Planning is the best insurance policy for protecting a company’s most valuable asset – its brand and reputation.

Building insurance, disaster recovery centres on standby, business continuity planning, product liability insurance, public liability cover and professional indemnity insurance are all costs that Chartered Accountants are familiar with. While businesses would obviously prefer to be able to dispense with the need for such overheads, they are accepted as a necessary investment in business to mitigate costly eventualities that could erode a company’s value and shareholders’ interests should an adverse event occur. Indeed, in an assessment of an organisation, the absence of any of these line items in a set of accounts is likely to raise red flags. Yet the nature of such insurance and contingencies tends to be focused on the fixed assets of a business or on maintaining the entity’s ability to continue operations in the event of a major disruptive event. However, both research and experience shows that significantly less attention is paid to how organisational leaders focus resources on appropriate crisis communications planning to help mitigate the risk of damage to their company’s brand or reputation in the event of a substantial issue or crisis.

The priority given to protecting fixed assets is, most likely, an overhang from an era when such assets were the primary focus of an enterprise’s value. Some 30 years ago, company valuations were almost entirely reliant on fixed assets with almost 80% of business worth tied up in tangible assets. Fast-forward to today and the reverse is now commonplace with the significant portions of company valuations accounted for in brand, reputation and goodwill.

This fundamental shift provides a real challenge for businesses in that, while critical incidents that impact on fixed assets can be localised in many cases, the nature of brand and reputation is ultimately universal. This makes isolating issues and limiting damage much more difficult. 

Despite the growing importance of the value of intangible assets, surveys both in Ireland and internationally have found – on a pretty consistent basis – that only half of organisations have crisis communications plans in place. More worryingly still, few of those organisations with plans in place actually test their effectiveness.

This situation may be troubling enough but when it is taken in tandem with a paradigm shift in the media landscape, the true challenge for companies to manage communications around an issue or crisis quickly becomes apparent. Traditional media’s omnipresent 24-hour news cycle can be sufficiently testing to deal with alone but when this is combined with the capability of any one individual with a mobile device, a Twitter account and a network connection, you then have the potential for a perfect storm.

Role of governance 

Those charged with organisational oversight need to satisfy themselves that management teams have given due attention to this crucial area. In considering whether executives’ efforts in ensuring preparedness have been sufficient, this can be addressed with a series of questions to assess whether an adequate plan exists and whether appropriate and trained resources are in place.

The plan

Although having a plan is an important starting point, its effectiveness is eroded if it is not reviewed periodically in a systematic way and updated to reflect the challenges the business is facing. These challenges can come in the form of the nature of the business itself, changes to personnel, risk or other internal and external considerations.

Five key questions

Those in governance functions can, with five key questions, examine management’s readiness to react. The first area of focus is establishing who within the company has ownership of the plan; without a custodian, there will be no driving force to ensure that crisis communications planning remains a key priority. And as an added protection, an alternate is essential. Second, directors need to establish when the plan was updated last and consider whether a review is necessary, mindful of the passage of time and extent of changes to the business within that time-frame. The third key question is around objective assessment. Business leaders will always see value in a third-party expert view on important organisational functions, so the same level of impartial external review needs to be applied to a process as important as crisis communications planning.

The nature of major issues and crises is that they expose weaknesses ruthlessly and unless the plan and the team are put through their paces, management will not know how effective (or ineffective) the preparations will be in the event of a crisis. As a fourth area of focus, those responsible for governance must ask whether a simulation exercise in a controlled environment has been undertaken and assess what learnings were derived and whether corrective action was taken to overcome shortcomings. A further step is to assess whether the simulation was planned or unplanned – a combination of both will provide a true test of capability. As a final consideration, the experience of every seasoned crisis communications practitioner is that when it comes to major issues, they will strike not only when least expected but also at the most inconvenient time. The nature of the issue or crisis may mean that normal business operations are disrupted or the team may be in different locations, so it is important to consider whether the content of any crisis communications plan is accessible, both physically and virtually.

The team

From a resource perspective, a primary consideration is the composition of the crisis communications team. For example, is its membership representative of key business functions and does it include those with responsibility for key risk areas? 

In addition to assessing the allocation of roles and responsibilities, management should also enquire as to whether alternates are in place for each team member in the likely eventuality of holidays, sick leave or unavailability. Organisations also need capable spokespeople to communicate in a way that provides reassurance to the public and other stakeholders that the organisation is in control of the situation. This involves both the selection and training of nominated executives. Contrary to popular myth, media training is not about orchestrating obfuscation, but equipping those in a spokesperson role with the skills necessary to deliver messages succinctly and credibly in a calm and controlled manner. Any sense of nervousness can erode confidence at time when an organisation can least afford it.

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Are you ready?

Here are 10 key governance questions to assess your organisation’s crisis communications readiness:

1. Who has ultimate responsibility for crisis communications planning?
2. Who comprises the crisis communications team?
3. What are their roles and responsibilities?
4. Who is back-up for each?
5. Who are the nominated spokespeople?
6. Are spokespeople trained regularly?
7. When was the last time the crisis communications plan was updated?
8. Has the plan been assessed objectively by a third party?
9. Has a crisis simulation exercise been undertaken to test the adequacy of the plan?
10. Is the content of the plan accessible virtually?

Niall Quinn is Deputy Managing Director and Head of the Corporate Advisory Practice at The Reputations Agency.