corporate crisis mgt

8/8/2019 Corporate Crisis Mgt

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MissionMode Solutions, inc.111 N. Chestnut St, Suite 200, Winston-Salem, NC 27101US +1 877.833.7763 | Intl +44 1494 837198www.missionmode.com | [email protected]

Executive Briefing White Paper

Corporate Crisis Management:How to Minimize the Chaos

In this article Elizabeth Stevens provides an executives introduction to crisis management, whyits important and the key tenets for successful crisis management.

The business world is getting more complex and results need to be obtained faster.Organizations that hitherto have prospered with a methodical response to threats using acombination of planning and insurance no longer have that luxury. Incidents are becoming morecommon inside and outside the enterprise. They are also less predictable for when and what willhappen. What is required is a way of managing any crisis irrespective of its source.

Vital to managing a crisis successfully are people, processes, and platforms. Underpinning theseis the need to communicate effectively between all participants and stakeholders. Miss any andthe crisis can rapidly escalate out of control increasing the damage to assets including peopleand brand.

And if there was any doubt about the long term effect of a crisis on an organization then a study

conducted by Oxford University and the Sedgwick Group (now Marsh) should prove interestingreading. The study analyzed the impact of catastrophes on shareholder value, and evaluatedcompanies that responded well to a crisis as well as companies that responded poorly. Notsurprisingly, companies that didnt respond at all or responded poorly suffered a decline instakeholder confidence, but quite interesting to note that the companies that recovered wellactually saw a 22% positive difference in stock price.

Elizabeth Stevens is an acknowledged leader in the fields of Crisis Management, Emergency Response,Safety and Security. Her career has spanned many industries including aviation, retail and financialservices. Trained by the Federal Aviation Administration and the National Transportation Safety Board,

during her career at Northwest Airlines (NYSE:NWA) she worked on in excess of 300 incidents and accidentinvestigations. At Target Corporation (NYSE:TGT) Elizabeth built a dedicated crisis management team todeal with the issues relevant to the retail world. She did likewise at Ameriprise (NYSE:AMP) proving that the

most effective crisis management is through an all-hazards approach applicable across industry.

Throughout her career, she has worked with numerous other U.S. Government agencies, non-governmentalorganizations and professional associations, including DHS, FAA, TSA, NTSB, FBI, CIA, DOJ, DOD, FEMA,ICE, OSHA, NRF, RILA, BENS, IAFC, SIFMA, NASD, SEC and American Red Cross at local and nationallevels. Under her guidance, companies have responded effectively to 9/11, hurricanes Katrina, Wilma andRita, the SE Asian tsunami and I-35W Minneapolis bridge collapse as well as hundreds of internal incidents.

Elizabeth has represented the State of Minnesota in Department of Homeland Security initiatives.

During her spare time Elizabeth continues to volunteer for various public emergency response bodies.


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Corporate Crisis Management: How to Minimize the Chaos

Elizabeth Stevens

MissionMode Solutions, inc. 2111 N. Chestnut St, Suite 200, Winston-Salem, NC 27101US +1 877.833.7763 | Intl +44 1494 837198www.missionmode.com | [email protected]

Crises vary in severity and frequency.They are at least somewhat unexpected

and involve some risk of loss. Preventwhat you can, and invest in mitigationefforts to minimize your overall risk.

Youare responsible forcorporate preparedness.

What is Crisis Management?

Hey thats my favorite store! said the boy, pointing to the business card ID tag on my briefcaseas I settled in for the flight. Then he asked Whats crisis management?

At the time, the Department of Homeland Security was in its infancy, the US Government was

scrambling to hire Federal Air Marshals to protect commercial aircraft, and I was one of a handfulof people working in the private sector with a job dedicated to crisis management. Tsunami,Katrina and bird flu werent yet a part of anyones lexicon.

Well, I said, not wanting to keep him from his Harry Potter, Most of the time our stores runsmoothly, and you can shop and get what you want when youneed it. But occasionally, when bad things happen, like ahurricane or a major power outage, things get disrupted. Thatswhen I get involved to make sure we take care of our teammembers, our guests, our stores and the communities we serve.

That was an acceptable response for a 10-year old. For others, crisis management cant bedefined so simply. The corporate Department of Homeland Security/FEMA analogy Iveoccasionally used doesnt fully explain the convergence of safety, security, business continuityand risk management. For those who are tired of the complexity of business risk management,disaster recovery details and the doom and gloom were all going to die tabletop scenarios, Imgoing to try to simplify it a bit.

Read on and youll learn what crisis management is, what I call the Ps of Preparedness are, andthe single most important element for any plan or program.

Bad Stuff Happens

For many leaders, crisis is par for the course. This is evidenced in corporate lingo taken straightfrom emergency management and military manuals. Days at the office are spent fighting fires(managing unexpected issues) or drinking from the fire hose (quickly learning all about a topic)to prevent a crisis. Important work is mission critical, evaluation occurs in a post-mortem andhindsight is documented as lessons learned. Most likely the corporate crisis of the day doesnt

actually involve injury, illness, crime or other lasting punishment, and would be better describedas a challenge.

But true crisis? Since 9/11, when the intentional harm of terrorism hit American soil and brought anew set of fears, dozens more disasters have demonstrated the need to be prepared for justabout anything. Wildfires, hurricanes, earthquakes, floods, tornados and tsunamis destroy entire

communities. SARS takes lives and travels by jetto infect other countries, and only hints at thehorror of an eventual Pandemic Influenza.Bridges fail. Crazed shooters take aim at studentsor shoppers. The electrical grid goes down acrossthe North-Eastern quadrant of the U.S. Trappedunderground, miners run out of oxygen. The worstdisasters, although infrequent, claim many lives,

and come with high stakes. An all-hazards approach envisions preparedness for any situation,without regard to cause, complexity, and scale.

The more frequent events that fit in the crisis category dont necessarily involve completeproperty destruction or meet the definition of mass casualty. Imagine being inside theheadquarters of a pet food company as CNN broadcasts an unfolding story of deadly dog food.Or, immediately following your promotion to Vice President, Investor Relations, youre handed anote that reads CEO son arrested; DUI & assaulted officer, local news airing police vehiclevideo, GC and VP media relations are on flt. to China /not available today. Or a company laptop


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Elizabeth Stevens


Preparedness involves a lot,

but principally, people, a

program, and a platform.

containing social security numbers and other sensitive client data has been stolen, and thetechnology department cant verify whether it had been encrypted. Or, a YouTube video showstwo of your trusted pilots boarding the corporate jet, the paint barely dry with your new logo, alongwith several young bikini-clad women to audit the liquorcabinet. Sound familiar? Bad stuff happens.

Crises vary in severity and frequency. They are at least

somewhat unexpected and involve some risk of loss. Preventwhat you can, and invest in mitigation efforts to minimize youroverall risk. And carry a good insurance policy, of course. But when the situation hits home,whether your company is at fault or simply suffers the impacts, youve still got to weather thestorm. Are you prepared for a crisis? Anycrisis?

Preparedness involves a lot, but principally, people, a program and a platform.

Preparedness

The People: Crisis Management Teams

Your preparedness plan likely involves teams. Continuity planning teams, emergency response

teams, crisis response teams and the critical senior executives the ones with C-levelresponsibility for it all who have the authority to make highly unusual things happen when acrisis is declared. Any major event would bring all of these teams to the table in short order.

Today, the number of Fortune 500 (Global 5000) employees whose work is focused on one ormore elements of crisis management has grown exponentially as jobs are being created withinprivate companies to provide risk assessment, planning, response training and incidentcoordination for bad stuff. I recently attended a business continuity association meeting atwhich a State of Minnesota official presented lessons learned during the response andrecovery to the complete collapse of a major interstate bridge that resulted in 13 fatalities andmore than 100 injuries. One of the points stressed: its critical to have the best people workingwith you, who bring a variety of experience, talent and flexibility to get things done on the fly.

The same companies that used to rely entirely on public sector emergency response capabilities

have now invested in enhanced protection, recognizing that safety and security require more thana patrol guard and an insurance policy.

A solid program puts the right people in place.

The Program: Have a Plan B

Most governments in industrialized countries have developed response plans that outline what todo and how to do it for various agencies and levels of government. Clearly, though, theseplans were not developed to ensure yourcompanys long-term viability and best interests in theface of any catastrophe. Neither government nor military forces can protect from all harm, and nogovernment can provide comprehensive response and recovery services to ensure everybusiness is made whole, free of charge, in the face of disaster. And the majority of corporatecrises dont even require law enforcement or fire department or other massive government

response, as the source of the crisis as well as the loss are contained within the company. Youare responsible for corporate preparedness.

The growing interest in enterprise risk management stems from multiple seeds. Influenced byregulatory requirements, prompted by media accounts of an insufficient government response, orbecause its simply the right thing to do and fits well in community relations programs orcorporate responsibility profiles, executives take action. Of the myriad reasons promptingcompanies to take-on crisis management, perhaps most painful are the been there, done thatexamples. They are the ones who were caught unprepared and without contingencies to supportunusual, unexpected and unnerving situations.


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Elizabeth Stevens


Your people are the who,your program is the what,and the platform is the howof crisismanagement.

And during the initial fast-paced,high stakes hours and days ofcrisis, you need to have a solidplatform to support the responseand recovery efforts.

A robust preparedness program involves policies, procedures, plans and processes that areflexible and scalable, to address the broad range of incidents. Your crisis management, disasterrecovery and business continuity plans are comprehensive, tested and audited.

You have the people, and the plans. Youre close to being ready.

The Platform: Be In as Many Places as Possible

You are responsible to run your business and likely do it efficiently, effectively andenthusiastically. Youve created value with operational strength, a best-in-class product,committed executives and an efficient strategy. Your people even like working for you. Its allworth protecting. Even a seemingly insignificant situation, unaddressed, can fester and grow intoa major threat. You know that just one crisis can hamper or even cripple your timelines,productivity, and energy. So far, youve got your people, and youvegot your plans to rely on.

The plans tell you what to do, and what you do in the hours and daysafter a critical event will determine, in part, how successful you are atmanaging back to normal operations, minimizing losses, andmaintaining value. But the plans do not specifically tell you howtosimultaneously navigate the complexity and chaos of these abnormal and often emotional

situations. That shortcoming is crucial.

One revealing description of the enormity comes from On Top of the World:Cantor Fitzgerald,Howard Lutnick, and 9/11: A Story of Loss and Renewal, 2003, by Tom Barbash, a book thatshould be required reading for any executive with a response role. From the perspective ofCantor Fitzgerald CEO Howard Lutnick, whose brother was among the almost 700 CantorFitzgerald employees who died in the World Trade Center:

So many things were going on at the same time. And I needed to treat each issueseparately, to segment each hour so that I could be in as many places as possible, sothat at each moment I could be on top of what was happening. Each time I spoke tosomeone, I needed to say to myself, this is what Im doing now. And if that took a halfhour, then when the time was up I gave the same attention to the next subject. Therewere emotional issues, and business issues, and some that touched both areas, and I

couldnt be emotional with the banks, and I couldnt even think about the business when Iwas talking to the widows of my closest friends. I shifted from extremes, sometimes fromminute to minute.

Anyone whos played a significant role in crisis response will tell you they werent fully preparedwhen the real thing hit even with robust plans and hours of training and exercises to practicevarious scenarios. Use your plans, experience and best judgment. But the plans themselves are

just the what of your response. And during the initial fast-paced, high stakes hours and days of crisis, you need tohave a solid platform to support the response and recoveryefforts.

Your people are the who, your program is the what, and theplatform is the howof crisis management. The platform

includes how you assemble the crisis teams, whether in oneroom (a million-dollar high-tech command center or the back room at Perkins using paper napkinsfor a whiteboard) or virtually (conference call or an online shared website) and how you share anddocument information (verbal, fax, text messaging, email). At a minimum, your platform shouldbe portable, flexible, reliable and tested, because that platform absolutely must support your teamwhen so much is at stake.


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Elizabeth Stevens


If you dont get information outquickly, people will create contextthrough speculation and evenmisinformation, if necessary --they wont wait.

The single most important element in any crisis managementprogram is always communication.

Communication: The Single Most Important Element

People need to know whats going on, and youre expected to provide direction. If you dont getinformation out quickly, people will create context through speculation and even misinformation, ifnecessary -- they wont wait. You may not have all the facts, but in todays world of instant

messaging, accuracy invariably takes a back seat to

timeliness.How do you get information? Validate the facts? Provideupdates and send out status reports? Make changes to theplan on the fly and ensure everyone knows? How do youknow everyone is safe? How do you contact your responseteam? How fast can you have everyone up to speed in the

midst of the chaos? What is unclear? What have you not addressed? Who else do you need tocommunicate with?

From the golden hour that immediately follows a critical incident through the first three days ofany disaster, the actions taken and not taken will determine your ability to respond and recovereffectively. Get your people and your plans together and get to work. Time is critical, and yourfirst need is for information. To get information, you need to communicate.

The single most important element in any crisis management program is always communication.Not leadership. Not a hot site. Not multiple redundancies. Communication - all kinds.

Youll need to navigate the tenuous elements that threaten your core business. Communicatewell -- quickly, with reasonable accuracy, providing frequent updates, and soliciting input from


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Elizabeth Stevens


Communicate well -- quickly,with reasonable accuracy,providing frequent updates,and soliciting input fromvarious audiences -- and theend result will be smoothsailing once more.

During any unusual event,you must communicate moreoften (and in more ways)than you would otherwise.

various audiences -- and the end result will be smooth sailing once more. Communicate poorly,or worse not at all -- and your response to a bad situation may actually create more problems,perhaps even sinking the ship.

In a crisis, you communicate at multiple levels. Most critical is the information exchanged directlywithin the organization and among your various crisis teams. These are the dedicated memberswho contribute to critical content that shapes both the response actions and the various

messages shared with others. Beyond this you need tocommunicate with employees and contractors, customers,partners, vendors, clients, shareholders, the board of directors,regulators, and perhaps even the media. The sooner you knowwhat needs attention the sooner you can address those needsand get things back in order.

Communication is too broad a topic to tackle without somecontext, and adding the word crisis to communications conjuresthoughts of CNN media briefings. Conducted within hours of major breaking news, thesefeature a fire chief, police chief, mayor or CEO who is clearly concerned, likely overwhelmed, andnot able to answer all the questions. Although crisis communications plans must include mediarelations elements, its just one kind of communication.

Peter Sandman is a recognized crisis communications expert who works with government andprivate sector clients to improve risk communications. His candor is refreshing as he challengescorporate communicators to radically change their fierce protective stance during crisis. Within alarger body of work, Sandman has identified six focus areas for crisis communication.

Six Focus Areas for Crisis Communication - Peter Sandman

1. Information content: What do we know about this particular crisis? What do we wantour audience to know? How do we communicate this content simply and effectively?

2. Logistics and media: How do we reach our audience with our information content?3. Audience assessment: Who do we need to reach? What do they know, think and feel

already? How should this affect the way we communicate our information content?4. Audience involvement: How do we solicit suggestions and feedback from our

audience? How do we provide opportunities for people to be active rather than passive?5. Meta-messaging: How do we manage the non-information content of our messages

(how reassuring to be, how confident to sound, how to address emotion, etc.)6. Self-assessment: How will our own values, emotions, and political problems affect our

communications? What are we likely to get wrong? How can we overcome the internalbarriers to good crisis communication?

Sandmans focus areas can be applied to many levels and types of communication within theorganization, outside the organization - to help get the right messages out. All six are important,but for this discussion, I will focus on numbers one (the message), two (the mode), and onespecific part of number six (the method). For more information visit www.psandman.com.

Good leaders are able to instill confidence even in difficult times. To avoid an avalanche oflosses, executives must carefully ensure that all communications are as truthful and timely aspossible, and that they are consistent with other communications, regardless the audience. What

you tell your Board of Directors and what you announce to your

employees via a memo at the time clock should not be in conflict,although the tone and tenor or content may vary. Transparencyis the current buzzword that comes to mind.

This is easier said than done, and its often because there are somany communicators within an organization. Many companies

differentiate communications according to the audience. You may have a very small companywith just one communications expert, but its more common to have an army of them: mediarelations managers, shareholder liaisons, associate/employee/team member or other internal


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Elizabeth Stevens


To ensure a successful responseto anycorporate crisisyou absolutely must ensure thateveryone is on the same page.

Most crises dont happenconveniently in your head officewhen all your key players are waitingthere for a crisis with nothing elseimportant to do.

communications specialists. You have people responsible for community communications andsome who handle the vendor/contractor/supplier interactions. Yet others write storyboards foradvertising purposes. And because of the various and somewhat confusing options forcommunications, theres the engagement engineer whose job it is to get you to the rightcommunications person/people within each division.

To ensure a successful response to anycorporate crisis,

and to protect and preserve the long-term value you havecreated in your company, you absolutely must ensure thateveryone is on the same page. Whether or not your crisisbecomes public or is contained internally, you must ensurefactual accuracy, provide everyone with a common plan,document and update your progress over and over and over again to confidently address thematter at hand and make sound decisions. If you dont have a way to get everyone out of stalevoicemail and email and into the current situation status, your risks are multiplied.

Critical Communications Considerations

The Message

The messages you create are derived from what Sandman calls Information Content. You needto gather as much relevant information as possible, and quickly, from your people and othersources. Whats happened? Is everyone OK? Whats the damage? What actions have alreadybeen taken? What decisions need to be made? Who else knows, and who should know butdoesnt? Youll gather and document and assess the information, make decisions, take action.Create specific communications for various stakeholders, and distribute those in short order. Astime goes on, you need to update your information, anticipate questions, and refresh yourmessaging accordingly.

The Mode

The import of Sandmans question How do we reach our audience with our information content?cannot be understated. Most crises dont happen conveniently in your head office when all your

key players are waiting there for a crisis with nothing else important to do. At first notification,your response teams are most likely tending to more routine matters, and certainly not in onelocation. You should have multiple modes and methods identified, because you may not be ableto use one or more of your normal modes of communication. Whether written, verbal, visual oraural, your message and information should be shared using more than one mode.

Commonly considered options include phone (land line,mobile, VOIP, or satellite), text messaging, fax, pager, e-mail, and web-based options. Less common but worthconsidering are public address systems, megaphones,signs (electronic and old school), posters, billboards,newspapers, flyers, brochures, post/parcel (USPS, UPS,FedEx, DHL), courier, radio

(AM/FM/EmergencyAlert/HAM), television, walkie-talkies, closed-circuit camera systems,

videoconferencing, teletype, and, the old-fashioned face-to-face discussion.

Phone systems are particularly taxed in the first few hours following a significant incident, simplybecause everyone is attempting to communicate something to someone and the systems andnetworks cant support the concurrent demand. Capacity isnt the only limiter. Safe from atornado below ground level you might find your phone service unavailable, if a repeater hasntbeen installed.


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Elizabeth Stevens


Expect the criticalinformation to change the crisis is dynamic.

Choose a secure system that allows

each stakeholder to directly input updateswithout an intermediary, as this reducesdelays and increases the accuracy.

So whats working? To start with, determine how yougot the information, and work from there.But give careful consideration as you choose your modes, and understand the benefits anddrawbacks of each.

For example, emergency communications must be made immediately and communicated broadlybecause safety and health are at risk if action is not taken. These most critical messages mustbe succinct, directive, and repeated to be effective. Modes used include public address systems,

emergency megaphones, and industrial sirens that urge people to seek shelter, and are oftenaccompanied by flashing strobe lights or other visual cues.

On 9/11, text messaging was the only communication for hundreds asthey descended the stairwells of the World Trade Center. In NewOrleans after the flooding, satellite phones and ham radios wereneeded and later billboards and newspaper ads. If youve evacuatedyour offices due to a gas leak, and only the crisis team carries mobilecommunication devices with the rest of the employees relying on their desktop PCs thensending a company email with the all clear/you can return to your desks message will be thehighlight of your lessons learned report.

Draft the messages, determine the modes, and deliver the meaning.

The MethodThe method is where you find the key to success. Your method for getting people on the samepage, to share and discuss information, make decisions, and document your response, willprovide the critical platform mentioned earlier. Sandman wisely identifies self-assessment as akey focus area for crisis communications, and begs the question How can we overcome theinternal barriers to good crisis communication?

How do you get people out of the nonstop game of catch up with four new voicemail messagescoming in with each one call returned? The ideal solution is to have a web-based, hosted servicethat notifies your people, has your program documents and plans at the ready, and provides a24/7 one-stop-shop crisis coordination center for all of your stakeholders.

You cant expect that everyone on the crisis response team will be immediately able to respond toa common physical location. Your ability to convene and communicate may involve just onemode of communication or several. But youve got to get people in place somehow before youcan even begin asking the first questions.

What processes are you using? Are you using old-fashioned, hand-written call trees that keeppeople tied to phones for hours or an automated data-driven call solution that gets the exactmessage delivered to hundreds or thousands within a few minutes? Thats the differencebetween starting your conference call in 10 minutes or 45 minutes from the word go.

That said, the faster your team assembles, the faster your response and resolution. The chaoticnature of these early assemblies contain an environment ripe for errors: during a conference call,other phones are ringing, static and background noise distort messages, people talk over oneanother and clarifications arent always made. People join late and drop off early.

Email conference call summaries that contain

critical decisions and task assignments dont getsent for more than 20 minutes after the call, andvaluable time is wasted. Email and voicemail areroadblocks for any crisis team trying to stay on topof a complex and changing situation. Web-based,

real-time situation rooms allow a single-source-of-truth approach for your extended keyaudiences.

Expect the critical information to change the crisis is dynamic. Details must be updated toensure resources are managed properly and stakeholders are kept in the loop. Choose a secure


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Elizabeth Stevens


system that allows each stakeholder to directly input updates without an intermediary, as thisreduces delays and increases the accuracy.

Fear and adrenaline drive some people to their peak performance, while others will feel unsureand uncomfortable. During any unusual event, you must communicate more often (and in moreways) than you would otherwise. The increased frequency and multiple modes are important, butwithin the crisis, do not send allmessages as urgent, sensitive or of high importance. Overuse of

priority messaging will defeat the purpose. To best manage your most critical communications,create a pre-defined view for posting to a shared, on-line situation room. This lets people get thecurrent information when they need it, 24/7, without distracting others. Tasks can be assignedand updated, and all the necessary plans and reference documents are right there.

Its Up to You

Employ your method in the midst of madness, and rely on your platform to support the program.

If youre not using a multi-faceted, secure, on-line solution as part of your crisis managementprogram, are you best managing the risks? Are you confident that you could get the informationyou need quickly in a crisis? Ensure all your players are at the table? Put your hands on thecurrent documents in time for the first call? Do you think your program employs the tools that helpeach of your people respond quickly?

Crisis is demanding. You need to ensure your program is supported with reliable technologysolutions that supports the challenges that come wave after wave, as crises keeps mounting.

That old insurance policy alone wont give you much confidence when it comes time to test theplans and take care of the crisis. Preparedness will.

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