis management and crisis communications. “Crisis management involves assessing the risks, planning what to do when the plant explodes, planning when to call the fire department, and devising a process for deciding whether or not to recall a product. Crisis communications involves communicating with all the stakeholders involved in the crisis, including the public, government authorities, regulatory authorities, employees, the police and fire departments, your banker, your insurance company... You need to establish a process so that you're proactively controlling, or at least contributing to, the message. It's about making sure that you're rapidly getting as much input as possible to understand the situation, and then actively engaging with your stakeholders.”
Martin's colleague Charles Lankester, Managing Director, Corporate Practice, of Edelman Asia-Pacific, adds: “There are two elements: scenario- and risk-planning, i.e. the mitigation side and the crisis management side. But overlaying all of that is the old principle of crisis leadership. Traditionally, companies tended to be quite defensive, but they're becoming more proactive now. A good example is the issue of product recalls. It's a very expensive exercise, but companies now tend to recall products far more quickly than they used to, because they want to be seen to be doing the right thing. It's all about the perception, because it's their reputation that's at stake.”
How can a public relations firm help?
As Genevieve Hilton, Senior Vice President of Ketchum Newscan Public Relations Ltd., outlines, specific areas in which a public relations firm can help you, before, during and after a crisis, include:
- Carrying out a risk audit, i.e. systematically going through your entire organisation and identifying all the possible areas of risk. “If there's any risk that's in the quadrant of both serious and likely, that's the one you start preparing for first.”
- Devising a crisis management plan, identifying roles and responsibilities, and gaining internal buy-in.
- Training spokespeople and all staff about what to do and say in a crisis.
- Holding simulation exercises. “There's nothing that can prepare you better for a crisis than a simulation exercise. You can make it feel real, and people will in fact act just like they would in a real crisis. That reveals an enormous amount about your structural or organisational readiness, and you'll figure out pretty fast what you need to be doing to prepare for a real crisis.”
- Issues management, i.e. stakeholder mapping and engagement. “You go through the list of everyone you know, or might need to know, in the event of a crisis, and you meet with them beforehand to discuss what you'd do. Then, if a crisis does occur, it's not the first time you've talked to them.”
- Offering objective advice about the public relations implications of any business decisions you make. “For example, during a crisis you might be tempted to say: 'What if we offer them a one-time payment to make this problem go away?', and we'd reply: 'Here's what that would look like.'”
- Setting up a media centre; handling enquiries; screening out what's important from the background noise; helping your CEO to craft effective messages, and orchestrating the communication on a minute-by-minute basis.”
Companies do need to be totally frank about their vulnerabilities and the potential risks they face, advises Martin. However, he comments, that's harder than it seems. “Everybody says: 'But that could never happen to us' or 'That's not my responsibility'. So the first thing they should ask us to do is to carry out a thorough audit. For a property company, the obvious risks are fire, lift breakdowns, flooding, robbery and suicide. For hotels, food poisoning is an added risk. So you need to identify your risks, then test your systems to see whether you're properly prepared. In most cases, in our experience, companies are not prepared, and then the little crises can turn into very big ones.”
Who's in charge?
A significant issue is: Where does responsibility for crisis management fit within an organisation? Charles reports that there's no general agreement about this. “Unlike more traditional business functions such as finance, human resources and marketing, crisis management has yet to find a functional home. In some high-risk industries, responsibility lies within the security or health and safety functions. In other companies, crisis management resides within the public relations function. Practitioners generally acknowledge that neither alternative is ideal, because ultimately, successful crisis management encompasses all aspects of a business, including operations, marketing, communications, distribution and legal.”
A sensible investment
Crisis preparedness and management can be expensive, but consider the cost of not being prepared. Charles asks: “What would three days of down-time cost your business? How much management time would be spent managing an avoidable media controversy? What about the cost of the legal advice to manage the harassment suit that has been brewing for months?”
He continues: “It's ironic – we can go to a client with a crisis preparedness resource that costs 10 cents and they're not interested, but when a scenario that we've outlined actually does occur, they're willing to spend an unlimited budget to solve the problem. Typically, companies have to go through something unpleasant before they realise that crisis planning and preparedness does have value. That's human nature.”
Even small companies face crises, warns Genevieve. “A couple of years ago my smallest client faced a crisis when they lost their biggest client. They needed to be able to respond rapidly to media inquiries, so we helped them to prepare a Q&A.”
The bottom line is that a crisis could have significant long-term implications for investor confidence and shareholder value, so companies need to be prepared.
Famous last words
Some final words of wisdom from the cPRf/HK: Seek advice from a professional public relations practitioner, and don't let “But that could never happen to us” be your “famous last words”.
The Council of Public Relations Firms in Hong Kong serves as a voice and as a forum for the Hong Kong public relations consultancy practice and promotes public confidence in the industry. The Council represents 25 leading consultancies that have combined estimated fees of some HK$360 million, and employ some 450 people. For more information, visit www.cprfhk.org.