New report from IR Insight finds majority of companies with crisis plan in place
A corporate crisis has affected one in three companies in the last five years, according to a recent report on crisis management and communication from IR Insight, the research arm of IR magazine.
The report, based on the responses of more than 750 investor relations professionals from across the world, finds the global financial crisis is by far the single biggest crisis during that time, cited by more than a quarter of respondents.
Natural disasters, key management departures and corporate scandals are rare by comparison.
The report also finds two thirds of companies have a formal crisis communications plan in place.
What’s more, at least two in five companies conduct regular crisis simulation exercises, most commonly on an annual basis.
Yet John Deverell, CEO of Keyhaven, the crisis management and communications firm and report sponsor, warns companies against complacency.
‘It is alarming to me that 30 percent of respondents say their companies either don’t have a crisis management policy or they simply don’t know whether they have one or not,’ says Deverell.
‘This is despite the survey establishing that more than one third of companies have had a crisis during the last few years. Companies that are unprepared should take note.’
On the question of crisis readiness, IR professionals give senior management an average score of 7.5 out of 10. In a clear message to CEOs and CFOs worldwide, this score increases at companies where there is a crisis plan in a place and regular crisis simulation exercises are held.
For their part, when respondents are asked to choose between prioritizing corporate reputation, shareholder retention and share price during a crisis, the overwhelming majority plump for corporate reputation.
‘We were struck by investors being clear that a company’s corporate reputation is their number one priority when there’s a crisis,’ notes Deverell.
‘From experience they know that is what’s most important for a company to concentrate on if it’s going to recover quickly and get its value back.’
On the whole, the results outlined in the report tend to differ by sector, region and market cap size. For example, Asian companies record the lowest incidence of a crisis but are the most prepared for possible future crises.
Meanwhile, large-cap companies are most at risk and also the most prepared.
‘The finding that larger companies are more at risk would lead one to believe they could most benefit from a crisis management plan,’ Deverell points out.
‘But in our experience it is the smaller companies that have a harder time recovering after a crisis – so no matter what the size, all companies benefit from having a comprehensive plan in place.’
Download a copy of the report.
