Manage It Before It Becomes a Crisis

What has Fukushima Daiichi nuclear plant, Chernobyl, Exxon Valdez, BP’s Deepwater Horizon oil, and Enron, and also potential issues in Kazakhstan have in common? These are all cases of a crisis that has happened and affected the company, country and the brand equity. The last one, potential issues in Kazakhstan, is included for the country to learn the lessons from these crisis examples

Fukishima was the most significant nuclear disaster that has been given the Level 7 event classification of the International Nuclear Event scale. Chernobyl Nuclear Power Plant was the first catastrophic nuclear accident in April 1986 in the northern Ukrainian Soviet Socialist Republic. The tanker Exxon Valdez ran aground off the coast of Alaska on March 1989, spilling 11 million gallons of crude oil into the waters of Alaska’s Prince William Sound, creating one of the worst oil spills in American history. When BP’s Deepwater Horizon exploded and sank in the Gulf of Mexico, it uncorked an oil spill a mile down at the seabed, far greater than the amount of crude that leaked from the damaged Exxon Valdez – about 200 million gallons compared with 11 million. BP and government officials had no experience in trying to control a deep-water blowout that was 5,000 feet deep and no human could reach it. Enron Corporation, a major electricity, natural gas and paper and pulp company, was America's Most Innovative Company" by Fortune for six consecutive years, reaching dramatic heights only to face a dizzying fall. Its leadership managed to fool regulators for so long with fake holdings and off-the-books accounting, and 29,000 people lost their jobs.

For Kazakhstan there are lessons to learn from them. Kazakhstan has had two earthquakes in the past 365 days; the latest next door in the vicinity of Ishi-Kul, Kyrgyzstan. Kazakhstan should scenario-build case studies of potential crisis in the country. Besides being the world's largest supplier of uranium, Kazakhstan has previously used nuclear power to generate electricity and desalinate water. The Aktau fast-reactor plant that operated on the shore of the Caspian Sea for 27 years has been closed since 1999. More recently the country has been gradually increasing its involvement in the nuclear industry, now reaching the planning stages for re-introducing nuclear power. The CEO of state nuclear company KazAtomProm, Vladimir Schkolnik, met Rosatom head Sergei Kiriyenko and signed a cooperation deal on nuclear power, as well as a memorandum of understanding (MoU) on a new nuclear power plant. The signings took place in the presence of First President, Nursultan Nazarbayev during an official visit by Russian President Vladimir Putin. It also has had its own “Enron” incidences –the spectacular banking failures affecting several thousands of people’s bank accounts.

Looking at the Fukushima disaster, it severely dented Japan’s reputation globally. Tourists stayed away. It exposed the weakness of the bureaucratic culture and the danger of willful blindness which refers to blinkered individuals, awed by authority and lacking the guts to laugh at all the naked emperors wandering the streets. Margaret Heffernan in her book Wilful Blindness: Why We Ignore the Obvious at Our Peril offers some ways for us to avoid the trap of ignoring the obvious. Some advice: Recognise the homogeneity of our lives and seek to diversify it; acknowledge our biases and seek to correct them; and resist working to exhaustion that is when people take the mental short-cuts. Corporate jargon is equally pernicious, a shared language to indicate belonging to a “tribe” and mask unpleasant truths.

On the positive side, there was an institutional system in the Japanese structure. The key point person was quickly appointed to handle the crisis. In contrast there was denial and absence of leadership among the Russians in the Chernobyl case. Given its Soviet history which has shaped the thinking of the top leadership in many of its state-owned companies, Kazakhstan must be seriously mindful of this flaw in its governance of issues and institutions. Crisis plans like evacuation should be tested regularly based on various scenarios that will surprise the staff so that employees to do not take exercises as routine. Some crisis like nuclear crisis will affect neighbouring countries and so the crisis plan reporting lines should be drawn to include the foreign ministry. The role of the CEO or senior politician in a crisis is especially important. How is he engaged? This determines the future relations with the publics and the press, nowadays the social media. The crisis demands the immediate attention of top management. Crisis planning should cover the management of the crisis, the business or operational recovery, and the communication process.

Lessons from these cases

Crisis Plan Should Be in Place: It is assumed that during the crisis there is an existence of a plan, the ability to assemble a crisis team when a crisis occurs, and that there is a credible and trustworthy spokesperson during the crisis. The legal team is also part of the crisis team, as their legal advice will also impact on the company’s disclosure standards. While openness creates problems, the public and in particular the media appreciate openness and will support the companies’ messages. Crisis usually provokes rumours because there is a vacuum of information, and rumours can create crisis that are difficult to quiet. Rumours can only be countered with massive amount of concrete, authentic information.

Anticipatory Communication: It is especially important to determine the vulnerability of the organisation to different types of crisis. This includes messages being prepared for different “known unknown” scenarios, and for internal communication so that staff can share with their friends and fellow colleagues. Within this context, there should be list of anticipatory questions and answers prepared: What can happen, how will it happen, who will form the crisis team, who is the spokesperson, where is the crisis centre located and so on leading to rehearsing the Crisis Plans as regularly as possible.

Credibility of an organisation is always at stake and that’s why working with the news media (influencers, YouTube, Instagram in social media context) is so critical. The spokesperson should be trained to be media mainstream and social media savvy. Understandably, information such as the extent of the crisis may not be known immediately. As the crisis unfolds, there will be highly stressful situations for all involved --physical exhaustion, and people become irrational especially when their love ones are involved. Given the emotional contexts of relatives and families, the communication component must demonstrate concern at all times and make arrangements to be available regularly even if there is no update as yet. Social media has changed the dynamics of crisis management. It facilitates instant and domino-type of demonstrations and social protests. It has taken a global dimension. Crisis are communicated globally through several interpersonal chat groups, creating a secondary protesting public globally (domino effect).

Checklist: The recommended checklist in crisis PR is never lock the gates on the press to avoid questions. Remember the press will then interview other people, speculate, conjecture and perpetuate rumour. Don't speculate about what happened, or why. It may well jeopardize the outcome of litigation which could result from such a situation. As in Fukushima Daiichi, Chernobyl, Exxon Valdez, BP’s Deepwater Horizon oil, or Enron, it frequently takes a group of experts’ weeks or months or years of investigation to determine what may have caused the accident. So, do not express opinions, stick to known facts.

In short, first ensure that all the issues of best practices, corporate governance and risk management are robustly in place. Beware of embedded Soviet-type wilful blindness. Remember three elements for dealing with the crisis: Have a plan; assemble a team; use a single spokesperson; tell the truth and tell it fast. PR is part of the management team but the ultimate decision maker is management.

Basskaran Nair, Visiting Professor at Nazarbayev University, Graduate School of Public Policy

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