When an event threatens the capability or integrity of your business operations, you have a crisis on your hands.
Whether it’s an accident involving a customer, an employee injured on the production floor, a natural disaster such as a flood or in a worst case scenario, a fatality on your premises caused by negligence, all can have a severe impact even on businesses who are thriving.
A common perception is that crisis management planning and insurance coverage for such an event is purchased in the most part by larger organisations or well-known brands.
The reality however is that more small and medium-sized businesses are also seeking cover, especially if their profitability is closely linked to their reputation.
Two very different examples of incidents that have occurred over the past 12 months immediately spring to mind. The first is a global brand, with the other virtually unknown to all but customers and employees until the incident occurred. The common theme across both examples was a disastrous event which required the effective management of a crisis.
16 injured, 4 seriously, at Alton Towers, June 2015
In June 2015, sixteen visitors were injured at Alton Towers, four seriously, after the crash that happened on the Smiler ride. In the aftermath of the incident Merlin Entertainments, who own the park, also closed their Oblivion ride and closed three other rollercoasters at other theme parks for safety reasons.
From the reports in the media, the human suffering as a consequence of the incident was managed with full responsibility taken by Merlin Entertainment. Commercially, an immediate pause to all marketing activity halted their crucial promotional period ahead of the school holidays and the result was an 11% drop in resort sales in the aftermath of the incident.
Marketing activity began again in July of the same year and whilst Merlin Entertainments end of year profits were much lower than expected, many economists believed their reported 2.2% increase in group revenues in September 2015 was in fact a very positive outcome considering the potential commercial impact the incident could have caused.
5 fatalities at Recycling Plant in Birmingham, July 2016
More recently, in July 2016, a tragic work accident occurred which involved five workers being killed at a recycling site in Birmingham when a 15ft retaining wall holding scrap metal collapsed. A sixth man was injured in the crush but managed to escape from the debris.
The company involved, Hawkeswood Metal, employs approximately 50 people and began trading more than 40 years ago. Their customers include SME’s, large corporate businesses and local authorities. According to the company website, the business processes more than 500,000 tonnes of scrap metal each year.
Whilst the outcome of the Health & Safety Executive investigation into this incident is ongoing, there was national news coverage at the time which went to great lengths to highlight previous accidents that were uncovered at the recycling plant. This included a major fire in February this year, when 700 tonnes of scrap metal went up in flames and in 2012, the company was fined £50,000 after a worker's arm became trapped in machinery. Each of the incidents were unrelated, however the perception of so many serious incidents across a relatively short period is undoubtedly damaging.
Irrespective of the size of your business or brand, how prepared is your company to handle a crisis that can threaten its very existence?
Troy Johnson, Director at Griffiths & Armour said, “News spreads quickly and bad news spreads even faster. Our clients recognise how important technology and social media has become as a key sales driver. However it also enables bad news to spread, often with local stories going viral across the globe, even attracting TV networks to report on incidents after large hit rates on social media and other websites”.
Troy added, “Most businesses are unlikely to have to deal with threats to their reputation often, however because it’s such a rare event, many are unprepared for the results. Irrespective of the size of your business, we always strongly advise that you invest time in reviewing potential risks and formulate a plan before a crisis situation arises. This gives you the best opportunity to protect your people, your organisation and your reputation following the impact of a major event”.
Five steps to consider…
- Assess the threats & risks
Evaluate your vulnerability. What are the specific threats and potential risks that exist to your business? Understanding these are the first and most important considerations to take to enable your business to develop an effective Crisis Management Plan.
- Establish the crisis team
Who needs to have a seat at the table? Consider all elements of your business i.e. senior management, heads of department, operational staff, internal and external communications (inc PR), customer service, your legal team. This team should have the responsibility for making key decisions and activating all aspects of crisis communication.
- Identify the spokesperson(s)
Who should be the person who will be the official ‘voice and face’ representing your business if a crisis develops? Ideally, this person should already have an existing relationship with the media and some direct experience in dealing with publishing news about the company on previous occasions – or in others words, the crisis should never be the first time this person has had to talk to the media. Also consider having a second spokesperson as a backup.
Evaluate your online presence and determine what channels can be used to communicate information in real-time — and who should be responsible for sharing updates online. Make sure that person (or people) understands that guidelines for communicating during a crisis are most likely different than guidelines for regular day-to-day interactions.
- Plan, prepare and practice
Agree the chain of command in a crisis. Who from within the crisis team needs to be part of the approval process? Consider a check list to bring clarity to this. In the event the media report on the crisis before the team has been briefed, what is the correct response? What is the plan of action a crisis is beginning to appear online? These are just some of the many questions that need to be asked and answered as part of your crisis plan. Getting well prepared increases the likelihood you will be geared up to respond and react quickly, and crucially, protect the company brand. Give serious consideration to introducing crisis “drills” to get the team used to different scenarios. Dependant on the size of your organisation, mock interviews between the official spokesperson or members of the crisis team and the media could also be considered (and be a great team building exercise without the pressure of a real life event).
- Repeat, repeat, repeat.
You can never review, evaluate and practice scenarios too much. Build in regular and ongoing reviews of the potential threats to business continuity and evaluate whether the plan remains fit for purpose.
However well planned your organisation is in dealing with a potential future crisis, our team of risk management experts at Griffiths & Armour are on hand and ready to help if you would like to carry out a review of your existing crisis plan and insurance cover. So whether you have in-house crisis management capability or seek expert support from a specialist in crisis management, we are here to help you through the process. Please request a call back and a member of the team will be in touch directly.