Lack of Communication and Transparency Biggest Mistakes Companies Make During a Crisis

13 April 2011

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A survey released yesterday by the Canadian Investor Relations Institute (CIRI) and Fleishman-Hillard found in spite of being mindful of the potential damage crises can cause to their sales, reputation and share value, few companies have an effective crisis management plan in place.

The survey polled financial analysts and investor relations officers (IROs) at companies across Canada and the United States on operational and corporate crisis preparedness. It also revealed the biggest mistake companies make during a corporate or operational crisis is lack of communication and transparency with their stakeholders.

Interestingly, the survey also found that half of responding IROs from the financial services and healthcare industries claim they don’t follow a crisis communications plan at all.

Here are some stats:

  • Of the companies with a crisis plan, only 29% update it once a year.
  • 85% of the analysts surveyed say fraud resulting in accounting restatement has the greatest negative impact on a company’s value.
  • Over 50% of the IROs surveyed say their company plan only prepares them for an operational crisis.

Social Media

  • Few companies have a crisis plan in place that incorporates social media protocols.
  • Over 50% of the analysts surveyed look to the corporate blog for information during a crisis.
  • But only 17% of responding IROs say their company uses a blog as channel for crisis communications.
  • Less than half of the IROs surveyed monitor social media platforms during a crisis.

 

Role of the IRO During a Crisis:

  • 85% of the analysts who responded said that IROs are a main point of contact – specifically for a corporate crisis.
  • 55% of the IROs surveyed don’t know if the crisis communications plan is updated after a crisis.
  • 50% of the IROs surveyed don’t know if their company conducts crisis simulations.
  • Only 19% of the IROs surveyed contribute to the corporate blog.

Join me on Thursday April 14th at 11 a.m. EDT for #irchat as we discuss steps companies can take to put together a crisis communications plan.

 

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