The crisis communications toolkit for investment firms
Key takeaways
- How you communicate in a crisis is critical to reputation management
- The stakes for financial firms can be high given the critical need for public trust
- The crisis communications toolkit is a standard protocol that can be applied to a variety of situations to help firms navigate through an acute challenge with their reputation intact
I’ve been thinking about crisis communications lately. It’s hard not to.
An army helicopter colliding with a passenger plane was crisis enough for the Federal Aviation Administration without it mushrooming from a tragic loss of life to a political crisis when the administration blamed the crash on DEI programs.
United Healthcare faced an escalating crisis after the assassination of their CEO when its health insurance business was maligned on social media from those who had been denied coverage.
"Crises may include the death of a founder or key executive, a regulatory lapse, a fraud or financial crime, a data breach or workplace violence."
These are crises of a mammoth scale, and I send supportive energy to the comms teams addressing what will likely take months if not years to recover from.
While not life and death, the investment industry has faced its own crises. Consider the allegations of portfolio manager fraud at Western Asset Management (WAMCO), a division of Franklin Templeton, a debacle that has played out over many months and led to massive outflows from the affected products. How a firm handles a single breach or a wider fraud can make or break decades of trust.
For all firms, but especially asset and wealth management firms, how you communicate in a crisis is critical to reputation management. The stakes can be high given the critical need for public trust. And while rare, crisis moments can define long-term reputations. In our experience, preparing for and managing through a crisis rarely strays from the following steps.
Most financial firms have a plan on hand, identifying the potential crisis scenarios unique to our industry. The plan includes protocols, templates and holding statements in order to be ready. What are those anticipated scenarios? They might include death of a founder or key executive, a regulatory lapse, a fraud or financial crime, a data breach or workplace violence.
"Your spokesperson, even if it is your most senior executive, should receive custom spokesperson training to the crisis at hand."
Communications leaders are usually at the heart of the process of drafting, maintaining, testing and updating these plans. While each crisis is different, the preparation can be vital amidst chaos.
When a crisis hits, it will be a “drop everything and get all hands-on deck” situation. The crisis toolkit, with a few exceptions, is a protocol that includes these elements:
- Crisis response team. A handful of leaders must come together to make critical decisions on the spot. That core team often includes representatives from company leadership, legal, communications and social media Their roles and responsibilities and a clear chain of command need to be clearly defined in the pre-crisis plan.
- Command center. Commandeering a dedicated crisis management space—a conference room or executive suite—is crucial. It needs to be equipped with all the essential tools and resources to gather information and respond quickly. Laptops and a protected network are necessary to be able to access information and share drafts without the risk of leaks. And as the team may spend countless hours until the crisis is resolved, having food and beverages on hand is a must.
- Information gathering. Rumors and misinformation abound when a crisis hits and everyone is scrambling to figure out what happened. Assembling as much information on the crisis quickly is essential. Having protocols to track and manage the most recent information and drafts (including discarding data that has since been updated or earlier drafts) is also helpful. This requires both document tracking and establishing information verification processes to assure data is both accurate and trustworthy.
- Stakeholder identification. Identifying both primary audiences (clients, employees, regulators, shareholders and media) and secondary audiences (vendors, community members) must be done early. This step can also entail identifying the appropriate firm representatives to make contact if necessary.
- Message development. After gathering the facts and assessing the potential impact on stakeholders, identify clear and consistent messaging. Engage Legal from the beginning to assess regulatory implications. It is similarly important for senior management and communications leaders to think through the long-term reputation implications of the message. Once a message is determined, core communications documents as well as talking points and Q&As need to be created.
- Announcement strategy. Almost as important as the message is how that message gets delivered. The crisis team should think carefully both about the messenger and the way in which the message is delivered (issuing a statement, holding a news conference, carefully offering an exclusive interview, etc.). Your spokesperson, even if it is your most senior executive, should receive custom spokesperson training to the crisis at hand to be well prepared to stick to your message and handle difficult questions.
- Monitoring and response. Once a crisis becomes public and the firm has responded, the next step includes monitoring all media to see how the story develops. This includes traditional media monitoring and social media surveillance. It also includes listening to stakeholders for feedback. The crisis team should synthesize all information to make real time messaging adjustments and follow up as needed.
- Post-crisis recovery. Once the news cycle passes and the crisis becomes less acute, the ongoing work begins to rebuild reputation if it was tarnished and to take the necessary steps to restore stakeholder trust. And as the dust settles, document the lessons learned and make any updates to your crisis plan.
For investment firms, crisis communications best practices require being as transparent as possible within regulatory bounds. There is a need for speed balanced by accuracy, and messages must be consistent across channels. What you say to your retail customers must be consistent with what you tell large institutional clients. Deciding when and how to be proactive versus reactive will depend on the situation.
Being prepared for a crisis is part of any strong reputation management program. Your plan should reflect your brand and broader PR strategy. A strong culture can help support you through a crisis, helping you avoid the missteps that could tarnish or even destroy your brand.
Trust is really at the heart of any crisis communications strategy. When we are called in to support clients in a crisis, whether those we’ve worked with for years or those who come to us for the first time in the midst of an issue, our goal is to help a firm navigate through difficult situations with their reputation intact.
Let us help you create your crisis toolkit.
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