A leading crisis communications manager says most  companies and their insurers  don’t understand best-practice communications during a crisis can make a big difference In minimising reputational damage and lowering the value of Insurance claims.

Strategic communications expert Lahra Carey said all too often, when a crisis hits, organisations turn to their insurance company to recommend a crisis communications expert. Those without a relationship are left to navigate the minefield of media and stakeholder relations – leading to mistakes and therefore bigger insurance claims and payouts.

“A communications crisis threatens the organisation’s reputation, and may impact the company’s share price, operations, or sales – and often the career or reputation of individuals. These are the issues that make up insurance claims,” Carey said.

“Whether a crisis is caused by intentional and knowingly bad behavior – like fraud, dishonesty, physical or sexual abuse, – or unintentional human error, or an accident which cannot be foreseen or prevented, time is your enemy.”

Carey, Principal of strategic communications consultancy, narrative, has a long history of working with businesses in managing media and stakeholder relations during a crisis.

She said when the pressure is at its most intense, most companies have no idea what to do, and their instinct is often to ‘go to ground’.

“They hope the media storm will pass, but they don’t realise that saying nothing will only make everything worse.” Carey said.

Governance expert and former Chair of the Australian Competition and Consumer Commission and now a Professor in the Monash Business School, Graeme Samuel AC said crises are made worse when they originate in the Boardroom.

“Boards don’t often include communications experts. And so when a crisis occurs directors  rarely understand what’s required. This dilemma is exacerbated when the crisis has been caused by senior management actions, leading to the Board having to assume prime responsibility for dealing with it” Samuel said.

Insurance generally covers the costs of communications advice, which Samuel says is money well spent if the advisors are seasoned crisis management experts.

“From an insurance perspective, getting it right means the risk of large payouts to cover key messaging mistakes, strategic failures and reputational damage, is limited – potentially leading to fewer and less costly payouts.”

“Insurance companies could be lowering the value of claims by developing relationships with savvy communications experts who they can refer to their clients facing a crisis,” he said.

According to Carey, “When a crisis hits you need to be prepared, calm and understand how the media process is likely to roll out. It can be confronting and quite frightening for those who’ve not experienced a crisis situation before. So, it makes sense to have experts on hand to step in and advise the organisation to mitigate risks and potential reputational damage.”

Narrative has worked with big financial institutions, mining companies, telecommunications business and schools as well as directly with Boards needing to tackle controversial issues head on to manage brand risk, stakeholder relationships, and financial liability.

Carey’s top tips for crisis planning include:

• Ensure there is a pre-approved crisis plan ready to go.
• Rehearse for a potential crisis so everyone is aligned and prepared.
• Develop agreed comms templates to save time when a crisis hits.
• Create a data base of stakeholders who must be informed asap.
• Have a spokesperson who can share the bad news with confidence.