Boards have historically used the standard Enterprise Risk Management approach for dealing with crisis. ERM was overseen by the Audit Committee. Typically ERM looked at things like disaster recovery from hurricanes and expanded to oversee areas such as cyber readiness.
While these topics need to be covered, I think the real risk is the fact that we live in the age of social media and a 45 second response to mitigate corporate crisis is what is really required to preserve the company’s brand and engage appropriately with investors, customers, and employees in the community.
Looking at the old ERM format, you listed the ten most likely crisis a company would face.
For example, if you’re a restaurant, the ten terrible crisis you have to have a response for could include: food poisoning, #metoo issue, kidnapping, breach of customer info, armed attack/active shooter, etc.
In today’s world I think boards who perform their ERM and risk mitigation oversight should challenge management teams to have a pre-reviewed “on the shelf” social media response ready to go for the ten most likely risks.
Look at the difference between Starbucks’ speedy response on an alleged racial bias issue and contrast that with the flat-footed response of United Airlines passenger abuse removal scandal followed by the puppy suffocation death.
A social media response must have genuine authenticity and truly resonate as coming from the heart. A social media response needs to be pre-thought out and ready to be instantly deployed. The actual issue may not be one of the ten that management has figured out, but it will certainly be a variance. This exercise will enable management and the board to have a plan that they can deploy instantly.
Additionally, the traditional PR and IR firms are not experts at social media. A boutique social media firm should be part of all public corporations contracted resources. Just as you have an accounting firm, a law firm and a PR firm, you need a social media firm.
A dedicated social media firm has a unique network of relationships to get your message out there. Your in house social media will never be adequate or as deeply wired in as a dedicated external social media firm.
To be impactful as a director we need to look out for the risks that will either harm our brand equity or enhance our company. It is the chance for the company to have their Tylenol tampering moment where the incident shows that the CEO and company truly care about the consumer.
This is a valuable exercise boards should consider incorporating.