‘Human’ reaction to crisis could save corporate reputation

When faced with a crisis threatening a company’s reputation, senior executives that respond immediately with compassion, empathy and humility may speed the recovery from the loss and improve the organization’s capital value in the long run.
Bruce Abrams of AIG, cited an example of an airplane crash where the CEOs of the airlines involved each had different responses, at a seminar on managing reputation risk at the RIMS 2008 conference in San Diego, California.
As a result of the different reactions one humanistic, the other overly defensive the airlines have experienced different levels of damage done to their respective corporate reputations.
“Following the July 25, 2000 crash of Air France’s Concorde jet in Paris, the CEO of that company went immediately to the airport where he expressed humility, compassion and sympathy to the families,” Abrams told delegates.
“The CEO of British Airways (which also had a fleet of Concorde jets at the time) gave a press conference at the same moment and suggested that debris on the runway was the cause of the crash and that it was not the aircraft’s fault,” he said.
This is a perfect example of one organization being overly defensive and the other reacting with compassion, he continued. Since then, Air France’s capital value has increased 40% and British Airways’ has decreased 20%.
“A damaged reputation can cost an organization billions of dollars and there’s no insurance coverage for loss of reputation,” Abrams warned. “Keeping that in mind, it is crucial to pre-plan and have a communication strategy in place before an event hits.”