Magazine article Risk Management

After It Hits the Fan: Five Big Mistakes Companies Make in a Crisis

Magazine article Risk Management

After It Hits the Fan: Five Big Mistakes Companies Make in a Crisis

Article excerpt

It was nine o'clock on Christmas Eve and I was waiting for the kids to drift off to sleep so Santa could visit, when my phone rang. It was a reporter.

"Is it true they're going to evacuate Bridgeport?" he asked. The North Texas city was the location of my company's largest moneymaking asset, a natural gas processing plant.

"I beg your pardon?"

"Your gas plant is on fire and the rumor is, they're going to evacuate the entire city," the reporter explained.

"Let me check into that," I said, trying to sound as though I knew what was going on. I took his number and said I'd call back shortly.

Within about 10 minutes, I had a better picture of the situation. Yes, our gas plant was on fire. The local fire department, with assistance from others in the area, had contained the blaze to one corner of the facility, but we were not out of the woods yet. There was still no assessment of damage. And neither we nor the local authorities were calling for Bridgeport's evacuation.

I called the reporter back, told him an evacuation wasn't necessary at this time, and gave him an update on efforts to control the fire. Then I called various company sources to gather additional facts and prepared a brief statement for the news media.

One week later, I learned that the company CEO and CFO still had not been informed that our biggest revenue generating facility had caught fire and would be out of commission for a number of weeks. The manager of the division that operated our gas plants tended to play his cards close to the vest and had not gotten around to delivering the bad news.

1. Having No Plan or Internal Notification System

This real-life example illustrates the first big mistake companies make in a crisis: not having a plan and a foolproof internal notification system. A good plan should not try to anticipate every possible crisis that may befall an organization but should, at a minimum:

* Establish a mandatory internal notification system and telephone contact list

* Identify the people and disciplines within your company that need to be included on a crisis management committee

* Develop a contact list of the appropriate government, regulatory and public safety agencies, as well as any news organizations that may need to be notified

* Identify and gather details on company facilities where a mishap could have public safety implications (and ensure that evacuation plans are in place for those locations, as well as for nearby residences and businesses)

* Provide for training of key personnel and tabletop exercises to test the plan periodically

Having a mandatory notification system within your company is one of the most important components of any crisis plan. Management and the appropriate departments need to know about the crisis situation before the news media and regulators start calling.

The notification list should include contact information for representatives from senior management, legal counsel, insurance/risk management, HSE (health, safety and environment) and public relations/corporate communications and should be posted in all company locations.

For one company with numerous remote field locations and workers who operate semi-autonomously, we produced individual wallet cards with the notification list on one side and basic tips for crisis media interviews on the other. We also media-trained all field personnel.

2. Putting the Lawyers in Charge

Mistake number two is placing lawyers in charge of crisis management. That may seem counterintuitive, since many crises involve death, injury or damage to property and these things tend to generate lawsuits. But lawyers can be the very worst choice for leading a crisis management effort because they are hard-wired to avoid lawsuits. As such, they are likely to shut down any communication efforts or tie them up with restrictions and legalese when candor and clarity are called for. …

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