Friday, July 24, 2009

Are Banks Getting Better at Crisis Management?

If you're looking for the 2-part Q&A series on bank crisis management THIS IS PART 2. Part one precedes this one.

An MBA student from Ireland has posed a series of questions to the Institute for Crisis Management about the current banking crisis, as part of the research he's doing on his Master's thesis. This is the second of two articles inspired by his questions:

Ahmed Hamed asked:

Confidence in the banking system is at an all time low, do you believe that it is the banks job to restore confidence to investors and stakeholders or would you be more inclined to believe that concentrating on performance and profit will ultimately lead to investor and stakeholder confidence?

We are often asked by a prospective client to help them get through a crisis. The first question we asked them is “what are you doing to fix the problem?” Frequently a CEO will tell us he doesn’t know what to do, but if we’ll do our PR magic, that will buy them some time. We always tell them it doesn’t work that way. They FIRST have to begin fixing what is wrong, then we can use communication tools to let their customers know and begin the process of rebuilding the reputation and consumer confidence.

Currently, what do you think banks should do to restore confidence among stakeholders?

They must first return to sound business practices and quit trying to make unrealistic profits at the expense of their customers. They must also STOP rewarding mismanagement and greed. Only then can they begin to regain the trust and confidence of their customers and potential customers.

What changes in the role of crisis management do you expect to see over the next 5 years? How will these changes impact on the structure or organisation of banks?

I don’t have lot of confidence that much will change. All organizations, including banks, should have three crisis plans. 1.) A crisis operations plan – what happens when the fire alarm or the hold-up alarm goes off? Who does what? In what order? What do you do to protect employees and customers from harm? 2.)A crisis communication plan – who says what, when and how when a crisis is looming or has already struck? 3.) A continuity or business recovery plan – how do you restore vital services/functions and get back to normal operations as soon as possible.
And, in the best of all worlds, these three plans should be integrated into one comprehensive crisis management plan.

Following the current financial crisis what do you think will be the greatest obstacles or constraints that will face the banking sector in the future?

The greatest obstacle will be pressure to reach unrealistic profits, not only in the banking sector but in most other economic sectors throughout the world.

No comments:

Post a Comment