Crisis Communications: Case Study 1
For publicly held companies a crisis is a direct threat to its market cap. Two weeks after announcing record earnings, a global insurance concern was forced to restate quarterly results and explain how it lost $3 billion dollars on what appeared to be risky investments. The company’s stock was in free-fall. Its storied reputation in tatters, its credibility damaged, shareholders, employees, and the news media demanded answers.
We were called upon to help design and execute a crisis communications plan to help the company stop the bleeding, stem the tide of external criticism and internal skepticism, and most importantly to re-establish confidence and credibility in the severely devalued stock. It was abundantly clear to the CEO that nothing less than his resignation would quiet the critics. He dutifully fell on his sword. We crafted the resignation communications as well as the plan to establish his successor as the “right man” to return the company to stability. In addition to shaping multi-lingual messages for all stakeholder groups and the news media, we coached the new CEO on how to authentically convey leadership in performances before each of those diverse audiences.
With clear, concise messages, the new CEO calmly explained what had occurred and why. He reminded everyone that insurance companies are in the “business of risk,” and that most times those risks pay off in profits – but sometimes risk results in a payout for which they have ample reserves. The new CEO calmed fears of incompetence and insolvency by presenting a straightforward plan to reduce the chance the company ever face such an issue again. He quickly established credibility and trust with all stakeholders and the news media. The company’s share price stabilized and soon recovered its losses under the steady hand of its new leadership.