Planning for potential business shocks, and how to respond effectively in a crisis, typically involves managing physical risks - natural disasters, industrial incidents, technological crises such as data breaches, malevolence, terrorism and other manmade threats.
For banks and financial institutions, greater potential impacts can come from market, credit and operational liquidity exposures. Market risks are becoming particularly compelling as the financial sector is undergoing a period of sustained uncertainty, with conditions that rival the Global Financial Crisis of 2008.
The International Monetary Fund, recently used its half-yearly global financial stability report to highlight the risks of a new financial crisis, warning that global output could drop by 4% over the next five years through a repeat of the market volatility seen during the 2008-09 recession.
Throughout Europe, structural pressures are continuing to mount on the financial sector, where €900bn (£715bn) of non-performing loans (NPLs) remains on the books of Eurozone banks. After months of negotiations, the Italian Government has agreed to a €17bn bailout of 2 major lenders, to avoid a larger run on banks.
Overshadowing these structural and geo-political issues is the challenge posed by needing to adapt to the threat of fast moving digital competition. Industry leaders estimate that 23% of their revenue is at threat from FinTech startups, as global investment in FinTech reached nearly US$17.4bil in 2016, up from just $2.1bil 2011.
The interconnected nature of the global financial system means that impacts to any organisation or market can have a run-on effect to even the best prepared and managed players. Even if systemic breakdown of the sector can be avoided, wholesale impacts are unavoidable, so it’s wiser to plan for a response, rather than assume the worst won’t occur.
Crisis Management is the response an organisation needs to take to in the event of unforeseen emergencies or disasters to minimise the harm to the organisation, its stakeholders, or the general public.
These events can include natural disasters like earthquakes, industrial incidents such as oil tankers leaking, technological crises such as data breaches, and a range of other possible scenarios including malevolence, terrorism and other manmade disasters.
For banks, potential risk factors include credit, market, and operational liquidity, business, and reputational exposures.
The common outcome of all of these situations is financial loss, reputational harm, and potential risk to human life. Unfortunately, incidents are inevitable for businesses of all size, and without adequate internal and external communications when they do arise, consequences are compounded, including:
- Break down of operational response
- Uninformed and unhappy Stakeholders
- Negatively impacted corporate reputation
- Extended time frame to full resolution of the issue
An effective and well executed communications strategy is required to help minimise the impact.
Crisis Communiations framework
1. Start with the plan — a written plan should be in place, which includes specific actions that will be taken in the event of a crisis. The key objectives during any crisis are to protect any individual (employee or public) who may be at risk, ensure that all stakeholders are kept informed, and that ultimately the organisation survives. Proactive planning is the cornerstone of crisis response, so seek advice from external specialists, as needed, to ensure that threat scenarios are adequately mapped, and the right tools and resources are in place for an effective response.
2. Identify and train a spokesperson — a key spokesperson needs to be identified, prepared and kept as up to date as possible to ensure that the media, staff, customers and the public are kept informed with a clear, consistent message. Ensure the spokesperson has the appropriate skills for communicating via the required channel – for larger organisations this is typically a hierarchy of communication leaders, appropriate to the situation or communications medium. Staff will have different capabilities for communicating in certain circumstances, such as speaking to large groups, addressing a camera, or responding to social media queries. Specialist media training should also be provided to help minimise the risks of important messages being misinterpreted during critical events.
3. Be honest and open — in our connected age it’s no longer possible to hope that information can be kept from the media or general public, so a policy of openness and transparency is essential to maintaining trust. This transparency must be projected through all communications channels: news interviews, social media, internal announcements, etc.
4. Keep employees informed — employees are the main conduit to keeping communications flowing between all relevant stakeholders, so it’s essential to keep the workforce informed with all relevant up to date information to prevent the circulation of incorrect rumours and potentially negative statements.
5. Customer and supplier communications — information on any crisis should reach your customers and suppliers directly from you, and not from the media. Part of the crisis communications plan needs to include these vital stakeholders, and how to keep them update throughout the event.
6. Update early and often — be proactive and early with sharing news, even when the whole picture isn’t clear. Its better to over-communicate than to allow rumours to fill the void. Start with summary statements on whatever is initially known, and provide updated action plans and new developments as early and as often as possible to stay ahead of the 24/7 news cycle. Make use of “holding messages” to inform stakeholders very quickly that the incident is under management, and quickly provide assurance that the organisation is in control of unfolding events.
7. Social media – ensure that all the channels that your stakeholders may be using are covered, not just the traditional areas in which critical statements were released, such as press releases or the company website. Nothing’s more damaging than incorrect information being live tweeted without your ability to see and respond with facts and the appropriate damage control.
8. Establish Notification and Monitoring Systems – staying informed and knowing what is being said about the company beforehand is essential to staying ahead of unfolding incidents. Monitoring systems allows companies to gather intelligence from a range of sources to keep informed and stay ahead of unfolding negative situations or sentiment. Before a crisis emerges, this can include using free options such as Google Alerts, or paid professional monitoring services, to track traditional media and trending social clues from staff, supplier and customer conversations. Internal processes should also be established that allow front line staff – sales, customer service, support, etc to report potential negative observations directly to the Crisis Communications Team
Multi-modal notifications have become critical to communicating quickly and effectively. Traditional, manual contact processes, such as phone trees, with teams of people making calls, or even email are typically too slow to execute, and might not reach affected stakeholders in time. Messages should be sent on the channels that are most likely to reach affected parties – which can be SMS, chat apps, social media, as well as traditional contact channels. There also needs to be a mechanism to track message receipt and allowing the appropriate response.
Modern communication systems give crisis responders the ability to reduce manual handling, and consolidate these contact channels into a single, centralised hub.
Planned, open and effective communication is the key to coping with a crisis. Leverage technology to deliver planned, multichannel, 2-way communication streams that keep stakeholders informed, and minimise the risk of financial and reputation harm, and the risk to human life.
State of the art crisis communications technology
Proactive Communications Scenario Planning
Having a clearly defined plan in place for communicating in a wide range of plausible scenarios cuts down response time, improves accuracy of contact, and ensures the right people are able to be reached in a timely manner. Modern crisis communications tools should have the capability of adapting to all possible scenarios and plans.
Send messages to your staff and customers in the way that suits them, whether that’s voice, SMS, Social Media, Rich Messages or email, to improve the rates of delivery. Knowing they will almost always have their mobiles close allows organisations to provide messages on all these channels.
Geolocation can segment communications even further, such as providing multilingual messages appropriate to the recipient’s location or pre-defined contact preferences.
Message templates should be prepared with specifics which can be rapidly used or altered during incidents, thereby ensuring approved language, structure & consistency, while saving time by providing pre-defined communication and response options.
When urgent communication is required, SMS accelerates the speed of notification. Whereas half of all emails aren’t opened for at least six hours, the average text message is accessed within a few minutes and responded to within 30 minutes. Voice calls to mobile and fixed lines generate an even faster response, and can be created to trigger automatically from the communications platform.
Where possible, communications platforms should be integrated with management & monitoring systems, allowing details to be auto-populated into message templates. Incidents can be raised automatically and sent directly to the coordination & resolution teams.
2-way Conversation Flow
It’s not enough to just send messages, there needs to be a system in place to track receipt, allow the receiver to respond as needed, and escalate when required.
Make use of an integrated communications platform
Best practice Crisis Communications programs are built around cross channel communications platforms, which provide interactive, responsive communications, comprehensive reporting and message delivery status transparency for key staff and senior stakeholders.
Communications automation and workflow acceleration, combined with integrated monitoring systems, provide BCM leaders with a unique and powerful opportunity
Crisis Communications in action
A leading retail bank with a reputation for effective operational resilience and crisis management faced a limiting factor to their planned expansion into new markets, due to the higher level of day- to-day operational risk. Their previous crisis communications system was manual and considered both tedious and time consuming.
Whispir’s Unified Communications platform was selected to overcome these challenges, providing a system which helps in planning for and automating the incident management lifecycle.
Event information is collated into the platform from staff on the ground, allowing incident responders to work collaboratively to evaluate, update, and categorize their response. Incident Managers can target who to activate or inform by location, availability, and role.
Crisis Communications paths are invoked, keeping relevant teams notified of the ongoing details of the Event to better inform ongoing decision making, and Real-time Dashboards can be accessed over any internet connected device, providing ongoing situational awareness to all relevant stakeholders.
Summary – The Best Defence is a Good Offence
Crisis scenarios are inevitable, and without adequate preparation and management have the ability to escalate into critical events that can risk an organisation’s reputation, financial position, or ultimately the ability to survive.
Effective planning and communication are the keys to ensuring not only the management of risk, but can also turn changing circumstances into opportunities for building new processes that become a source of sustainable, technology driven competitive advantage.