Many banks believe they have to keep the general public entertained with a steady supply of good news, says communications expert Marionna Wegenstein in an essay for finews.first. But that is simply not enough.
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Monday morning, 7 o’clock, the phone rings endlessly – the revelations in the Sunday press had alerted the journalists. Eight requests for a statement about the situation by financial news sites, print media and blogs, one request for an interview with the CEO by a television broadcaster – and all that please before lunchtime. Is it true that…? Did the executive committee know that…? What are the consequences for the company? Is the CEO considering stepping down?
«Financial service providers aren't prepared for challenging situations»
That’s the way things are when a company appears in, say, the Paradise Papers, independent of whether the «revelations» are true or mere concoction. And that’s only for starters – are you ready?
It is not only the media world that’s changed: the financial market has undergone substantial change too. Globalization and modern technologies have helped to vastly increase complexity and risks. Financial service providers, which naturally are very professionally organized in their core business, tend to neglect communications and therefore aren’t prepared for a challenging situation. They are taken surprised by «unexpected» events and can react clumsily.
In the new reality facing the banking world, it is vital to be prepared. Negative headlines, the rapid pace of the news flow, regulatory pressure and ever rising demands for transparency and social responsibility require clear structures in communications departments. An integrated communications strategy geared towards everyday tasks, a functioning plan for crisis communications and a transparent issue management are fundamental to detect potential problems at an early stage.
«The proper response by those charge decides the company's future»
In critical situations in particular, the proper response by those in charge dictates the future of a company. The loss of reputation through badly managed crises – in terms of communication – can be immeasurable. Many financial service companies assume that the main task of their communications office is to keep the general public entertained with s steady stream of positive news and to provide upbeat headlines at all times.
A business culture where communication is simply equated with marketing makes it hard for those in the communications hot seat to discuss with members of the executive, legal or risk-management as experts on an equal footing. Those are the spokespeople who suddenly go quiet when asked to inform the general public about wrongdoing by the CEO, for instance.
«We are currently evaluating the situation and we will come back to you in due course,» are the common answers once a company under pressure battens down the hatches, in the hope that the storm will pass. In such a case, external advisers can be a useful complement to the existing structures, and may – thanks to their outsider status – help put the crisis into context, address the problems at hand and initiate necessary measures.
«You need courage, speed and the power to convince to keep pace or stay a step ahead»
With corporate communications managers and good preparation before crises hit, damage to a firm's reputation can be prevented or at least minimized. Deep, profound knowledge of a company and predefined communication channels can help detect the danger potential at an early stage, and channeled appropriately. It is important to develop messages well in advance to create clarity and show perspectives in order to keep authority of information in situations critical for success. That’s the way to reduce the risk for stress-related communications errors.
You need courage, speed and the power to convince to keep pace – or even stay a step ahead – with media requests such as the ones mentioned at the beginning. Solid crisis management, a relation of trust that has grown over time between the customer and his adviser and a close cooperation especially during quiet periods create the best conditions for an effective crisis management .
Marionna Wegenstein is an independent communications adviser based in Zurich. Wegenstein Communication has mainly clients in the financial market and philanthropy. She has more than 20 years of communications experience in the financial market and most recently was head of public relations and communications at Lombard Odier in Zurich. After her studies she worked for several years as a journalist before switching side to work as a PR manager at a number of companies.
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