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Crisis Management:
Where Risk Management and Public Relations Meet

If you are a savvy risk manager or business owner, you probably already have a disaster management plan to help your company minimize the effects of a disaster. You’ve probably considered evacuation of employees and customers, data backup, and contingency plans for manufacturing your products or delivering your services. But have you considered the role public relations can play in managing a crisis?

Although people use the term “public relations” to describe everything from corporate image brochures to the duties of a sales clerk, “public relations” simply means using the mass media to get an organization’s message to the public. Used effectively, public relations can prevent a critical situation from resulting in irreparable damage to the business’s reputation and goodwill.

Consider the example of Odwalla, a juice company that built its reputation—and its business—on providing natural juice drinks to health-conscious people. After drinking Odwalla drinks containing apple juice contaminated by the E. coli bacteria, 65 people, including many children, became severely ill.

Then, when it looked like the worst was over, one of those infected by E. coli, a 16-month-old Colorado girl, died. As you might expect, some of the sickened people have decided to sue Odwalla.

Risk Management Versus Public Relations

Odwalla is still feeling the effects of the crisis, but its financial picture is improving. Its products are still on the shelves, customers are coming back, and stock prices are up, so the company’s future looks positive.

The picture today might be very different if Odwalla had looked at the E. coli contamination problem from a purely risk management standpoint. Since risk managers seek to minimize the company’s risk it might have taken the very different strategy of denying liability for the contamination or of waiting to act until the link to its products was proven. Instead, Odwalla considered its philosophy and its customers in formulating its approach. In doing so, it protected its most valuable asset—good name. And that’s what effective public relations is all about.

Although you may never been faced with life and death problems, any company runs the risk that a problem with its products or actions could affect its reputation. Having an action plan ready before crisis strikes will help you act quickly and correctly. To create a crisis communication plan, you must:

Before the Crisis

(1) Identify your key audiences. These may include employees, customers, stockholders, regulators, industry groups, local government, people in your community, the general public.

(2) Identify the media best able to reach your audiences in a crisis. These can include local and business newspapers, radio stations, local television stations, trade publications, investor publications, client newsletters, Web sites and telephone hotlines. Get the names, phone and fax numbers and e-mail addresses of reporters whose beat includes your area or industry.

(3) Develop a plan for identifying customer, employees, wholesalers, distributors and retailers who may be affected by the problem.

(4) Name a company spokesperson. Direct all media inquiries to this person. He or she should be able to handle press inquiries, make statements and work with your public relations firm (if applicable). Therefore, this person should have the confidence of and immediate access to upper management.

(5) Train your spokesperson and CEO to deal with the media. Can they handle floodlights and intrusive questions? Role-play crisis situations.

(6) Prepare one-page fact sheets on the company, its products or services, its finances (if publicly traded) and its mission. Keep these updated for easy distribution when the media make inquiries. When a crisis occurs, prepare a similar fact sheet on the problem and what the company is doing to resolve it.

(7) Interview public relations firms. Even if your firm doesn’t use a public relations firm on an ongoing basis, you may want to have a public relations firm available to handle communications in a crisis.

After a Crisis

(1) Alert the public and your key audiences to the problem.

(2) If people have been hurt by your company’s services or products, show compassion. Issue public apologies. Provide direct aid where appropriate.

(3) Recall faulty products and products that may be faulty immediately.

(4) Find the cause of the problem. Look at manufacturing, suppliers, distribution, etc.

(5) Mobilize other companies in your industry to look for a solution.

(6) Keep the media informed of your efforts to resolve the problem.

Tips for Handling the Press

(1) Respond to all inquiries as soon as possible. Reporters work on deadline, so if you fail to respond, your side of the story might not get told. A “no comment” or “the company failed to return inquiries” may be interpreted as evasiveness.

(2) Be honest. As the Odwalla example demonstrates, a company can survive bad news if it admits the problem and makes necessary corrections.

(3) Keep your answers short and simple. Think like an editor: long, boring speeches make bad news, whereas quick, pithy sound bites can make a story come alive.

Like your buildings or inventory, your company’s reputation is a valuable asset that deserves protection. Public relations, used properly, can help you protect this asset.  

riskVue | The webzine for risk management professionals
January 2006



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