A company’s reputation can take years to build, yet it can be destroyed in the blink of an eye due to a crisis.

In the past year, we have seen several companies suffer financially, failing at crisis communication in situations that needed frequent, honest and transparent messages: Target. Malaysia Airlines. General Motors. Takata (the airbag manufacturer). To name but a few.

Recent studies indicate that only about half of North American companies have a crisis plan, and of those, only one-third have confidence that their plan will work effectively. A survey of corporate directors found that more than 40% want to devote more time to crisis communications planning, and nearly one-third said that they do not have a solid understanding of their company’s crisis communications plan.

Companies may define a crisis in many ways. From my perspective, a crisis is any event that, if it goes public, can harm the organization’s reputation or finances. The crisis bottom line is simple—money. In this day of the 24-hour news cycle and the broad reach of social media, an issue can go public in a matter of minutes and escalate into a full-blown crisis in hours. No organization is immune; it is simply a matter of “when” the crisis hits, and not “if”.

In the ideal world, the organization has three plans that are integrated: a crisis response plan, a crisis communications plan, and a business continuity and recovery plan. These three plans should work in concert and be flexible enough to address a variety of situations, including things like the unexpected death of a key executive, protests, online smear campaigns, natural disasters, data breaches, worksite fatality, office violence or other human-caused situations. Ideally, the organization would conduct a vulnerability assessment first to determine the most probable risks for which to prepare.

Today’s crisis communication plan needs to be a comprehensive tool that incorporates not only mainstream media communication strategies, but also strategies for social media, internal communications, vendor and customer relations, investors relations, and communications with officials, regulators and other stakeholders. The importance of consistent messages across the enterprise and all communication channels cannot be overstated.

Building, testing and drilling these crisis plans helps assure that they remain current and relevant to the risks to which the company is most vulnerable.
In addition to these three crisis plans, companies should consider implementing an early warning system, a process by which issues are identified, monitored, prevented (if possible), elevated to management and ultimately resolved. According to our research, more than two-thirds of crises are “smoldering” issues that are both predictable and preventable with the right process in place.

The investment in a comprehensive crisis plan is small compared to the potential real dollar losses that can befall the unprepared company.

As the old saying goes, an ounce of prevention beats a pound of cure.