In the News–Crisis Management
Educating boards
Larry Jaffe, SC Magazine, May 2, 2016
C-suites and boards of directors are increasing their knowledge of IT security risks and needs – before a breach happens. Larry Jaffee reports.
Cybersecurity clearly falls under board-level governance and oversight, notes Davia Temin, CEO of Temin and Company. Boards have rapidly adopted cybersecurity as an issue because they’ve seen the potential for trouble quickly.
However, not all boards have incorporated cybersecurity into their annual plans or oversight activities. The good news is that more and more are leaning in that direction after reading about high-profile breaches in the news. “It’s a very popular topic on the governance speaking circuit,” Temin adds. […read more]
Crisis management in food retail
Food Marketing Institute and Oliver Wyman, Boardroom, March 2016
Anticipated or not, when a crisis strikes a company, CEOs must be prepared to respond immediately in order to lead their organizations through a potentially catastrophic event. Within the last 5 years alone, the food industry has been at risk for a wide spectrum of crises, including E. coli and norovirus outbreaks in fresh food, cybercrime such as high-tech SQL injection attacks aimed to steal customer data, natural disasters, and traditional and social media public relations disasters. While there are certainly aspects of a crisis response that can be planned in advance, each incident inevitably requires a unique approach.
In many crisis situations, the reputation of a company hangs in the balance and can literally vanish overnight if the crisis is not addressed immediately and correctly. The expansion of social media in recent years has exacerbated this trend, bringing widespread, factually incorrect, and damaging attention to issues such “pink slime” and the presence of horse meat in beef products. These issues have gone viral and, in some cases, pushed companies to the brink of bankruptcy. Interestingly, reputation is rarely the top priority identified by a crisis incident response team. However, given how quickly exaggerations and mistruths spread, reputation does need to remain top-of-mind for every executive in a crisis. […read more]
Crisis of the Week: OSI Fights Back In China
Ben DiPietro, The Wall Street Journal’s Risk & Compliance Journal, February 8, 2016
Food processor OSI Group is this week’s crisis candidate, as it has taken an aggressive stance to fight a court ruling in China finding the company sold “inferior products” to fast-food chains. U.S.-based OSI called the ruling inconsistent and said the charges against it were part of a “smear campaign” by the Chinese authorities. OSI, by going public with its criticism of the Chinese justice system, is going against the norm for how western companies solve disputes in China.
Using only the statements made by OSI since the verdict was announced, the crisis experts evaluated the decision to challenge the government publicly—is it one they would have advised the company to take? Did the company’s response strike the right tone? If not, how could it have been better? What are the next steps you would advise the company to take?
Says Davia Temin, “While there are some crisis counselors who believe that an organization’s first response in crisis should always be to fight back, that is not my belief. I believe response needs to be based on the circumstance. In this one, OSI has shown it will no longer be backed into a corner, docilely. It is doing the right thing, and in the right way.” […read more]
Crisis of the Week: Tesla Slams the Brakes on Seat Belt Problem
Ben DiPietro, The Wall Street Journal’s Risk & Compliance Journal, November 30, 2015
The crisis this week deals with Tesla Motor’s decision to recall all Model S cars—about 90,000 of them—because of a problem reported with a seat belt in one of the vehicles. The company said even though the car in question wasn’t involved in an accident, and no one was hurt—and the problem wasn’t found on 3,000 other vehicles it inspected—it decided to proceed with a full recall nonetheless. “We have decided to conduct a voluntary recall as a proactive and precautionary measure to inspect all front Model S seat belts and make absolutely sure that they are properly connected,” the company said in a letter sent to every Model S owner.
Using only the public statements made by the company, or the comments it sent to owners, we asked the experts to evaluate whether the company is doing the right thing with a total recall, or overreacting to a minor problem in one vehicle. Is there more to the company’s response than just dealing with a seat belt issue?
Davia Temin, chief executive, Temin and Co. says: “In this highly unstable world of social media–where anything can catch fire or be totally ignored–Tesla has wisely understood that overreaction can keep problems from going ballistic. Throw every wise solution you have at an incipient problem, especially if human life is at stake, and no one will ever doubt your trustworthy intent.” […read more]
The Morning Risk Report: Can the Auto Industry Redeem Itself?
Ben DiPietro, The Wall Street Journal’s Risk & Compliance Journal, October 2, 2015
Volkswagen’s emissions deception. Fiat-Chrysler underreporting its death and injuries totals. General Motors’ ignition switch scandal. Toyota’s gas pedal bungle. Takata’s air bag mess. The automotive industry has been taking one reputation hit after another, leading to costly recalls, criminal charges, hefty fines and unhappy customers, dealers and shareholders. What can the industry do to clean up its image? Or do they even have to, as the latest sales figures show the industry is poised to have its best year since 2000?
“Cynically, they’re saying ‘It doesn’t matter to our bottom line whether we lie or whether you know we lie or whether x number of people die because of the things we lie about. You still have to buy from us. Maybe I’ve degraded the brand but you don’t have anywhere else to go,’ ” said Davia Temin, president and chief executive of crisis management firm Temin and Co. Assuming the industry wants to clean up its reputation, she said it needs to stop making promises to fix its problems and actually fix those problems–then communicate to its constituencies. […read more]
When Bad Things Happen: 4 strategies for managing reputational risk
Lisa Valentine, Banking Exchange, October/November 2015
Reputation is all about perception: how customers, employees, investors, and other stakeholders view your financial institution. The goal is alignment between the image you think you portray and what people really think. Reputation drives revenues–and it can also help insulate your institution from brand damage due to events such as cyber attacks and regulatory actions. They key is to build your brand resilience so that customers perceive your institution positively, even when unfortunate situations occur.
So how can financial institutions approach reputational risk, given the challenges of managing and measuring the risk?
For most financial institutions, the best defense will be a good offense: going out of their way to build goodwill that can carry them through a tarnish to their brand; monitoring their reputation on social media; and preparing for the inevitable event that can potentially damage reputation with a well-thought-out crisis playbook.
This article discusses these three strategies and a fourth – the importance of being flexible – with the experts.
“A great reputation can get you through a problem,” points out Davia Temin, president and CEO of Temin and Company. “It’s a simple concept, but people often forget it.” […read more]
Crisis of the Week: United Airlines Faces Turbulence Amid Federal Probe
Ben DiPietro, The Wall Street Journal’s Risk & Compliance Journal, September 21, 2015
This week’s crisis of the week takes a look at the statements and actions of United Continental Holdings Inc., which replaced its CEO and two of his top executives amid a continuing corruption investigation by federal prosecutors.
In a statement, the company said it decided to replace Mr. Smisek and the other two executives as a result of its own internal investigation into its dealing with the Port Authority. The airline’s board apparently decided to cut ties with Mr. Smisek a few weeks before the announcement of his departure. During a conference call discussing its latest quarterly results, the company said it wouldn’t comment further as the investigation is ongoing.
Looking only at what the company has said publicly in its statement and on the conference call, we asked the crisis experts to gauge how well United has handled this crisis.
“‘By the book,’ is how United Airlines said it conducted its investigation of former CEO Jeff Smisek, and by the book is how its board and new CEO have handled every communication regarding management changes. Communications have been textbook–word-perfect, well-vetted and bloodlessly on message. But there are times when ‘by the book’ is simply not enough to do the job, and this is one of them. Extraordinary measures are needed,” says Davia Temin. […read more]
Business continuity planning and disaster recovery
Larry Jaffee, SC Magazine, September 2015
The Sony Pictures hack should serve as a wakeup call for all organizations to consider the importance of business continuity (BC) and disaster recovery (DR) plans. However, an informal survey undertaken by SC Magazine of IT security professionals and crisis communications experts reveals that anyone could be caught with their pants down.
“A cyber breach can be an extinction-level event for an organization if it’s handled wrong or unfolds at breakneck speed unaddressed. That could destroy the organization,” says Davia Temin.
During a crisis, a company’s various stakeholders must be considered, she points out, posing basic questions: “If you’re a financial firm, how does trading continue? How do you communicate with your customers? How are your people using email? Do they have access to email?”
If a call center gets hit with a tornado or hurricane, a company obviously must have contingency plans to outsource to a third-party vendor and backup data off-site. “That’s the nitty-gritty, tactical operational stuff that makes businesses work,” Temin says. That kind of planning should be going on all the time. […read more]
Dealing with a data breach or hacker crisis
Doug Barney, GFI Blog, August 5, 2015
Data breaches are getting worse and more expensive every day and it often takes far too long to clean up the mess. Recently the media was inundated with cases of big brands being hacked and millions of personal records were affected. Websites like AdultFinder and Ashley Madison are just two of these high profile cases, and apart from the immeasurable damage such breaches can have on customers, they also deal a big blow to the brand’s reputation.
In the worst of cases, the breach isn’t discovered, even if the data is being put to criminal or evil use right under an organization’s nose. Part of the problem, according to a crisis management consultant at the conference Unintended Consequences: Impacts of the Internet of Things (IoT) & Big Data is that many companies tackle these events all wrong.
“I am going to ask you to throw away every rule of crisis management you have ever known, as we explore how cybercrime is rewriting the crisis management rule book,” said Davia Temin, CEO of Temin and Company in the conference’s keynote address. […read more]
Crisis of the Week: Accounting Problems Hobble Toshiba
Ben DiPietro, The Wall Street Journal’s Risk & Compliance Journal, July 27, 2015
The crisis this week involves the actions taken by Toshiba Corp. in the wake of an accounting scandal that saw the company overstate earnings by more than $1.2 billion over seven years. The fallout from the scandal escalated last week, when the company announced the resignation of Chief Executive and board Vice Chairman Hisao Tanaka and a reorganization of its board in which half the members are stepping down. A report from the company into the overstatement said its three most recent CEOs all played roles in inflating the company’s operating profit.
Looking only at the statements of company officials, and the actions taken in removing the CEO and reshuffling the board, we asked the crisis management experts how well has the company handled this crisis? Where has it done particularly well? Where has it fallen short? What should it do next?
Davia Temin responds: “It is extraordinarily difficult for a company to buck its own tradition and culture. Japanese companies have always been opaque and less than communicative, and are not known for admitting to misdeeds until they are absolutely forced to–and sometimes not even then. Much pain could have been avoided had they owned up to their problems quickly, rather than doubled down through denial.” […read more]
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