Friday, October 19, 2012

Going Public On The OTC? Here Are 15 Rules Of Corporate Crisis Management

If you are going public on the OTC, here are 15 corporate crisis management strategies that you'll need to know. Obviously a crisis would not be a crisis had you been able to plan on it. Crisis planning is contingency planning, including unidentifiable contingencies. You cannot predict when or if space debris will suddenly add a skylight to the 15th, 14th, and 13th floors. You can be sure that it will fit into a certain type of crisis, and generally prepare for that. A few general strategies facilitate that preparation.

1) Have an Organic Risk Management Strategy -- A Strategic Plan that marginalizes Risk Management already handicaps your Crisis Management. Even the best Risk Management Plan gathering dust hobbles you in a crisis. Every change in staff, resources, and institutional goals alters the nature and magnitude of potential risks. An Organic Risk Management Strategy evolves with your organization and adapts to its success.

2) Counter Groupthink -- Groupthink limits creativity, feigns completeness, and exposes your organization to liability. When executive risk management brainstormers think they have covered everything, call in the custodian. Crises rarely occur that someone has not anticipated at least as a job related worry. Screen glitches that bother a data entry specialist could indicate an IT crisis waiting to happen. An executive might quickly assign unexplained fuel depletion as theft, when it could be a slow and dangerous leak -- but only a mechanic in the motor pool might recognize the symptoms.

3) One Response Never Fits All -- In The Crisis Manager: Facing Risk and Responsibility Otto Lerbinger identifies three major types of crises. These are Crises of the Physical Environment, Crises of the Human Climate, and Crises of Management Failure. Each of these produces distinct challenges and each likely requires greater involvement from specific departments over others. Coordinate crisis management sub-teams for each type around core leaders for all. An earthquake (physical environment) will require a lawyer at some point, but that probably demands you reach engineering first. On the other hand, if the SEC walks in and takes over Accounting (alleged management failure) you'll want to talk to legal before leaving your office -- and ordering in for dinner.

4) Crises Beget Crises -- … at least when unattended. That fuel leak from a storage tank only remains a private and internal matter until: a) Something explodes b) It gets identified as a groundwater contamination source c) Someone on staff or nearby gets sick d) All of the above -- and more! In today's litigious society count on any type of crisis as a litigation threat, and becoming a crisis of alleged management failure.

5) Your Reputation Precedes You -- When the CIA and FBI collaborated to explain the July 17, 1996 crash of TWA Flight 800, it actually reinforced the conspiracy rumors it sought to belay. Both organizations had secretive reputations, so concurrence of both seemed doubly deceptive. Build positive relationships with the media and the public. Become a friendly, familiar, and trusted face to the reporters who would report on your crises -- send them birthday cards. Sponsoring community events draws more press than advertising can pay for, even as it creates positive organizational associations for your community. If nothing else, regular Facebook updates and Tweets give your crisis manager something to do in the "off-season".


Incident Response is the event horizon of crisis management. You can see the figurative atoms beginning to split and the fallout is inevitable. How bad it gets depends on how well prepared you and your staff have become, and on how you act right now!

6) Safety First -- Risk no personnel, resources, or data not already threatened. Evacuation or lockdown, reboot or shutdown, news blackout or press conference -- do it now!

7) Reflexive Protocols -- All Incident Response is automatic, no deviations, no exceptions. This is where most of your planning pays off.

Empower Your People -- A housekeeper may be the first to smell smoke. A lift attendant may be the first aware of a skier hitting a tree. A gardener may notice an agitated ex-employee sneaking into a secure entrance. They should have direct access to appropriate crisis personnel to report it. If you learn of a heart attack before you hear an ambulance, someone did not feel empowered.

9) Better Safe Than Sorry -- Always commend, never reprimand, any employee for acting to prevent a perceived imminent crisis -- even if they perceived wrong. Being right and disregarding it can cost lives instead of money. If they followed the reflexive protocols, they did the right thing.


The incident response is underway. The senior manager or crisis manager assemble appropriate team members.

10) One Person is Always In Charge -- Your plan needs to designate this. If senior management is busy -- as is likely -- that person is the predetermined Crisis Manager, no changes, no substitutions. That authority should listen to the whole team, but cannot be bound by advice. Any decisions are that person's and that person's alone, as are the responsibilities for them.

11) All Decisions Will Require Incomplete Data -- Only people capable of making decisions lacking total information should fill the leadership role. The best decision could still be the wrong one, and how that is handled determines the maximum effective range of the crisis. Whatever decision you make with incomplete information will be critiqued with better information later. Be ready for that.

12) Know What to Say Before Speaking -- Listen to your lawyer. Include no phrases that suggest accepting culpability or disclose details in an ongoing investigation. At the same time, say nothing construable as blaming any victims. Language should be responsible, suggest control, and reflect sympathy for any victims -- without acknowledging any role in their victimization.

13) Cash in your Chips -- This is where all that relationship building pays off -- and an idea that most Crisis Management may find unconventional comes in. You know all the local media reps by first names -- use them. If the crisis draws major media, let them see you interact with the locals. Treat them respectfully, but give deference to local reporters. Put them all in a room together where the "big time" reporters have to talk to locals -- and the local reporters will supplement your official statements with glowing reviews, and frame your message for you.


Thanks to your relationship with local media even the worst decision may be seen in the best possible light -- but depending on the crisis, that still may not be enough to salvage reputations or careers. All that matters now is to not stay down, and to keep the crisis from happening again.

14) Crisis Recovery Means Dig-up before Clean-up -- Figurative or literal, digging up information about what happens has to have priority over cleaning up the mess. You cannot be so eager to repair the damage that you interfere with investigation into the cause. Condolence letters, hearings, getting new equipment online -- any of these things may demand immediate implementation. None are more important than learning everything possible about this crisis and how to prevent it. Your Risk Management Strategy should already have considered any resource deficits you need to work around.

15) You've Earned What You've Learned -- Use it! -- This is why your Risk Management Strategy is organic. All crises are expensive. Think of it as tuition. With careful consideration you may now adapt your strategies to prevent this from happening again, or be better prepared if it does.

James Scott is the CEO of Princeton Corporate Solutions, a corporate globalization and political strategies firm, PCS offers a unique blend of think tank, corporate and governmental communication strategies to expedite the facilitation of long lasting relationship building in these necessary sectors. James Scott is a member of Chatham House, Aspen Institute and Manhattan Institute

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