Bad Things Come in Threes: Corporate Crisis

2016 has been one of those years many people wish they could forget. Scrolling through my Facebook feed this year, there’s been a constant stream of exclamations that 2016 has been the worst year ever. The annus horribilis that was 2016 was summed up perfectly when “surreal” became US dictionary Merriam-Webster’s word of the year. We’ve had celebrity deaths, two votes which look set to change the course of history and to top it all off Steven Gerrard announced his retirement. All these events look set to dominate the review-of-the-year style TV shows over Christmas, but for businesses and institutions, there have been even more issues causing headaches in 2016.

It’s not quite The Big Fat Quiz of the Year, but here’s our look back at three key crisis themes in 2016.

There were 5.8 million incidents of cybercrime recorded in 2015-16 and the impact on some of the world’s leading brands has been severe. Talk Talk got a record fine for failing to prevent its hacking in October 2015, Tesco Bank customers had their debit cards hacked which led to the FCA asking some awkward questions and we saw the Fancy Bears hacking group rise to prominence by posting the private medical certificates of athletes. No one is immune from cyber-crime, yet a report out by PwC at the beginning of the year found only 37% of organisations have a cyber incident response plan. We compiled our own communications checklist featuring ten questions your organisation should be able to answer before you’re hit by a cyberattack.

Diversity was a bear trap for some in 2016 and the previously wholesome British cycling team was in the spotlight. Comments by Shane Sutton about female team members tarnished the reputation of one of Britain’s fastest growing sports and proved that crises can come from within a company, rather than being imposed by external events. Gender diversity was also an issue amongst businesses and with 72 firms now signed up to the Treasury’s Women in Finance Charter, this could see many firms now being put under the microscope in 2017. But, the diversity issue doesn’t begin and end with gender. A new Government report found more than half of firms in the FTSE 100 have no directors from an ethnic minority on their board and 2017 could see this issue really causing problems for firms.

There’s been a heightened focus on transparency in the way brands do business and the way they communicate since the financial crisis, and this year has given us high profile examples of the spotlight shining on practices deemed murky. In October, Wells Fargo faced condemnation from US politicians after employees created millions of unauthorised bank and credit card accounts without their customers’ knowledge. Rolls Royce is also under investigation for bribery charges, resulting in its CEO stating publicly that the business is committed to doing business in the right way. Increased transparency is fundamental to good corporate governance and with Theresa May keen to clamp down on bad practice, there may be more cases to come next year.

No brand is immune from events or crises which can cause serious reputational damage. In the words of the great investor Warren Buffett: “It takes 20 years to build a reputation and five minutes to ruin it.” The way you communicate with your customers, employees, and shareholders, and the way you approach traditional and online media, could mean the difference between business-as-usual and a brand damaged beyond repair.

Preparedness is key. In light of the themes above, a wise New Year’s Resolution for every brand in 2017 would be to review crisis communications plans and conduct stress tests. If weaknesses emerge, better to act now than suffer the consequences if and when the worst happens.

Jennifer Evans
Junior Consultant

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