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Crisis Preparedness Survey EVIDENCE-BASED COMMUNICATIONS. INFORM. MONITOR. MEASURE. SUCCEED

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About the survey Burson-Marsteller commissioned its sister company Penn Schoen Berland (PSB), the global market research and consulting firm, to carry out the Crisis Preparedness Survey. PSB conducted a total of 826 online and face-to-face interviews globally amongst business decision-makers in May and June 2011 in the following countries: UK, France, Germany, Italy, Spain, US, Japan, India, China, Korea, Indonesia, Mexico, Brazil, Chile, Argentina and Colombia. Data has been weighted to reflect GDPs of each region. For the purpose of this study, business decisionmakers are defined as respondents who are aged over 25, are full time or self-employed business owners, have an active interest in business and current affairs issues and have final or significant decision-making power in their business. Overall, half the respondents were from large enterprise businesses and half were from SME businesses.

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Introduction Crisis is a constant variable of the world we live in. Be it in politics, economics or even nature, we are all vulnerable. But that does not mean that we necessarily have to be exposed. As most business leaders will agree, crisis has to be an integral part of doing business. Preparing and reacting to crisis, go hand in hand with planning and making decisions, weighing risks and making smart investments. Our survey conducted with PSB amongst worldwide decisionmakers, showed that, on average, 59% of business leaders have experienced a crisis. The rise of globalisation and the digital era have brought innumerable new opportunities for business, but have also made companies more vulnerable than ever to crises. The nature and frequency of crises that companies experience are changing. While companies always worry about crises emerging from logistic difficulties, technical accidents or regulatory scrutiny, today, they must also deal with the emergence of new crises, such as digital security failures or critical social media campaigns. The most salient characteristic of these “new generation” crises is their speed. With digital media, everything and everyone has become interconnected. No crisis is far enough, or small enough to be ignored. Even a minor crisis that happens locally can travel globally and make headlines in no time. Organising movements and staging mass attacks has become very easy for

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critics and coordinated online attacks are mushrooming everywhere. To face them, companies must be both fast and sharp, making sure that they react immediately and in the right measure. Above all, the effectiveness of a crisis response is determined by the company’s ability to shield its reputation. Though it takes years to build, reputation can be lost in an instant, and recovering it is usually a long and difficult process, no matter how excellent your product or services really are. Managing public perception and preparing for the “new generation” of crises is a challenging task. To ensure that companies continue to grow and reap the benefits of the digital era without being subjected to its dangers, companies need to modernise their crisis preparedness strategy and acquire tools that can help them deal with online attacks. The Crisis Preparedness Survey tries to help business leaders deal head on with this reality. It looks at what exactly crisis means for different businesses across the world, and what specific tools business leaders can acquire to help their businesses avoid and effectively respond to crisis.

Jeremy Galbraith CEO, Burson-Marsteller Europe, Middle East & Africa

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Crisis is an ordinary part of doing business Reacting and preparing for crisis is simply a fact of life and an integral part of doing business. Fifty-nine percent of business leaders reported that they had experienced a crisis in their current or previous company, and almost 4 in 5 believed their company would experience a crisis within the next year (chart 1).

Chart 1

The most common crisis encountered by businesses is controversial company developments, followed by logistic difďŹ culties, danger to product safety and technical accidents. Digital is increasingly becoming a source of risk and instability for businesses. According to our survey, online or digital security failure and critical or negative new media campaigns represent 32 % of the crises experienced by businesses (chart 2).

79 % ARE ONLY 12 MONTHS FROM A POTENTIAL CRISIS – OVER 50 % THINK THIS WILL HAPPEN IN THE DIGITAL SPACE

Global

21 % 79 %

Controversial company developments

50 %

Online or digital security failure

47 %

Logistic difficulties

47 %

Intense regulatory scrutiny of your product or company

45 %

Critical or negative new media campaigns

43 %

Danger to product safety

42 %

Technical accidents

40 %

Intense political scrutiny of your product or company

40 %

Criminal actions

33 %

Likely to experience a potential crisis Not likely to experience a potential crisis

How likely do you think it is that your company will experience any of the following potential crises in the next 6-12 months ?

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Chart 2

CONTROVERSIAL COMPANY DEVELOPMENTS ARE THE MOST COMMON CRISIS ENCOUNTERED

31 %

Controversial company developments (e.g. layoffs) 20 %

Logistic difďŹ culties (e.g. problems with transport/delivery)

19 %

Danger to product safety (e.g. defective or contaminated parts)

18 %

Technical accidents (e.g. natural disaster or explosion) Online digital security failure

16 %

Critical or negative new media campaigns (e.g. criticism over social media)

16 % 12 %

Intense political scrutiny of your company

10 %

Intense regulatory scrutiny of your company

9%

Criminal actions (e.g. bomb attack or ďŹ re)

Global

What sort of crisis did your company encounter? (Among those who experienced a crisis)

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Companies are not planning sufďŹ ciently Yet despite crisis being an ordinary part of business, many companies still feel vulnerable and unprepared when it comes to crisis exposure. Our survey showed that only half of companies surveyed had a crisis management plan. But simply having a crisis plan is not enough. Half of business leaders still reported that their existing plans were not satisfactory (chart 3).

Chart 3

Overall, the importance of crisis preparedness as a strategic priority is on the rise. In the past 5 years, 47% of businesses have increased their internal resources for responding to a crisis.

ONLY HALF OF COMPANIES HAVE A CRISIS PLAN

54 %

46 %

Have a crisis plan Do not have a crisis plan

Does your current company have a crisis management plan?

Chart 4

NEARLY HALF OF THOSE WITH A CRISIS PLAN FEEL THAT THERE ARE STILL GAPS

49 %

Current crisis plan will be satisfactory in event of crisis

47 %

Current crisis plan will cover the company to some extent but there are gaps Crisis plan will not offer proper coverage and needs to be reviewed

3%

To what extent, do you think that your company’s crisis plan will be effective in the event of a crisis? (Among those with a plan)

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Digital has made crisis management more challenging Among business leaders surveyed, 40 % believe that it is now more difficult to plan for a crisis than it was 5 years ago. This is in large part due to the changing nature of communications.

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SOCIAL MEDIA PUTS INCREASING PRESSURE ON COMPANIES TODAY

81 %

The new channels of digital communications, such as citizen journalism or social media, have truly enhanced the speed and strength with which crises spread. Companies are called to react faster than ever before and deal with an expanding array of issues. Digital communications means that even a local crisis can now play out at the global level. With 43% of business leaders reporting they feel incapable of responding to new media, and with digital plans only being held by a third of companies, it is no surprise that companies are having difficulty releasing online pressure points.

of respondents believe that new media’s role in driving reputation during a crisis is on the rise

65 % of respondents feel that new media makes crises more difficult to manage

65 % believe it is hard to know who influences opinion online

66 % of respondents believe new media has significantly increased the potential cost of a crisis however...

55 % believe new media (including social media) has made it easier to recover after a crisis

Chart 5

ONLY A THIRD OF BUSINESSES HAVE DIGITAL PLANS

38 %

GLOBAL

52 %

APAC 37 %

US

33 %

EU 19 %

LATAM

Have a digital plan

Does your current company have a digital crisis communications plan, in other words a plan for effectively responding to new media crises (including social media)?

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Benefits of planning It’s no secret - companies with a plan recover faster. Our survey showed that 32% of crisisprepared firms will recover in less than a month, while 41% of unprepared companies will only recover in 6 months or more (chart 6).

Chart 6

But planning doesn’t just help improve the speed of response in a crisis; it also limits its impact in terms of revenue, cut-backs and loss of reputation (chart 7).

COMPANIES WITH A PLAN RECOVER FASTER 20 %

One month or less

32 % 29 %

Up to 6 months

31 % 41 %

6 months or longer

34 %

About how long would you say that it took your company to recover from the crisis?

Plan No plan

(Among those who have experienced a crisis)

Chart 7

THOSE WITH A PLAN ARE MORE LIKELY TO HAVE HANDLED THE CRISIS EFFECTIVELY 41 % 33 %

30 %

22 %

22 % 15 %

Drop in revenue

Cut-backs and/or layoffs

27 %

Loss of corporate reputation

21 %

20 %

16 %

Destabilisation of the entire company

You said your company has experienced a crisis. What was the impact of the crisis on your company?

None, the crisis was handled effectively with little or no damage to the company Plan No plan

(Among those who experienced a crisis)

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Who do you want to be?

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When it comes to crisis, simply wishing it away doesn’t work. To help companies better understand where they stand in terms of crisis preparedness, Burson-Marsteller has grouped the findings of its survey into three simple categories. Each example illustrates a particular corporate attitude towards crisis preparedness, and shows what companies can do to improve their crisis plans.

BOY SCOUTS

TIGHTROPE WALKERS

OSTRICHES

(WELL PREPARED)

(VULNERABLE)

(EXPOSED)

Companies with strong comprehensive plans, which will stand up to the pressure of a crisis.

Companies with plans that will not necessarily cover them, or which aren’t sufficiently comprehensive.

Companies which lack plans entirely. They see only barriers to creating plans and thus avoid making them.

They account for under 1/3 of companies with a plan. More crisis focused than their peers, they believe having a crisis plan is very important and review their plan at least once every 6 months.

They account for over 2/3 of companies with a plan. Although engaged with crisis, they are less likely to plan frequently, and admit that their plans are insufficient or inadequate to deal with a crisis.

They do not have a crisis plan, despite the fact that 45% report having experienced a crisis in the past.

Their plans include various components such as:

They have less sophisticated plans than the ‘boy scouts’, with three or less components to their plans.

Evaluation of possible scenarios Action plan Financial planning Issue monitoring

When faced with a crisis, ‘ostriches’ will handle it by going through their public relations department or senior management, adding to the burden on senior staff.

Companies are not condemned to fall prey to digital and other attacks. They can prepare and make sure they know how to react when one of their most valuable and hard-earned assets, their reputation, is at risk. With digital mobilisation on the rise, and public discontent becoming increasingly vocal, companies need to plan and make sure they have the right tools, so that when a crisis erupts, they can resolve it as quickly and efficiently as possible. Otherwise they risk losing years of hard work... at the click of a mouse.

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Our offering Our Crisis Management Network operates at a global level and enables us to mobilise crisis teams locally and virtually anywhere, anytime. We work alongside management when customers, consumers, employees, analysts, shareholders, regulators and governmental bodies are all demanding immediate answers and action. We have an unrivalled track record of helping corporate management handle major crises.

Crisis preparedness

Our experience extends from product failure to international recalls, from fraud and malfeasance to strikes and litigation, from difficult restructuring to site closings in the face of militant opposition, from product tampering to campaigns by activist groups and boycotts.

• 24 hour / 365 day crisis strategic advisory and operative support • Strategic research and analysis to solve the problem without delay • On-site support

• Reviewing and understanding risks and threats • Evaluating internal crisis procedures and developing new plans as needed, including issues management, 360° stakeholder analysis and engagement • Crisis training, assessments • Digital and social media scenario development/testing

During the crisis

Post-crisis recovery • • • • • • •

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Brand, reputation or trust capital recovery programmes 360 degree stakeholder relations and engagement Corporate responsibility/CSR programmes Environmental affairs Change programmes Organisational transformation Research and analysis

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About Burson-Marsteller Burson-Marsteller (www.burson-marsteller.eu), established in 1953, is a leading global public relations and communications firm. It provides clients with strategic thinking and programme execution across a full range of public relations, public affairs, advertising and web-related services. The firm’s seamless worldwide network consists of 73 offices and 83 affiliate offices, together operating in 108 countries across six continents. Burson-Marsteller is a part of Young & Rubicam brands, a subsidiary of WPP (NASDAQ: WPPGY), one of the world’s leading communications services networks.

About Penn Schoen Berland (PSB) Penn Schoen Berland is a global market research and consulting firm. It collaborates with Burson-Marsteller to help global clients win by delivering an integrated strategic communications approach that is customised for each client’s unique situation and needs. Founded in 1975, PSB brings together lessons from the campaign trail and the boardroom to create innovative strategies to handle complex situations. Its powerful hybrid model combines both political and corporate research, recognising that the strategies used to effect change in one area can be innovative and effective in the other. The firm calls this Winning Knowledge™.

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Jeremy Galbraith CEO, Burson-Marsteller Europe, Middle-East & Africa T. + 32 2 743 66 11 jeremy.galbraith@bm.com

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Burson-Marsteller EMEA 37 Square de Mee没s B-1000 Brussels T. + 32 2 743 66 11 www.burson-marsteller.eu

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Crisis Brochure 2012