How to weather a crisis, not make it worse
Broadreach Public Relations
Linda Varrell is president and founder of Broadreach Public Relations in Portland.
It may take years before we understand why Silicon Valley Bank and Signature Bank unraveled, and what the economic fallout will be. But one truth has clearly emerged: a breakdown in communication played a large role in escalating the crisis. After 30 years of helping financial institutions figure out how to communicate about a wide variety of worst-case scenarios— including bank robberies, security breaches, and missed earning targets — I can tell you that there are important lessons any business of any size in any industry can learn from SVB.
Be proactive. Once news broke about the failures and we saw the stocks of regional banks tumble, local banks and investment firms rushed to reassure investors and depositors that their money was safe and explain what, if any, exposure they had. They sent customer emails, posted statements on social media, and made their chief executives available for TV interviews. Even though most banks in Maine don’t have significant direct exposure, they realized that guilt by association would shake their stakeholders’ confidence and they needed to get ahead of their questions, or risk bank runs of their own.
Always speak your stakeholders' language. So much of the news coverage revolves around explaining the basics of how loans and deposits work. This is a level of education and detail few financial institutions go into in the course of everyday business. But once the SVB crisis started moving markets, this clarity became critical. Yes, sophisticated detail and analysis are often necessary to meet regulatory requirements, but so many companies unnecessarily lean too heavily on technical jargon on a day-to-day basis and neglect the fact that many stakeholders don’t understand it. By doing so, they’re neglecting their opportunity to control the narrative and leaving it to outsiders to read the tea leaves. Make sure every public statement passes the talk test. Read your press releases out loud to your kids and parents. If it flows naturally off the tongue and the average 10-year-old can understand what you’re saying, you’ve likely hit the mark. But if your sentences are 50 words long and brimming with words that would win you 75 points in a round of Scrabble, get out your red pen. I don’t care how complex your subject matter is. If you can’t share your news in terms that your stakeholders can understand, you’re missing a chance to tell your story, and leaving way too much room for dangerous interpretation.
Remember your W’s. Any public statement should answer the basic questions covered by any high-quality news story: Who, Where, Why, What, When, and what the news will mean for all stakeholders. Much has been written about how SVB's press release announcing the sale of shares failed to state why the bank needed to raise capital; the explanation was buried in the investor prospectus. Any time one of those basic “W” questions is left unanswered, you’re creating a void where speculation and panic can quickly proliferate and move markets, especially in our digital world where perception can morph into reality in an instant.
Be honest about your bad news. When clients come to me in crisis, one of the first things I tell them is this: I won‘t lie to you, and I won’t lie for you. The quicker you come to terms with your inconvenient truth and come clean, the quicker you can start your comeback. Lie out of the gates, delay, or tell a lie of omission, and you will extend your crisis indefinitely. Your cover-up will become the news. Reputational capital takes years to build up and split seconds to destroy. And many never recover.
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