Tuesday, June 2, 2009

What Crises Were Most Likely To Impact Your Organization?

Overall, business crises were up only slightly in 2008, compared to the year before. But, there were significant increases in negative news coverage in eight of 16 crisis categories monitored by the Institute for Crisis Management. They were up 18 to 48 percent in 2008, according to the just released annual ICM Crisis Report, published each year since 1990.

Workplace violence was up the least by 18%. Defects and recalls, business financial losses, hostile takeovers, workplace accidents and deaths, and environmental incidents were up 21% to 48%. The other eight crisis categories hovered around the same level as 2007. While the percentage increases seem large, the actual number of crisis events in each of those categories was still relatively low.

For example, defects and recalls, including automobiles, toys, pet food, baby food and infant formula were up 44% compared to 2007, but that was just 410 major events that drew the attention of editors in the most recent year for which data is available.

ICM monitors 1,500 business print publications around the world, tracking 16 broad crisis categories.

The increase in negative news coverage may be evidence of a number of factors. The impact of the internet and social media cannot be discounted. Stories move quickly on the internet, forcing the mainstream media to take notice and often report on issues that editors otherwise might have missed or ignored.

Plus, election year rhetoric emphasized a lot of the “bad news,” day after day in the mainstream media.

The crashing economy (i.e. Madoff, GM, mortgage crisis, etc.) plus terrible natural disasters round the world, added to a significant increase in financial damages, hostile takeovers, business failures, workplace violence, casualty accidents in the workplace and even an increase in the number of environmental issues that drew public attention.
The first hint of trouble in the sub-prime market began in late 2006, but the real bad news began to make headlines in the third and fourth quarter of 2007. And the multi-faceted economic crisis spread to almost every corner of the world in 2008.

CEOs were bailing or getting the boot in record number. According to consultants Challenger, Gray & Christmas, 370 CEO positions turned over in the first quarter of 2008 alone. Many were less than voluntary.

And then there was food poisoning – beef, tomatoes, jalapenos, pancake mix, cereal and bottled water, along with melamine tainted eggs, milk and infant formula. China reported nearly 53,000 children were sickened by tainted formula. Topps Meat Co. had been in business more than 60-years, but after recalling nearly 22-million pounds of contaminated beef in 2007, the company was forced out of business in 2008.

A uniquely American type crisis – the class action lawsuit -- increased slightly from 2006 to 2007, but soared in 2008. There were at least 525 class action cases that made headlines in the U.S.

Eight of the most crisis prone industries repeated from the previous year. The food and insurance industries were the two new additions to the less than honorable top ten list.

Non-profits, universities and health care had their share of organizational crises in 2008. Hospitals continued to make negative news and many demonstrated their lack of crisis planning. Eighteen California hospitals were fined for shoddy care, including leaving surgical instruments inside patients and in one case, someone failed to turn on a ventilator.

Hospitals in New York City and Raleigh, NC were sued after patients were left untreated for nearly a full day. Both patients died and hospital surveillance video showed staff walking around them, even after one had collapsed on the floor.

FaceBook, Myspace and Twitter began to make their impact on business crises. Late in the year Motrin became the poster child for how to get burned by the social media. An ill conceived marketing campaign outraged moms and others who took to Twitter and other social media to attack Motrin and within two days the campaign was cancelled.
Then Dominos Pizza began the new year of 2009 with another on-line moment!

For the full report go to http://www.crisisconsultant.com/2008CR.pdf

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