The Evolution of Crisis Communications in Banking
By Kamyar Naficy, Founder and Principal, KNECTCOMMS, for International Banker
Banks are more vulnerable than ever to a wide range of potential crises. These crises are often exacerbated by 24/7 news cycles, volatile social media and unprecedented social, economic and geopolitical disruption. Against this backdrop, banks must shore up their crisis communications efforts if they are to confidently implement strategy, maintain resilience and manage reputation.
Strategic priorities in a crisis
Getting crisis communications right is crucial for all organisations. But banks face heightened risks when a crisis occurs. In addition to complying with stringent regulatory expectations, banks operate business models predicated on trust. In retail banking, a crisis in public trust can spiral into an existential crisis for a bank and contribute to systemic risk for the wider financial system. In corporate and investment banking, the ability to provide complex, high-stakes financial services to institutional clients relies on winning their trust in a sophisticated marketplace.
The bank’s communications priority during a crisis is two-fold: shaping its response based on containing and remedying the impact on stakeholders while preventing the erosion of trust with clients, counterparties and regulators.
The Four Ps
A crisis’s impact is determined as much by the response and degree of preparedness as the crisis itself. Banks should be guided by the four Ps – prepare and practice for potential perils.
A crisis communications plan should be developed and integrated into the wider crisis-management or business-resilience plan. It should define the activities of the board and management team in the event of a crisis. It should address who will be making decisions, who needs to be involved and in what capacity, who will be brought in to assist, who the delegates are if designated people are unavailable and what the escalation process is for sharing information.
Assembling an effective crisis communications team is critical. It should include members of the leadership team and representatives from business operations, finance, treasury, legal, compliance and, of course, communications. Banks should road test the crisis communications plan and the team’s effectiveness with regular scenario planning and crisis simulations. This helps ensure that both the plan and the team are fit for purpose, and it builds the team’s skills and confidence. Banks can prepare for a range of common crisis types such as IT failures, cyber-security breaches, vendor disruption, market shocks, personnel misconduct or financial mismanagement.
When a crisis strikes, firms need to quickly gather all the facts about the incident, decide on the actions they will take and implement those actions, including determining and managing the appropriate communications. They should be prompt—and appear to be prompt—in their responses. Having a plan in place and rehearsing it will make this significantly easier during the firestorm of a crisis. For the rest, click here.