Archive for the Emergency Response Category

Crisis Issues – Beyond Emergency Response

Crisis Issues – Beyond Emergency Response

Don’t worry! We have a great emergency response team. They follow all the best practices and train annually. They can handle any emergency response.” That’s a great start for any company. Certainly, it will serve you well in an operational emergency. Also, they can apply many of their skills in other areas. However, this doesn’t address the different perspective needed for corporate concerns and crisis issues. To illustrate this, you’ll see major crisis issues to watch later in this post.

crisis issues emergency response

Emergency Response vs. Crisis Management

Many companies plan and practice only emergency response procedures because they are more comfortable with the structured approach and focus on operating issues. They also like that the federal government has complementary emergency response protocols.  Of course, emergency responders are very important in most operating circumstances. However, corporate crisis situations require perspectives that go beyond emergency response.

What’s missing is the host of corporate concerns that are also covered in the broader field of crisis management. If you have an existing emergency response program and need a crisis management capability, the simple solution is to build an overlaying crisis management team and supporting crisis management plan at the corporate level. This will ensure that neither team or approach confuses the focus of the other.

Likewise, crisis management teams support emergency response teams and other tactical groups while providing direction and voice for the entire enterprise. In this hierarchical structure, the crisis management organization encompasses all the resiliency efforts such as emergency response, business continuity, and security.

Conversely, don’t expect emergency response teams to handle crisis issues. Corporate concerns can simply be too complex for the structure of emergency response plans and compartmentalized teams.

Hopefully, your company already has a crisis management plan and practices it. If not, act now, since the middle of a crisis is usually too late to plan and practice your team’s roles and responsibilities.

crisis issues emergency response

10 Crisis Issues

Crisis management can work hand-in-glove with your emergency management team and plan while addressing other enormously important issues. Here are 10 major crisis issues that warrant real thought, preparation and integrated crisis management:

Bankruptcy

This can happen to any company. Consider two companies that had been among the 10 largest in the United States. Texaco declared bankruptcy so it could appeal an unexpected $13 billion judgment for tortious interference. Enron went from perennially most innovative company and darling of Wall Street to a global pariah in a matter of weeks. The plans, strategies, and leadership at Texaco ensured the company survived for many years after the bankruptcy. Enron did not enjoy a similar fate. Initially, there was too much executive focus on personal survival and shocked denial to stem the massive capital collapse. These situations resulted from several of the next examples.

Litigation

This was the proximate cause of the Texaco bankruptcy and virtually ubiquitous around the Enron collapse. Litigation is often the cause of an unanticipated crisis. Unfortunately, you may appear to be in complete control, until you aren’t. Litigation requires extraordinary attention to any communication and coordination with legal representation. Often, communication with stakeholders helps with litigation, such as through amicus curiae

Hostile takeovers/activist investors

Activist investors are increasingly confronting companies and threatening change-of-control. For instance, when Texaco was weakened by its bankruptcy, Carl Icahn initiated a takeover. The crisis response included passage of the Delaware corporate consolidations bill that slowed more aggressive tactics. This gave the company time to restructure and successfully respond.

Third party incidents

One company’s emergency may become a crisis for other companies in its industry. An oil spill in Alaska resulted in stringent shipping requirements on the entire petroleum industry and a passenger train collision in California resulted in multi-billion-dollar positive train control requirements on freight railroads. Public opinion and crisis issues can drive punitive legislative responses.

Corporate malfeasance/ government investigations

If an employee bribes a foreign official, the CEO may go to jail under the Foreign Corrupt Practices Act. In another case, the government may prosecute your company if you falsify billing. Both will seriously damage reputations.

Expropriations/ abrogation of contracts/ sanctions

You may be doing everything right, but a sovereign government can act for its own reasons. It may want your assets, refuse to pay for services under its contract or put you in the middle of an international dispute. These actions can shake markets’ confidence and require massive crisis communication, diplomatic and legal campaigns.

Executive misconduct/sexual assault

Even powerful executives have flaws and they are not always obvious to those who work with them. The preventive programs you put in place and the way you respond can make all the difference. Observers will attribute their actions to your company, whether that’s right or wrong. Carefully managed, it won’t be as bad.

Cyber-attacks/digital assaults

Denial of service, cybersecurity breaches, and other digital attacks have become common. Be sure to handle each case appropriately for its unique circumstances. Federal law actually changed after more than 100 million personal records were hacked at a consumer credit reporting agency. If you want to avoid scandal, be sure to consider and address public interest as a part of each case.

Mass shootings/ terrorism/ acts of war

Nothing is immune to violence. Churches and schools are targets, and new industries are having to scramble to adapt and prepare. Remember when few could imagine someone checking in a hotel, firing hundreds of rounds and killing scores of innocents. The thought, planning, and training to prepare for the unthinkable is now a necessary part of the business.

Targeted reputational attacks

It’s not just politicians and governments that find themselves under attack. Similar methods and sensationalism can be used to persuade communities that a company has violated their trust when that’s not the case.

 

Companies are vulnerable to many of these crisis issues. Waiting for them to happen is too late. Take actions now! Crisis Management and Crisis Communications require capabilities, critical thinking skills, and innovative approaches. With strong planning, preparation and skill you can overcome these issues.

Managing the Unthinkable

 

Managing Unthinkable

Even the unthinkable needs to be managed.

When your business depends upon it,

you can count on Corporate Crisis Group.

 

Change of Control – Losing Everyone; Keeping Everything

Change of Control – Losing Everyone; Keeping Everything

How companies manage a change of control can make an enormous difference in the value and viability of the operations being acquired, merged or reorganized. It’s natural that companies will want to reduce costs and redeploy resources when they make the decision to dispose of assets or operations. After all, these are no longer considered core assets, so why continue dedicating corporate resources to protecting them as if they were still core.

Of course, companies will be sure to fulfill contractual obligations and protect the integrity of the operation until the change of control, but they will often reduce or eliminate areas that are considered nonessential. Those numbers vary depending on the reason for the personnel reduction with some departments being impacted more than others.

In some instances, entire Health, Safety, Security, Environmental, and Communications departments have been dissolved leaving no one assigned to what were once considered critical roles.  Emergency response capacity, security integrity, EHS, community relations, government affairs and related fields can be heavily impacted.  This type of significant paradigm shift can result in heavy losses of intellectual, operational and procedural capital.

Business Negotiations change of control

Change of Control Negotiations

As an example, a European energy company (strategically motivated) with businesses and assets dispersed globally, sold one of its overseas divisions to an Asian company (financially motivated) whose intent was to restructure and repackage the assets for a future sale.  In the process, the entire division management staff was reduced from over 100 professionals to 4.

The positions remaining were solely for optimizing cost, efficiency and preparing the assets for future new ownership.  The buyer would either merge the assets into an existing portfolio with established central controls and authority or build a new management team to operate their new assets.

This isn’t an unusual story and it happens frequently.  What doesn’t happen frequently is a good plan to retain the wisdom, experience and intellectual capital from past employees for use after the transition.  Assets have a valuable operational history and culture both independently and in the context of a larger organization.  This is especially true if the parent company, owner or operator is from one social culture and the assets are located within others.

Beyond social cultures are the asset group cultures, asset individual cultures, and the adaptive culture of being from one type culture and working under the operational rules of another.  These cultural understandings facilitate processes, procedures and community relationships that have immense value regardless of changing management structures, ownership or evolving business values.

In the European company example listed above, there was a cumulative loss of over two thousand years of experience.  Within one month of the sale announcement, many of the remaining employees were “checked out” and preoccupied with their employment prospects rather than putting the company in shape to make the transition successful.  This isn’t an unexpected behavior.  What was unexpected was that the buyers didn’t anticipate this reaction and left itself very vulnerable during and after the transition.

Since emergency response, crisis communications, security integrity and crisis management are designed to protect against infrequent threats, they are often the first to go during a change of control. They are also difficult to quickly replicate and essential to ensuring the continued viability of a business. A poorly handled crisis can taint assets for years, dramatically reducing their value. In this example, the buyer plans to restructure and repackage the assets for sale would have been undermined if it had encountered a crisis without support after the change of control.

This is all avoidable with some planning prior to the signing of the purchase agreement and announcement of the sale.  The planning should begin during buyer qualification and finalize during the transaction structure.  By the time the deal is done, the plan should be well underway.

When the transition phase begins, missing internal capabilities are outsourced on an on-demand basis consistent with established protocols ensuring continuity and consistency until new capabilities are put in place by the buyer after the change of control.  In most cases, the services you typically require can be temporarily outsourced to reliable, professional firms that will be engaged for the duration. In this way both the buyer and seller protect their interests, retaining interim capacity without the obligations associated with dedicated personnel.

A little forethought and planning before rushing to cut can protect everyone’s interests and ensure a successful transaction.

Contact Us

Phone: +1.833.227.4747

Email: info@corporatecrisisgroup.com

Address: 405 Main Street, Suite 730
Houston, Texas 77002