Corporate crises can take many forms, from a social media scandal to a natural disaster, and every crisis has the potential to negatively impact a company’s reputation, daily operations and performance, among other things. All of which can have significant financial, legal and regulatory ramifications.

Corporates must be prepared to respond to any disaster with a crisis management programme that brings together a variety of stakeholders who understand the potential implications and can initiate recovery.

Evolution of crises

Technological developments have changed the way corporate crises impact organisations. The growth of social media, for instance, has been one of the driving forces behind this change. There is now a much greater risk of a crisis becoming public, and causing significant additional damage to an organisation. “That increased exposure has led some organisations to take these issues much more seriously in recent years,” says Andrew Terry, a partner at Eversheds Sutherland LLP.

The nature of the news agenda has altered how corporates respond to events, particularly at boardroom and C-suite level. “With today’s 24-hour news cycle and the prominence of social media, companies’ approaches to crisis preparedness and communications have changed drastically in the last five years,” says Lauren Casazza, a litigation partner at Kirkland & Ellis. “Boards of directors and executive management now see that enterprise-level issues can quickly spiral out of control, exposing the company to potential additional legal and reputational risks. Flat-footedness is no longer an option.”

Jul-Sep 2019 Issue

Richard Summerfield