By Greg Hazley
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.
Source: CIRI/Fleishman-Hillard |
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," said CIRI president and CEO Tom Enright, who said IR pros need to be more involved in crisis planning.
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 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.
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