Handling a Crisis
McKinsey just released a report on how companies can prepare for corporate crises and why it is critical for such readiness. There are some notable pieces of advice that I wanted to share. Since we manage crises often at Weber Shandwick, I feel fairly schooled and seasoned when it comes to knowing what to do and what to expect. Additionally, having written a book on how to recover from a crisis, this is a topic that intrigues me greatly. The authors are quite right that a crisis can define a company for years to come and that most companies underestimate the price. McKinsey advises that companies underestimate the cost by five to 10 times. A good thing to remember.
Most interesting was this chart. I guess I am very influenced by charts, graphs and stats that size up the extent of the problems faced by CEOs and their teams. I take them wherever I can find them.
Here is the chart and their analysis.
“Many incidents inside companies never hit the headlines, but recent evidence suggests that more are turning into full-blown corporate crises (exhibit). The total amount paid out by corporations on account of US regulatory infractions has grown by over five times, to almost $60 billion per year, from 2010 to 2015. Globally, this number is in excess of $100 billion. Between 2010 and 2017, headlines with the word “crisis” and the name of one of the top 100 companies as listed by Forbes appeared 80 percent more often than in the previous decade.” The chart also demonstrates the risks that have compounded in the auto industry. We could say that about every industry at this point in time. The complexity of maintaining reputation equilibrium is harder than ever.