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Finally Putting Crisis Theory into Practice

By Alwin Binder, Consultant, CNC – Communications & Network Consulting

Energy companies are generally exposed to a broad range of risks. Risks that ‘naturally’ derive from business operations: spanning from upstream production all the way to downstream distribution of energy to a single household. As seen over and over again in the past, it seems almost unavoidable to fully mitigate these types of inherent business risks.

What is more, these risks often have the potential to develop into an existence-threatening crisis for a business, and one with a large environmental and social impact. Consequently, and for good reason, public attention is especially significant when the crisis is energy-related. At first glance, every crisis might appear different. In reality, most of them have something in common: the correlated reputational and financial damage.

As Warren Buffet famously said:

It takes 20 years to build a reputation and five minutes to ruin it.

On Energy Report Sept 2016 - DominoA survey by international law firm Freshfields Bruckhaus Deringer further underpins the relevance of Buffet’s quote. According to the findings, nearly one third of all crises spread internationally during the first hour. During the first 24 hours, more than two thirds of all crises reach up to 11 countries worldwide. Most importantly though, fewer than half of the companies impacted by crises will have recovered their pre-crisis share price after the first year.

Given this essential business threat, it is not surprising that crisis communications has evolved into an essential element of any crisis response strategy. As online news and social media in particular tend to spread extremely rapidly, corporations need to respond more quickly than ever before. Their reputation and financial well being depends on it.

Thus, it is essential to be prepared for when the unforeseen happens – at any moment. For this purpose, most energy companies have detailed communications action plans and crisis manuals at hand. However, how can a communications team achieve the immediate shift from theory to practice, when every minute counts?

Without a doubt, the best way to prepare for a communications crisis is to go through one. What is essential, is the experience that goes along with it. This realisation is actually the quintessence of a new wave of crisis simulation programs: experiencing a realistic crisis scenario in real time.

These new types of simulations are first and foremost an opportunity for communications teams to jointly tackle a crisis relevant to their business, based on real cases but in a fabricated and totally secure data environment. The crisis simulation can bring a nightmare scenario to life,  be it a severe production incident, an environmental hazard or a cyber-attack threat retrieving business-sensitive information.

The simulation itself allows each participant to interact with all relevant internal and external stakeholders. Every move they make – from one-on-one media relations to distributing press releases – directly influences how the public perceives the further development of the crisis. Online coverage and social media channels are realistically presented, allowing full interaction through different channels. In the meantime, experienced communications consultants manage the back-end of the simulation and give in-depth feedback with clear recommendations afterwards.

The experience of the team being confronted by a realistic crisis together is the key. This experience will help them be better prepared, because often the next crisis is just around the corner.

This article is a part of the September 2016 edition of MSLGROUP’s ON Energy Report – Navigating a Changing Energy Landscape. If you want to find out more about the work we do, or enquire as to how we might be able to help, don’t hesitate to contact Nick Bastin.

Alwin Binder

 
Alwin is a public affairs and crisis communications expert for the private equity, eenewable energy, real estate, science and telecom sectors. He has been a part of CNC since August 2011. Connect with him on Twitter @AlwinBinder.

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