Unwelcomed, potentially tragic and potentially materially disruptive, a crisis can damage a company’s reputation for competence and integrity and may also result in major financial loss. When a crisis does occur, engaging the investor relations (“IR”) team can assist in protecting company reputation, stock price and company valuation.
Here are the top 5 dos and don’ts for IR teams during crisis:
DO
- Collaborate and Acknowledge the Crisis as Early as Possible – IR Teams should collaborate with the internal crisis communications team including senior management, legal, operations, and corporate communications to communicate the facts of the situation as early as possible and establish trust with investors. They should continue to collaborate with the entire internal team to ensure that all messaging remains aligned.
- Consistency in Messaging – Consistency in messaging across all communication channels is crucial during crises and IR teams should maintain a unified message. This consistency not only helps build trust but also protects the company’s reputation and valuation during challenging times. The IR team should also adjust messaging to address emerging concerns, such as stock price volatility or regulatory scrutiny, ensuring that management’s responses are aligned with market expectations.
- Enable Two-Way Communication –During a crisis the IR team should not only conduct outward communications but also serve as a vital bridge between senior management, internal departments, and the broader investment community. This unique position allows the IR team to provide a balanced view of both the internal decision-making process and the external sentiment among shareholders and analysts. By maintaining this two-way communication, the IR team ensures that management is aware of the market’s response to their actions and can adjust future strategies accordingly.
- Engage with Key Stakeholders – IR teams should engage with top shareholders, debtholders, bankers, and analysts to manage their expectations. IR teams should also ensure that senior management is available to reassure investor directly if necessary. IR also needs to conduct outreach to other key stakeholders.
- Emphasize Long-Term Strategy and Value – IR teams need to reiterate key investment messaging around the company’s long-term strategy, plans and prospects, highlight business fundamentals, and any opportunities for recovery, or even growth, post-crisis. If the crisis affects the company negatively and in a material way, IR will ensure that required regulatory disclosures are made, while also communicating if appropriate, how the company will manage and aim to recover from the crisis.
DO NOT
- Go Silent or Assume Investors are the Only Stakeholders Affected – During a crisis there can be multiple stakeholders that are affected, and all should be communicated with. Going silent, ignoring stakeholders or putting the needs of investors first may come across as extremely insensitive, and could be interpreted as hiding information or incompetence, which breeds uncertainty, fear and anger.
- Overpromise or Offer Speculate Information – Don’t make statements that raise false hopes or that appease short term expectations only to disappoint as any uncontrolled situation evolves. IR teams should not try to speculate on causes, circumstances, solutions or timelines. IR teams need only to stick to the facts and not make any promises that cannot be kept, or they may damage credibility.
- Deflect, Assign or Admit Any Blame – Don’t defend the company’s actions or assign any blame in trying to explain the situation. IR teams must only stick only to the facts in fluid situations. Internal failures or missteps may also be to blame, so staying neutral and consulting with legal counsel before any fault is assigned or admitted is critical.
- Downplay the Severity – Don’t downplay the severity of the impact of the crisis. Investors would rather IR teams realistically communicate the challenges of the situation while providing solutions, rather than minimize a crisis or mislead them.
- Neglect Long-Term Relationships and Regular Communications – Focus on clearly communicating about the crisis as it evolves, but don’t forget to nurture long-term investor relationships as well as continue with on-going regulatory disclosures as required, such as quarterly earnings releases. Not only can a crisis distract the entire team and burden existing resources, but it can erode trust with investors and regulators if relationships and disclosure cadence is not maintained.
