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Crisis & Risk Management

Ali Haider IM-226
Muhammad Danish IM-218

NED University of Engg & Technology, Department of Industrial

Management and Design

Time : 15 mins
Total slides : 12
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 Sequence
• Introduction
• Definition
• Objectives
• Life Cycle
• Problems & challenges
• Case Study

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 Crisis happens more than
we imagine.

They are not always easy to see

unless they affect our own lives.

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 What is Crisis?

• A crisis is anything that has the potential to

significantly impact an organization.

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 What is Crisis Management?
• The overall coordination of an organization's
response to a crisis, in an effective, timely
manner, with the goal of avoiding or minimizing
damage to the organization's profitability,
reputation, or ability to operate.

• Crisis management involves identifying a crisis,

planning a response to the crisis and confronting
and resolving the crisis.

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 Crisis management objectives
Crisis management has four objectives:

• Reducing tension during the incident;

• Demonstrating corporate commitment and
expertise
• Controlling the flow and accuracy of
information
• Managing resources effectively
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 The Crisis Life Cycle
• Stage one: The Storm Breaks

• Stage two: The Storm Rages

• Stage three: The Storm Passes

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 Problems and Challenges in Crisis
Decision-Making
• Surprise and hesitation. The shock of a crisis can create
a delay in response that allows your critics and the
media to fill the gap with negative comment and
speculation.

• Pressure and stress must be channelled by the discipline

of a crisis strategy.

• Mistaking information distribution for communication.

• Treating key audiences as “opponents”.

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• Good crisis management is essential, but never a
substitute for daily risk management processes.

• Risk management processes should apply to all

customers, although depth and detail may depend on the
transaction and customer. Transactions involving credit
or other types of financial risk should incorporate a risk
management process.

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 Case Study: Coca-Cola PR
Crisis Management
• The company came under a storm of criticism after The New York Times
(http://www.nytimes.com/2013/01/15/business/media/coke-tv-ads-
confront-obesity-and-sodas-role.html) in January, 2013 that Coca-Cola
was funding obesity research that attempted to disprove the link between
obesity and diet and shift the problem to lack of exercise.

• Coca-Cola, desperate to halt sliding sales, financed the new nonprofit

Global Energy Balance Network. Critics call it a front group created to
espouse misinformation and deflect the role of soft drinks in the spread of
obesity and Type 2 diabetes.

• Company CEO, Muhtar Kent outlines the company's response and admits
the company’s misstep while not exactly apologizing in his op-ed, Coca-
Cola: We’ll Do Better. In a matter-of-fact tone, Kent takes the accusations
head on, acknowledging the accusations that it has deceived the public
about its support for scientific research.
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 Contd’
• He defends the company by saying it is attempting to tackle the global
obesity epidemic and has always had good intentions.
• Kent also admits the company’s strategy “is not working.” “I am
disappointed that some actions we have taken to fund scientific research
and health and well-being programs have served only to create more
confusion and mistrust,” he writes.
• The company will publish a list of health and well-being partnerships and
research activities it has funded in the past five years on its website and will
update the list every six months.
• The company will continue its efforts to provide healthy options, he says,
such as waters, lower-calorie and lower-sugar drinks, diet soda and zero-
calorie drinks.

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 The Three O’s

• Own up to it. Assuming responsibility at some level

usually helps the corporate reputation over the long run.

• Out front. The CEO is the best spokesperson for the

corporation. Most PR disasters happen when companies
shield the CEO, or the CEO appears to have little
interest in the problem.

• Outsized response. Kent directs the president of Coca-

Cola North America to create an oversight committee of
independent experts to provide governance on company
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 Contd’

• investments in academic research, and engage experts

to explore opportunities for research and health
initiatives.

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 Bottom Line
Coca-Cola’s response to accusations that it financed a
front group to protect its interests at the expense of
public health is a case study in PR crisis management.
The op-ed by Coca-Cola CEO Muhtar Kent epitomizes a
corporate response that contains the essential elements
of effective corporate PR crisis management.

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Thanks

16
Q&A

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