May '11 PR Rankings Issue - Odwyerpr.com

REPORT
Study finds few companies prepared for crisis
Just a few years out of the financial crisis and with product recalls still reverberating in
healthcare, those two sectors would seem ripe for crisis communications planning. But a
study by Fleishman-Hillard and the Canadian Investor Relations Institute found just the opposite.
By Greg Hazley
While many companies are
mindful of potential crises,
few have effective crisis
communications plans for such contingencies,
especially in healthcare and
financial services, according to the survey
of U.S. and Canadian analysts and
investor relations officers.
The survey also linked crisis situations
to negative valuations for companies
and found the biggest mistake companies
make during a crisis is a lack a
communication with stakeholders and
employees.
“The survey reveals that a poorly
managed crisis clearly has a negative
impact on a company’s share valuation,
so it is imperative for IROs to be prepared,”
according to CIRI President and
CEO Tom Enright, who said IR pros
need to be more involved in crisis plan-
18
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ning.
The apparent lack of planning is also
surprising as the study found that 85%
of analysts said a corporate crisis has the
greatest negative impact on a company’s
• Public / Legislative Affairs
• Community / Industry Relations
• Social Media / Online Marketing
Don Silver/Julie Talenfeld
Source: CIRI/Fleishman-Hillard
value.
The gap between what analysts
expect and what IROs are prepared for
was no more evident than in the survey’s
social media findings. Few IROs
and analysts said crisis plans incorporate
social media like Twitter or
Facebook, the survey found.
Notably, 50 percent of analysts said
they look to corporate blogs for information
in a crisis, but only 17% of IROs
said their companies use that channel.
Less than half of IROs said they monitor
social media during a crisis.
Half of the respondents from financial
services and healthcare sectors said
they do not follow a crisis communications
plan at all, a surprising revelation
given those sectors’ doldrums in recent
years.
And more than half with crisis plans
said such guidelines only apply to operation
crises, not a corporate scandal like
an account fraud or executive scandal.
Asked how different crises impact
company’s valuations, 85% cited fraud
resulting in an accounting restatement,
while 74% cited an accounting restatement,
59% noted an operational crisis,
and 44% said an executive scandal or
environmental crisis would have an
impact.
Of the companies that have a crisis
plan in place, only 29% update it annually
and 26% said it gets a look every
one to two years, according to the survey.