If a larger financial crisis comes, are you prepared?

Earlier this month, the SVB implosion incited a crisis that threatened the well-being of the (already unstable) tech sector–and beyond. Over the course of 10 hours, customers withdrew $42 billion from their accounts in the largest bank run in history.? The collapse came after a quiet period in bank failures, but its magnitude was reminiscent of shut-downs during the 2008 financial crisis.?

After the collapse, a handful of business owners in my Vistage Group were feeling some downstream effects. While some members were concerned about the broader economic implications of the collapse (Are we heading into a recession? What should I consider knowing what’s going on in the background?), others were looking for more short-term, practical guidance for communicating through and managing a crisis of this scale.?

Thankfully, we didn’t have to launch those crisis response strategies in March (with the Fed stepping in to return all deposits in full), but that doesn't mean we’re in the clear yet–especially now that the Fed has again raised interest rates in the ongoing fight against? inflation.?

If a larger financial crisis is in fact on the horizon, are you prepared? And if a future crisis impacts your organization–directly or indirectly–how will you respond??

The key to returning to a state of equilibrium is something that should sound very familiar: clear, consistent, honest communication.?

More than anything else, effective communication inspires confidence, increases trust, and keeps stakeholders engaged at a time when they’re easily influenced by signs of panic. It reassures employees, customers, suppliers, and board members that you have their best interests in mind and will always tell them the truth.?

To do that effectively, your crisis communications strategy should have clear messaging around the following questions:?

1. ?What does this mean for employees?

Will there be payroll delays? Will there be budget cuts? Even if your business went unscathed, it’s critical to spell out the details so that everyone feels confident in their jobs and the organization (and so your top talent doesn’t run for the hills).?

1. What does this mean for your customers??

In the wake of a major event, customers want to know that your business is solid, your supply chain is intact, and your commitment to delivering your product remains unchanged. For customers that will be impacted, be sure to provide accurate timelines and other details around when things will return to normal–and let them know what you can do for them in the meantime. Transparency is paramount for keeping business.?

1. What does this mean for your suppliers and other partners??

Be sure to engage your legal team before communicating with suppliers. They should analyze your organization’s contracts and agreements to check for any potential exposure in the supply chain so you can craft your communications accordingly. If your business needs help–like emergency banking facilities or extended payment plans–the earlier your suppliers know the truth, the better. Communicating proactively creates an environment of trust and good will, and increases the likelihood that suppliers will step in to help.?

Even if your finances and client-base are unaffected during a collapse, times of crisis are a great way to reconnect with your most important stakeholders in a way that’s not forced. It’s a natural time to lead and be vocal: employees, customers, suppliers, and investors expect to hear from you about the health of your business–so (whatever your status) don’t be afraid to over communicate.?

How to Communicate to External Audiences

When communicating externally via PR or marketing, it’s often in your best interest to wait until the second or third wave of media coverage to join in. You don’t want to associate yourself with bad news–unless you can offer something tangible, unique, or advice-driven to solve an immediate need.?

For external communications around a crisis, keep it simple and follow these three rules:?

1. Be proactive. Communicating the good and the not-so-good in a transparent and timely manner is vital. It will position your organization as trustworthy and “on it” from the start–even if you have bad news to share.?
2. Don’t go quiet. A crisis is often a fluid situation–at least in the first few days and weeks. Even if you’re not sure what your next steps are, be sure to let the world know that you’re aware of the problem, looking for answers, and working on a solution.?
3. Tell the complete story. Don’t hide bad news. The truth always comes out. It’s better for people to hear the truth from you first rather than hearing it from a secondary source who may not get the facts straight.?

If managed correctly, a crisis offers a unique window of opportunity for businesses to prove themselves internally to stakeholders and improve their external image to those following along. Thoughtful, strategic communication is the vehicle that will help you do just that. #crisiscommunications