xv) Crisis Management

Need to understand Crisis Management. Every organisation needs to prepare itself on how to handle a potential crisis.  This involves planning, simulations and thinking about reputational risk issues.  With the rise of social media and 24 hour news cycle, there are increasing risks, especially around reputation that are becoming harder to manage. One of the biggest challenges facing organisations is gaining executive approval and sign-off on how to immediately respond to the media.

Some tips include

- crisis responses need to be fed into the established channels of communications
- initially acknowledge the event (have some approved responses ready)
- have clearly established approval pathways through the organisations so that communications can respond quickly to the changing situation
- get the senior manager to respond with empathy to the event
- use social media like Twitter, YouTube, ie video is better at conveying emotion than the typed word
- maintain control of the narrative by continually communicating (even if little new information to report)
- never allow a public information vacuum to develop as it will be filled with misinformation.

It is a delicate balancing act defending your organisation and its financial interest without appearing disrespectful to the people impacted by the disaster.

Some examples of poor handling of the crisis include

- Dreamworld's Ardent Leisure (deaths of 4 people in a raft accident on a water ride at the Gold Coast (Australia) theme park in 2016. The day after the accident its share prices fell by 20+ %; it will take years to rebuild its reputation. Some of the things they could have handled better include

i) media revealing that the theme park had a history of safety problems; with staff afraid to speak out for free of reprisal
ii) the failure of the company to make direct contact with families of the victims; yet the organisation claimed otherwise
iii) holding its AGM a couple of days after the accident where a decision on CEO's incentive payment (worth around A$ 1 m.) was on the agenda and approved by the board (later the CEO donated part of the bonus to the families of the victims via the Red Cross)
iv) announcing a re-opening date of the theme park for a memorial day, ie 3 days after the tragedy and before the police investigation, etc was completed. It subsequently had to cancel the memorial day

- Samsung (after a well-publicised launch of its new smart phone in 2016, some phones started bursting into flames)

- Crown Resorts (the arrest of 18 employees including top expatriate executives in China in 2016; their arrests are around promoting gambling in China)

Some good handling of a crisis include

- BHP Billiton (its response after the mudslide in its joint venture in Brazil wiped out an entire village and killed around 20 people in 2005.  Its CEO immediately fronted of the media, apologised to the families affected and flew to the scene of the disaster)

- AirAsia (plane crash in 2014 where the CEO tweeted regular updates about the recovery efforts and expressed his concern for the victims' families)

An example of how not to handle a crisis (see below diagrams)








(source: AFRBoss, 2016)

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