As evidenced by the Costa Concordia cruise ship tragedy, social media outlets offer real-time updates on breaking stories, and businesses must adapt their crisis communication and reputational risk strategies to stay ahead of the game

Without question, companies are not taking appropriate steps to prepare themselves for effective communication during times of a crisis. In the digital age, where social media platforms are quickly replacing traditional media as sources of information, the communication landscape has changed for all companies across all industry sectors.

The biggest change brought about by the online world is speed. The time to react has shrunk enormously. The generally accepted rule for communications used to be that in times of a crisis, boards, executive teams and issues managers may have had an hour, sometimes two, to react to a breaking issue. This time would be used to release media holding statements, contact key stakeholders, investors, employees and so forth.

Today, this window is now around fifteen minutes. As a result, traditional business continuity planning practices, whilst broadly adequate, need to embrace and focus far more comprehensively on better communication strategies that are geared to this changing landscape.

We only have to look at the recent tragedy off the coast of Italy, where the Costa Concordia capsized, to understand this issue of speed and the power of social media.

Following the grounding of the ship on the evening of 13 January 2012, onshore witnesses and passengers who had managed to evacuate immediately began uploading images through a range of sites including Facebook and Twitter. By the time Europe woke later in the morning, amplification on social media had reached saturation to the point where traditional news outlets were uploading online images and video, and the ship’s corporate website, failing to cope with the level of online traffic, collapsed.

For a three-to-four hour period during the day, social media represented the sole direct interface with the ship’s company. Over the course of the next few days the incident led to over 35,000 tweets, 10,000 blog mentions, 34,000 news mentions online and 4,500 YouTube video mentions – all of which were in different languages and time zones.

Another good example is the emergency landing of US Airways flight 1549 into New York’s Hudson River in 2009. The plane landed in the Hudson at 3:40pm, and within ten minutes the first image of the plane floating in the river appeared on Flickr. By 4:00pm traditional media had begun feeding reports online, and by 4:10pm a video of the plane with passengers in the water had been posted on YouTube.

By 4.25pm mass media coverage had exploded throughout the United States, and at 4.30pm the airline’s website was crashing intermittently. The airlines’ first statement appeared on its website at 4.40pm, followed by a press conference with the CEO at 5.10pm. By this time, online coverage of the incident was global, with thousands of articles – including personal stories from passengers, tweets and blog mentions.

While a maritime disaster or aviation story may not immediately appear relevant to most companies, the issues of speed and amplification of news online present real risk management issues for all companies.

The hallmarks of effective crisis management are largely the same as they have always been. Prepare, identify potential scenarios, develop holding statements and have in place an issues management team with clearly understood response protocols. However, it is now imperative that companies across all industries understand the speed at which a crisis can break and where it can break.

This can require a large amount of preparation and research. Companies need to understand where their customers or partners may be active online. It is also critical to review all crisis scenarios and align these with online media, and identify the areas where it could potentially develop. In short, preparation must be more thorough and comprehensive than it has ever been.

In our opinion, companies are still not taking the necessary steps to prepare and protect themselves properly. This is of particular concern during a time when many market commentators and experts are predicting stronger economic headwinds ahead.

Recent global research released by Penn Schoen Berland in the US shows that 60 per cent of business decision makers have experienced a crisis in their current or previous company. In addition, those working in manufacturing are more likely to experience a crisis and – of the various types of issues encountered – controversial company developments such as staff lay-offs, logistical difficulties (including supply chain problems) and product issues are the most common.

More significantly, 79 per cent of business decision makers believe they are only 12 months away from a potential crisis. Therefore, the threat of an issue is very real and, given the widely accepted impact of a crisis on brand and share price, there needs to be a renewed focus on preparing more rigorously for breaking issues.

Taking action

To understand if a company is adequately prepared, risk managers should first ask a range of questions. Ask what the likelihood is over the next twelve months that the organisation will experience:

• a controversial company development;
• logistical difficulties;
• regulatory scrutiny;
• a technical accident;
• or critical and negative media coverage.

Depending on the likelihood of one or more of these scenarios unfolding, it is essential to address the crisis plan and the organisation’s level of preparedness.

One area in which most companies can make immediate improvements is in the area of listening tools – i.e. social media monitoring. These analytical instruments can provide critical information regarding your prospects, customers, and how other stakeholders are reacting to – and talking about – your company. It’s important to monitor the tone and content, and to understand how and on which platform you may be able to respond to, and deal with, a problem. This is simply no longer an area where a firm should be passive or apathetic.

If we were to look for an extreme example of where online coverage and tone is being monitored, then the recent launch in Europe of the first social media-based hedge fund is an interesting development. The hedge fund is using Twitter for investment direction, following a widely publicised academic study that established the connection between emotion-related words appearing on Twitter posts and subsequent movements in the Dow Jones Industrial Average. In August 2011 the fund posted positive returns following its first month of trading.

The digital age has changed the arena of risk management. If preparation is the foundation for successful crisis management, companies need to do more. Every organisation is vulnerable to a crisis and stakeholders are not easily forgiving. Crisis communication has changed and every firm needs to ask itself how prepared it is to properly answer the digital question during a crisis.

To view this article on the Risk Management Magazine website, please click here.

With more than 11 years’ experience in corporate communication, media relations, reputation management and strategic counsel, Ian joins MAGNUS as co-lead of the company’s Sydney office. He joins John Gardner (founder and Managing Director) and Dudley White as directors of the firm.

During a career spanning the UK and Australia, Ian has developed a strong track record in managing strategic communication programs and providing executive counsel to a range of firms domestically and internationally. His primary experience covers the corporate and financial services sectors, including private equity, insurance, property, investment banking, fund management and financial technology.

Before joining MAGNUS, Ian spent almost four years with an international public relations agency in Sydney where he was Director/Practice Leader of Corporate and Financial Services. As well as managing successful corporate communication programmes, Ian’s past roles have included crisis management projects, transaction communication and providing media training, messaging and corporate positioning workshops for clients.

MAGNUS Managing Director John Gardner said Ian’s appointment marked another important step in the company’s growth following the opening of its Perth office in October 2011.

“Despite the headwinds facing the global economy, MAGNUS is continuing to grow and we’re delighted to have secured somebody of Ian’s calibre.

“Ian’s joining MAGNUS significantly strengthens the senior capability within the team, particularly in the area of corporate communication and brand reputation where we already serve a number of blue chip financial services and professional services clients.

“With Ian on board we hope to continue to grow in those areas and to develop further our national capability across the Sydney and Perth offices.”

During his career, Ian’s clients have included leading financial services, professional services and property firms including: Mirvac, Hudson, Warburg Pincus, Commonwealth Bank of Australia, Deloitte, HBOS, TowerGroup and Cable & Wireless.

Ian has previously worked for Hill & Knowlton in Australia, and Greentarget, Weber Shandwick and Ogilvy PR, in the UK.

The MAGNUS team would like to wish you a Merry Christmas and thank you for your support throughout 2011.

MAGNUS this year started supporting the Black Dog Institute, a not-for-profit, educational, research, clinical and community-oriented facility offering specialist expertise in depression and bipolar disorder. In lieu of sending Christmas cards this year, MAGNUS has put together a brief Christmas video and will be making a donation to the Black Dog Institute.

We hope you have a Merry Christmas and a safe and successful 2012.

Warmest regards,
The MAGNUS team

MAGNUS will provide pro-bono media relations and corporate communication services when requested by the Institute, to help boost the Black Dog Institute’s profile to more and more people across Australia.

MAGNUS Managing Director, John Gardner, said establishing a relationship with the Black Dog Institute was ultimately driven by the MAGNUS team’s willingness to give back to the local community by providing corporate communication services, skills and expertise.

“The MAGNUS team discussed the idea of working with a charity on a pro-bono basis and the team unanimously agreed to support an organization that helps to break down the stigma of mental illnesses in Australia.

“Both MAGNUS and the Black Dog Institute are currently embarking on national expansion, which makes this relationship more meaningful as we look to the future,” Mr Gardner said.

Black Dog Corporate Relations and Development Manager Vicki Miller said: “With one in five Australians developing a mood disorder in their lifetime, it’s important to have a passionate team behind the cause to help educate the community about depression and bipolar disorders.

“We are very excited to have MAGNUS’s support and are looking forward to forming a long and impactful relationship.”

Located on Richardson Street, West Perth, MAGNUS’s new office spearheads the company’s move to become a dominant investor relations and corporate communication advisor to what MAGNUS believes to be an underserviced market.

MAGNUS’s dual-located Perth and Sydney location also positions the business to bridge the gap between Australia’s East and West Coast; and more specifically between clients and members of the corporate advisory, broker, fund management, broader financial and investment, and media communities, from coast to coast.

Celebrating its second anniversary in August 2011, the opening of MAGNUS’s Perth office reflects the company’s strong future outlook and the next stage of its growth.

At the office launch last night, MAGNUS Managing Director John Gardner said: “With our expansion into the WA market, MAGNUS becomes the only Australian-owned firm offering true investor relations and transaction communication services across both Perth and Sydney, which is a very powerful proposition.

“We already enjoy some outstanding client relationships in WA and with the business community generally and we have always believed in the strength of the MAGNUS brand to expand nationally.

“Growing the MAGNUS business in WA represents our true commitment to this market and an excellent opportunity to continue delivering value to our clients.”

MAGNUS placed among Australia’s top 10 in the ‘League Table of PR Advisers’ based on the value of deals announced in the first half of calendar 2011, and among the top 20 firms across the broader Asia Pacific region, according to the latest figures released by mergermarket. Based on deal volume, MAGNUS also polled in the top 20 across Asia Pacific.

Transactions worked on by the MAGNUS team include New Hope’s successful A$238 million acquisition of Northern Energy, Catalpa Resources’ defence in response to an unsolicited offer from St Barbara, and Catalpa’s subsequent announced merger with Conquest Mining.

MAGNUS has also advised retained client Extract Resources Limited on a proposed offer for its major shareholder Kalahari Minerals plc, by China Guangdong Nuclear Power, and Cedar Woods Limited on a defence mandate in response to an unsolicited A$310 million takeover offer.

Since commencing operations in August 2009, MAGNUS has advised on more than A$10 billion of mergers, acquisitions, IPOs, capital raisings, divestments and trade sales.

MAGNUS Managing Director John Gardner said: “Our ranking among Australia’s largest communication advisers on M&A deals is evidence of the growth of our transaction capability and the strength of our referrer network in Australia.

“Transactions are one of our core focus areas and we plan to continue to grow our advisory business through the rest of 2011 and beyond.”

The MAGNUS team thanks all of the clients, referrers, suppliers and members of the media who we have worked with during the company’s first two years.

Victoria brings to MAGNUS six years’ experience with Macquarie Group in investor relations, equity capital markets and asset management in Sydney and New York.

Stephanie joins MAGNUS from Bank of America Merrill Lynch, where she worked in mergers and acquisitions, capital raisings, initial public offerings and corporate restructurings for mining services, retail, industrial distribution, healthcare and professional services clients.

MAGNUS Managing Director, John Gardner, said the appointment of Victoria and Stephanie is an exciting step in MAGNUS’s continued growth and its position as one of the emerging investor relations and corporate communication firms in Australia.

“The expansion of the corporate transaction communication advisory team with the hire of Victoria and Stephanie significantly boosts our capacity to service a growing list of investor relations clients and listed companies undertaking complex corporate transactions,” John said.

MAGNUS has also welcomed Kirsty Lally to the team as Finance and Operations Manager to support the expanded client advisory team.

“Kirsty has 12 years experience working for listed entities in the energy, oil and gas sectors, as well as a number of years working for international accounting firm, KPMG. Her experience spans corporate transactions and shareholder communication, through to day-to-day financial activities.

“Since our inception in 2009, MAGNUS has strived to build a team with strong financial markets and corporate knowledge to service our clients. We are committed to delivering the highest level of service to our clients and I am delighted to welcome Victoria, Stephanie and Kirsty to the team,” John concluded.

Garry brings seven years’ experience to the role and a strong background in corporate communication, strategy development and media relations both in Australia and the Middle East.

Garry has previously worked on communication programs for one of the ‘big four’ Australian banks, a prominent sovereign wealth fund and one of the world’s largest financial technology providers, and also has experience working with a number of financial services, professional services and property clients.

MAGNUS Managing Director, John Gardner, said the appointment of Garry further strengthened the company’s corporate communication capability, especially in the financial services, professional services and property sectors.

“Garry will bring a range of valuable skills to the role as we continue to build our team and deliver effective, targeted communication programs to our clients.

“With this appointment we are increasing both the capability and capacity of our client services and this reflects the ongoing growth and development of MAGNUS as a specialist investor relations and corporate communication consultancy.”

Garry has a BA in Broadcasting Communication from Leeds University in the UK.

Dudley brings more than 13 years’ experience in corporate transactions, media and investor communication in Australia, the UK and Asia Pacific to the MAGNUS business.

Over his career Dudley has developed a deep specialisation in financial communication for listed and unlisted companies, and advised on a number of significant transactions including acquisitions, public-to-private takeovers, debt restructurings and initial public offerings.

Before moving into communication advisory roles, Dudley had a successful career as a journalist with Bloomberg News in their London, Melbourne and Sydney offices. During his time at Bloomberg, Dudley developed a specialisation in mining and oil and gas, coordinating coverage across the Asia Pacific region.

Dudley’s media experience covers both print and broadcast journalism, including regular TV appearances discussing news and developments in the mining and natural resources sector, and the Australian economy more broadly.

MAGNUS Managing Director, John Gardner, said the appointment of Dudley was another positive step in the evolution of the MAGNUS business.

“In the 12 months since opening our doors, the MAGNUS business has built a reputation for delivering outstanding results for clients in relation to corporate transactions, investor relations and their broader corporate communication needs in the resources, mining services, property, professional services and financial services sectors.

“To attract an advisor of Dudley’s experience is a major win for both MAGNUS and our clients, and a reflection of the future growth potential of the business,” John said.

Until recently, Dudley was an Associate Director with Edelman in London. His main clients included Akbank (Turkey’s largest bank), private bank Brown Brothers Harriman and TD Waterhouse (the UK’s biggest execution-only broker). He has also worked on a litigation case in Turkey for global hedge fund QVT and Ontario Teachers’ Pension Plan’s acquisition of lottery operator Camelot.

Before joining Edelman, Dudley worked at The HeadLand Consultancy, a specialist financial communication firm in London. Prior to that, he spent seven years in Australia where he worked for Bloomberg and Ogilvy financial PR affiliate, Savage & Partners.