PAUL HOLMES: Companies that feel immune to recent crisis history are likely doomed to become part of it

To paraphrase Michael Corleone, if history has taught us anything, it is that a crisis can happen to any company at any time. Apparently, however, history hasn't taught us anything, because most corporations still act as if nothing could possibly go wrong with their businesses - as evidence by last year's numerous scandals.

To paraphrase Michael Corleone, if history has taught us anything, it is that a crisis can happen to any company at any time. Apparently, however, history hasn't taught us anything, because most corporations still act as if nothing could possibly go wrong with their businesses - as evidence by last year's numerous scandals.

Two separate research studies released recently provide a fascinating glimpse at the denial that has apparently permeated American business. First, BritishAmerican Business and Peppercom found that only 27% of companies had conducted any research to determine vulnerability to scandal, and only 16% had conducted workshops to simulate crisis scenarios. Nearly a fifth of respondents believe their companies have taken no steps at all. Then a study released by the Foundation for Public Affairs reported that despite increased interest in public affairs, nearly a quarter of the companies responding have not even established crisis management teams. Did the CEOs of these companies miss last year's headlines? Or do they believe that if they stick their heads in the ground, all their problems will simply disappear? More than a decade ago, Ian Mitroff of USC published one of my favorite books about crisis management, the aptly titled We're So Big & Powerful, Nothing Bad Can Happen To Us. The book explored all the reasons companies fail to plan for the worst case. In many instances, it comes down to believing their own hype. Pharma companies, for example, failed to understand how attacks on their profits would resonate with consumers because they believed they were simply helping to cure horrible diseases. But the book also provides pretty convincing evidence that companies that fail to plan for crises are the most likely to experience them. The very act of conducting a crisis audit, of analyzing possible risk factors, and of running a crisis simulation helps companies avoid problems. It aids companies in identifying potential problems early, but it also creates an atmosphere of vigilance and can help all employees understand how their actions can have negative reputational consequences. Mitroff has recently been working with the Council of Public Relations Firms. Perhaps it would be wise to unearth some of his research and have PR counselors present it to their clients, in the hope that those clients might come to see crisis planning not as a luxury, but as an essential part of a comprehensive business insurance package - an investment against potentially catastrophic loss of reputation, time, and money. Or maybe we should keep our collective mouths shut. After all, when crisis strikes these companies - and it surely will - we'll be able to set our own fees.
  • Paul Holmes has spent the past 15 years writing about the PR business for publications including PRWeek, Inside PR, and Reputation Management. He is currently president of The Holmes Group and editor of www.holmesreport.com.

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