Missteps the GC Should Avoid in the First 48 Hours of a Crisis
September 05, 2023
The urge to spring into action when crisis strikes is instinctive. Strategic tactics can scale back pressure on the GC to launch an effective response.
The first 48 hours of a corporate crisis presents a complex web of risk and challenges for the general counsel (GC). Emotions can run high and skew judgment across the company. The urgency to understand the impact and craft communications that will tamp down the fire and gain time grows more intense by the minute. Conversely, the legal pressures to lock down and avoid any exposures can lead to paralysis. Then there is the rush to engage stakeholders, launch an investigation, remediate damages and restore operations, if affected.
For today’s GC — who has legal purview over the situation and is responsible for coordinating external counsel and regulatory agencies (if applicable) while maintaining day-to-day business — the pressure to act effectively and swiftly is massive. It’s a complex and critical job made more complicated by conflicting expectations of internal and external stakeholders. The GC’s ability to play a pivotal role in assessing the crisis and orchestrating a crisis plan is critical to a successful outcome.
Once the clock starts ticking, nothing less than the organization’s license to operate is at stake.
“60% of general counsel say they rely on outside providers and/or law firms to help manage their growing risk profile.” — The General Counsel Report 2023 from FTI Consulting and Relativity
Whether a crisis is anticipated or strikes out of a clear blue sky, the response demands on today’s GC are so intense it’s easy to see how missteps can happen in the first 48 hours. Here are some the GC should be aware of when the alarm bells sound.
Allowing the Media To Get Out Ahead
The most acute need for response occurs in the first 24 hours of a crisis. The organization can assume that an incident with external exposure, such as a website going down and users being unable to conduct business, or a halt in supply, will light up social media very quickly. A crisis that might only be known about within a small part of the organization may be more containable in the short term. To be prepared, have communications ready to roll out for a variety of incidents as part of a recovery plan.
Maintaining Radio Silence
Crafting initial communication requires some understanding of the source or cause of a crisis. That can eat up time. Waiting to communicate is understandable, but waiting too long or not responding at all could create mistrust, raise questions about concealing information or lead to apathy. You cannot keep a lid on a crisis for long. The organization must acknowledge the incident, including to the board and to regulators (if applicable), the latter of which can in fact create goodwill.
The trick of timely communication is knowing when to speak up and what to say. Preliminary information rushed out the door that is later found to be inaccurate will come back to bite you. As the GC, you may be operating with an incomplete set of facts, so you will need to know when to dig for more answers. Caution applies to engaging not only with regulators and the board, but with all stakeholders, including employees, the media and the general public.
Assuming All Stakeholders Are Known
One of the biggest missteps an organization can make is failing to understand who the relevant stakeholders are that need to be engaged in a crisis. Consider the example of Silicon Valley Bank, which left investors out of the loop and collapsed 48 hours later after social media chatter incited depositors to withdraw their money in a classic bank run.1
Employees are sometimes a forgotten stakeholder — engaging them can help check hearsay around job security and reinforce the organization’s transparency. There’s also the question of how best to reach certain stakeholder groups. Social media is one thing, but email or even a phone call to top clients is more personal and delivers a message of integrity. Ultimately, you want to have a communications plan for crises that lives the values of the organization.
Failing To Preserve Evidence
The first action after an incident such as fraud, IP theft or a cyber attack is usually to lock down email and other systems to limit exposure. That’s a smart start, but forensic investigators say you must integrate a plan for preservation of evidence in a crisis response strategy to avoid wiping out relevant data.
Trying To Go It Alone
As noted earlier, emotions can run high in a crisis. Accusations may fly and fingers may be pointed, which can lead to a fractured response. Meanwhile, the GC, in managing the legal exposure of the organization, will instinctively look to protect the organization as well as the officers and other leaders from legal and regulatory liability. This can create a tension for the GC when coordinating the legal response.
Dialing Down the Pressure
Working in cooperation with the GC, independent crisis management experts with industry experience can help reduce tensions and pressure by providing impartial support that promotes remediation and business continuity.
Forensic investigators will know how to uncover and preserve digital evidence; forensic accountants will know how to interpret it. Cybersecurity experts will protect the system from further incident and test resiliency as they work to bring the organization back online. Government affairs experts can confer with regulators as needed, while communications specialists will assist with tone and frequency of the ongoing narrative and reputation preservation.
While no one can predict a crisis, experts with deep understanding of the different types of incidents that can occur can help the organization respond and identify gaps to deal with future crises. In the end, the GC is empowered to make informed decisions while helping the organization recover, move on and get back to business
1: Hawkins, Eleanor. “Silicon Valley Bank’s Fatal Communications Flaw.” Axios (March 14, 2023). https://www.axios.com/2023/03/14/svb-silicon-valley-bank-communications-flaw.
© Copyright 2023. The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals.
About The Journal
The FTI Journal publication offers deep and engaging insights to contextualize the issues that matter, and explores topics that will impact the risks your business faces and its reputation.