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Did You Plan for This?

Understanding the stages of crisis management

February 15, 2022 Photo

Yet again, we have had a year of crises and mass casualty events; seemingly one after another. This past year has reinforced the importance of engaging a crisis management team before the crisis occurs so that you can control your part of the narrative when it happens.

Undoubtedly, the next crisis will be a national or even an international story, and the insured’s ability to get in front of it is critical. The place to start is understanding the stages of crisis management: pre-crisis footing, crisis response, and post-crisis recovery. In this article, we will discuss the pre-crisis and crisis response stages.

What is a crisis?

•     A crisis is a time of intense difficulty, trouble, or danger.

•     It can last from a few hours to days, months, or even years.

•    It requires that decisions be made quickly to limit damage to an organization, shareholders, and the public.

The first key to dealing with a crisis is to start planning before one occurs. Preplanning helps to define what a crisis is and who should manage it when and if it happens. Two items to consider in risk assessment are a vulnerability audit and a list of potential crises, ranked in order of likelihood.

A vulnerability audit is defined by Erik Bernstein, president of Bernstein Crisis Management, as a “thorough self-inspection designed to identify potential crises before they occur and pave the way for creation of a crisis communications plan [that] will allow an organization to avoid, or at least minimize, the negative impact of such crises.”

Together, the audit and the crises list will help in the preparation of a crisis management plan (CMP), which makes it easier to detect and prevent a crisis before it happens or before it gets out of hand. Of course, few crises can be totally avoided. We will focus on the development of a CMP and its impact on an unfolding crisis. As noted previously, you must be prepared for the unthinkable. Having a CMP beforehand can minimize the damage to both reputation and revenue.

Crisis management is a rush to the truth, and the first one to address the crisis usually wins. Consider these elements confronted in a crisis:

•     The court of public opinion is the jury, so engage an experienced public relations (PR) team to manage events internally and externally. When potential jurors hear the matter years later, their initial impressions and memory of the incident will include your narrative, and contemporaneous public opinion can be used strategically to your advantage if you act quickly enough.

•     Events will move rapidly, so speed and accuracy are critical, and having a preselected stable of PR firms and teams is a smart strategy—failing to plan is planning to fail.

•     Public perception can help or hurt your efforts. Ensure that your public relations team has good relationships with key contacts in the media and that you have your finger on the pulse of the latest developments. Make sure you have a fair opportunity to comment if the legal team so desires. It is important that the PR team coordinates closely with the legal team and does not make any public statements without prior approval. Consult with the PR team about legal strategy and potential public perceptions to help adjust strategy and execution when it comes to court filings, hearings, and related litigation action and inaction. The two teams must always be on the same page working together—one never compromising the other.

The benefits of a CMP are many, and they should contain, at a minimum:

•     A strong, direct line of communication.

•     A clear chain of command for funneling information to the key decision makers.

•     A defined crisis response team that is ready 24/7.

•     A list of decision makers and crisis response members who are known and readily available.

Execute the Plan

Equally critical with planning: You must execute the CMP when the crisis occurs. It does no good to have a plan if it is not followed. In fact, it can be used against you if it isn’t. It is important that key players are informed of the CMP and trained properly so they are ready to go when needed. In executing the CMP, define the defense strategy plan, or at least the key hypothesis of the defense strategy, and be focused and consistent in the execution of that plan. This will ensure that all teams are strategically aligned in the insured’s defense and competing approaches are eliminated.

The defense and crisis management teams must work together to create a clearly defined strategy as they play off and support one another. Organization and coordination here is critical, from the big picture down to the details. The strategy is the “North Star” of the defense and should be revisited periodically to ensure stakeholders are updated continually and necessary tweaks are universally executed as the investigation unfolds and as public opinion and social media respond to various information. Engage the insurance tower from the beginning so that all levels of insurance support the strategy and are introduced to the legal and crisis management team, with key points of contact shared.

Schedule regular all-hands calls with the insured, defense team, and carriers so that each person is apprised of rapidly moving developments and remains on the same page as the rest of the team, with opportunity for input by all. Consider whether the insured has indemnity from other key parties and make demands to defend the insured as soon as practical. Additionally, if opportunities to tender are available, explore these to help control the investigation and potential litigation. Consider a joint defense agreement with other parties, if appropriate.

In today’s fast-moving technological world, a rush to judgment on a mass casualty event is inevitable. Access to social media can provoke contemporaneous commentary and questions as a crisis unfolds. The billion-dollar question is whether that judgment will favor you. Quickness and credibility are your best options—playing defense is not a strategy. The insured must be prepared to go on the offensive before a crisis happens. If we have learned anything, it is that a crisis will happen tomorrow and it could be yours. Are you ready? We can assure that the plaintiffs’ bar is ready.

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About The Authors
Multiple Contributors
Stratton Horres

Stratton Horres is partner at Wilson Elser. stratton.horres@wilsonelser.com

Karen Bashor

Karen Bashor is partner at Wilson Elser.  karen.bashor@wilsonelser.com

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