Be Prepared

In recent years, the exposure of corporate improprieties and the accompanying intense media scrutiny has created heightened cynicism and distrust of business among the American public. This environment is especially troublesome for financial service organizations since their success depends in large part on their ability to create marketplace confidence and trust. It is critical, therefore, that every financial services organization always be prepared to respond to a crisis in a way that will preserve credibility.

Most financial services organizations devote a myriad of corporate resources to creating and reinforcing trust through advertising and product/service promotion. At the same time, however, these same companies spend very little corporate effort to create an effective crisis management strategy to protect that hard-won trust. Experience shows that prior preparation can provide substantial corporate rewards since, even in some of the most troublesome circumstances, the real issue often becomes not the incident itself but the way it is managed.

Mayor Rudolph Giuliani's actions during the catastrophic events of 9/11 provide a notable illustration of the positive results of proper crisis management. Time's 2001 Man of the Year proved that preparation, instinct and common sense, coupled with effective communications, can play a major role in handling even the most extreme situations favorably.

What It Takes

Past crises can teach important lessons about how an organization can successfully deal with what could become a devastating incident. Our experience helping clients through a wide range of crises has taught us that the critical aspects of crisis management include:

Timing. When a crisis hits, an organization's response should be swift and to the point. It is important that an organization take control and get the bad news out as quickly as possible, rather than give a third party the opportunity to leak the news and use it to their own advantage. A delay in disclosing an adverse situation only invites negative conjectures and hyperbole.
Responsiveness. During a crisis, an organization should avoid providing a "no comment" response to the press or any of the company's various constituencies. In a crisis, people demand quick, incisive information. Companies who evade the hard and important questions cede control of the situation and invite the public to turn to other sources that may have little, if any, interest in protecting the organization or fairly depicting the situation.
Access. The most successful crisis management strategies utilize a multi-dimensional communications program to quickly and accurately disseminate critical information that will convey the "real story" to its various constituencies. Good communications can also prevent confusion and embarrassment by providing all constituents with the ability to provide ready, consistent answers to relevant questions. The Internet can prove particularly useful in providing organizations with a way to continually provide updated information to interested parties. Many companies place banners on their home pages to alert visitors to where to find the latest information. Some have even used paid Internet advertising to ensure that individuals using search engines to find information about the event are directed to the company's own site and not that of a third party that is looking to promote its own interests.
Candor. Honesty does count. If the crisis is the result of mistakes or omissions within the organization, management should make candid, straightforward statements conce
ing the nature of the problem and, most importantly, how and when it will be corrected. However, if the organization stands falsely accused, the corporate spokesperson (who under these circumstances should probably be the CEO) should be strong and indignant, providing a full and complete factual rebuttal to dispute the false allegations.
The Bottom Line

A crisis can represent a turning point in a company's history. How the organization responds to that crisis often plays an essential role in determining the future course of that history. The guiding rule for a successful outcome lies in the five Ps: Prior Planning Prevents Poor Performance.

Companies seeking to successfully shape opinion and remain credible in a crisis must effectively manage perceptions while bearing in mind that success will follow truth. It is, therefore, important that every financial services organization have a crisis management plan that guides all parties-management, corporate spokespersons, sales representatives, et al-on how to handle unexpected events. That ounce of corporate prevention can be worth pounds of attempted cure.