Be prepared

Dealing with the media is a core skill when it comes to successfully managing the impact of a crisis. In the history of corporations there are several examples of this being done extremely well. But there are many more cases of poorly handled crises.

There are some golden rules that companies should follow in order to avoid the wrath of the media and emerge from a crisis successfully. The first thing to remember is to communicate. Journalists are drawn to disasters. If a company is involved they will need to react quickly to avoid the media narrative turning negative. Humans by their nature are quick to assign blame.

A company involved in a crisis should put an emergency action plan in place quickly. A key component of this is talking openly, honestly and, if lives are at stake, most importantly, compassionately. Companies that do so will stand a better chance of getting journalists, and the public, on their side. If they don't suspicions may be raised. Lying to the press or concealing the truth is not an option.

‘The most important thing to remember is to be quick to react,’ says Peter Power, a crisis management consultant, 'If a company is slow to react to media inquiries the vacuum gets filled by speculation and that gets worse and worse.' Events can quickly nose dive further if journalists don’t believe what the company is saying. ‘Denials may be seen as disingenuous and not sincere,’ warns Power, adding that: 'You must always be seen to be caring.'

When a Virgin train bound for Glasgow crashed in Grayrigg, near Kendal in February 2007, Richard Branson's response to the crisis is widely regarded as exceptional. The train was travelling at almost 100 miles per hour when several carriages derailed and slid down the embankment. One person was killed and five were injured.

Branson responded quickly and rushed to the scene of the accident to give a press conference—cutting short a holiday in the process. Rather than ducking responsibility Branson showed compassion with the victims—he was filmed visiting them in hospital—and praised the emergency services and the train driver.

The story became one about the heroism of the driver and less negative media attention was focused on the failure of the train and rail operators to protect their passengers. 'If you are perceived as caring, to be doing the best you can and not trying to duck the issues shareholders can be much more sympathetic,' said Power. 'You can use a crisis do demonstrate corporate integrity,' he added.

“Insurance is of little value to companies in the immediate aftermath of a public relations disaster.

Sir Michael Bishop's handling of the Kegworth air disaster is another example of good crisis management. Bishop was chairman of BMI when engine problems forced one of his Boeing 737's to ditch onto the M1 motorway killing 47 people and seriously injuring 10 more. Again the response was quick and Bishop offered himself up to the media inquiries. He filled the information void with his own feelings of compassion for the victims and he accepted personal responsibility and told the press what he was going to do about it. His emotional TV interviews from the scene of the crash were accepted as genuine and he received the sympathy of the media and public.

And how not to do it

In both of cases above, the companies concerned were seen to be communicating openly and honestly with the media. These stand in sharp contrast to the recent case of Trafigura, the oil trading company that allegedly dumped toxic waste on the ivory coast causing thousands of African's to become sick.

Following a BBC Newsnight investigation and legal battling Trafigura agreed to pay compensation to sick Africans. While Trafigura has always publicly argued that the waste was not harmful, internal emails published by the BBC and Guardian newspaper show that it knew that waste from its planned chemical operations—called ‘caustic washing’—was so dangerous that it was outlawed in most ports.

One email spelt it out: ‘US/Singapore and European terminals no longer allow the use of caustic soda washes since local environmental agencies do not allow disposal of the toxic caustic after treatment.’ Yet, the emails show that the company continued to search for ports that would handle the stinking sludge.

The BBC claimed the slurry was eventually dumped around landfills in Abidjan, after Trafigura paid an unqualified local man to dispose of it cheaply. ‘What followed was an environmental and human catastrophe,’ said the Guardian. 31,000 sick Africans launched an unprecedented group action compensation claim.

Rather than being communicative and compassionate, despite eventually agreeing to pay the claims, Trafigura launched a libel suit against the BBC. Several other newspapers claim to have been issued with similar legal threats. The BBC accused Trafigura of a cover up and of knowing that the chemical waste was 'highly toxic, potentially lethal and posed a serious risk to public health'. Trafigura admits that its reputation has been seriously damaged.

“Events can quickly nose dive further if journalists don't believe what the company is saying.

The value of crisis management

One of the best studies to illustrate the value of a crisis management plan was published by Rory Knight and Deborah Pretty. The authors assessed the impact of high profile disasters on publicly traded companies. They split the companies into two groups ‘recoverers’ and ‘non-recoverers’.

The recoverers were companies that quickly implemented a crisis response plan, they communicated well with the public and the event was generally viewed as well managed. On average, about a month after the disaster the share price of the recoverers was actually higher than before the disaster. Non-recoverers, on the other hand, companies with no discernable crisis management plan, suffered a negative impact on their share price up to a year after the event.

Insurance is of little value to companies in the immediate aftermath of a public relations disaster. A policy may be able to indemnify the business for some of the lost revenue associated with the incident but it will provide little security against the ensuing public loss of confidence if the incident is poorly managed. Good risk management is crucial.

In the first place risk managers should be looking to reduce the chances of any incident ever happening. If it does, it is not a failure of risk management. Instead risk managers should be able to contribute their intimate knowledge of the mitigation procedures and processes to help inform the crisis plan. It is another way in which they can add value.

A crisis is also an opportunity to demonstrate how well managed your business is.

Sources: Risk Issues and Crisis Management in Public Relations: A casebook of best practice, Michael Regester & Judy Larkin. Available from Kogan Page publishing.

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