When an organisation is confronted with a crisis, such as employee fraud or a systemic data breach, there is more at stake than financial and legal exposure. Reputational fallout can be swift and lasting, with associated financial consequences often being greater than the fraud itself. How and when an organisation communicates (or doesn't) during these events can define its public reputation and help save its bottom line.
Crises can strike an organisation at any time. Instances of fraud, cybercrime and financial misconduct continue to rise. An organisation's ability to meaningfully respond to a crisis can be the difference between a short-term setback or lasting institutional damage. Preparation is critical.
Those organisations that are adequately prepared can act swiftly in coordination with their legal and communications advisers to respond to a crisis, emerging or imminent. In this article we consider five prominent communication strategies that organisations can use in times of crisis.
1. Address the Issue Directly: Prompt and Transparent Communication
For many organisations, the most effective strategy during a crisis is to acknowledge the issue directly and demonstrate a sincere appreciation that the matter is being taken seriously. This does not mean admitting liability or disclosing all critical details upfront. Rather, it involves signaling to stakeholders, and the market, that the matter is seen as important and is being actively managed.
In instances of data breaches or major fraud, stakeholders will have a natural desire to know whether their data or assets have been compromised. Prompt, clear, and authentic communication helps build credibility early with stakeholders and the public at large. The first response during a crisis routinely shapes how the organisation is perceived for the duration of the event and beyond.
Legal and communications teams should be involved from the outset. While a natural tension can exist between the two, both perspectives are critical. When done well, this collaboration results in messaging that is both legally sound and reputationally effective.
Organisations should avoid speculation and hypotheticals at all times. Stick to verified facts, acknowledge uncertainty where necessary and clearly outline how the matter is being addressed. Own the narrative early, only communicate verified information and remain on message across all channels.
2. Strategic Silence: When Less is More
Sometimes, the best strategy available to an organisation is to do nothing – at least initially. This strategy can sometimes be borne out of legal or practical necessity, where investigations are ongoing, legal privilege must be protected or confidentiality obligations limit public comment.
Silence can also prevent the inadvertent escalation of an issue that might otherwise resolve quietly, avoiding the so-called "Streisand effect"; where a party's attempt to manage information ends up attracting further public attention.
While in some instances silence may be the best way to manage a crisis, the strategy is not without significant challenges and risks. Silence can risk competitors, critics or the media filling the vacuum, shaping the narrative to their advantage or agenda. Misinformation, both in digital and legacy media, can further fill the void and become difficult to displace.
If your organisation chooses to embrace this strategy, continue to actively manage issues internally and monitor public sentiment. Behind the scenes, prepare for how and when to move from silence to engagement.
3. Reframe the Narrative: Highlighting Positive Actions
Once an issue is public (or is likely to become public) there can be value in showing that it doesn't define your organisation. In such circumstances, narrative 'reframing' can become a powerful strategy. Done carefully, it can help maintain trust, demonstrate accountability, and shift focus towards the future.
Highlighting the organisation's broader values, corrective actions or independent reviews can reassure stakeholders that the matter is being taken seriously but is only a small part of the complete picture that is the organisation's activities.
However, messaging must be accurate and legally compliant. Misleading or deceptive statements can create further legal liability. The strategy is prone to risk, particularly in sensitive regulatory environments and must be performed in close collaboration with legal advisors.
Be transparent about what your organisation is doing to improve but never exaggerate. Engage credible and trusted third parties to validate your claims where possible.
4. Legal Actions: Weighing the Risks
While legal action may appear to offer a means of regaining control, it is rarely the most appropriate action during a crisis. In Australia, most organisations are precluded from bringing defamation claims, and where such claims are available, they are subject to strict legal thresholds and robust defences. Whilst there are other claims apart from defamation that can be considered, these are not straightforward and involve requirements in respect of trade and commerce activity, damage and intention of conduct, that can be difficult to prove.
Litigation also carries strategic risks. It can amplify the issue and runs the risk of disclosure of sensitive internal material. Legal action should be carefully evaluated in the context of the broader reputational strategy. It is not a communications solution in and of itself but can be appropriate in select circumstances and where other measures have been exhausted or legal principles require vindication.
5. Always be Prepared: Establish a Crisis Response Framework Now
The most effective crisis management occurs well before any event hits. Organisations that have tried and tested crisis management frameworks are better placed to respond when serious events, such as fraud, corruption or cyber breaches occur.
Organisations should plan for such events ahead of time and form a dedicated crisis response group comprising senior leaders, legal advisers and corporate affairs specialists, and insurers. This central team must be empowered to present leaders with real-time information and execute solutions and decisions without delay. Agility is critical.
Governance structures and the nature of any relationship between a crisis management group and an organisation's board of directors need to be considered thoroughly. Legal advisors should be consulted to ensure any arrangement complies with an organisation's regulatory obligations.
It is essential that corporate affairs, investor and human relations members (including internal and external communications, and stakeholder relations) work closely with legal advisors in advance of any crisis. Ideally, a single legal advisor should act as a central touch point for the working group, coordinating information and managing risk. Roles must be clearly defined and rehearsed on a regular basis.
Organisations should identify shortcomings in capabilities ahead of time. Consultants, such as communications or stakeholder relations specialists, should be engaged prior to a crisis if an entity does not possess the requisite skills in-house. If media or stakeholder scrutiny is expected, organisations should identify a single contact person for external inquiries. Likewise, entities should identify a designated spokesperson in the event of a crisis. Preparation will further assist an organisation overcome the natural temptation to respond to each claim made in the public arena. Message discipline is key to any successful crisis management strategy.
Ultimately, most crises are resolved soon after an intense period of activity and attention. Once a period of public inquiry is over, it is essential a crisis management group continues to manage related issues and help lead an organisation through the necessary changes to mitigate against future risk.
Key Takeaways
- Reputational harm to an organisation can escalate quickly. Prepare in advance with a crisis response plan.
- Good governance is critical to avoiding crises.
- Not all crises require the same response.
- Message discipline is critical.
Legal and communications teams should collaborate early and be prepared. Messaging must be legally safe and strategically sound.
Final Thoughts
There is no playbook that fits every crisis. The strategy that is appropriate can evolve from one day to the next so flexibility and willingness to pivot is required. But the principles remain consistent: act promptly, honestly, in alignment across all parts of the organisation and follow through with consistency.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
