Do's and don'ts in the event of a crisis situation within a company

Companies shouldn't ask themselves if they will ever be faced with a crisis but rather when this will be the case. Modern means of communication present a vast number of opportunities but also entail a wide variety of risks. Managing these risks requires special attention. Without arguing for a moun-tain of paperwork and red tape, we believe it's important for each company to have at least the ap-propriate internal procedures and mechanisms to manage the risks it faces.

By  Elke Janssens, Partner at NautaDutilh

Companies shouldn't ask themselves if they will ever be faced with a crisis but rather when this will be the case. Modern means of communication present a vast number of opportunities but also entail a wide variety of risks. Managing these risks requires special attention. Without arguing for a moun-tain of paperwork and red tape, we believe it's important for each company to have at least the ap-propriate internal procedures and mechanisms to manage the risks it faces.

The last few months have shown that no company should assume it will not have to deal with a cri-sis, the causes of which can vary and are usually diverse. However, one thing is certain: companies shouldn't ask themselves if they will be faced with a crisis but rather when.

"Companies shouldn't ask themselves if they will be faced with a crisis but rather when."

For example, Covid-19 has led to more teleworking, sometimes with the employee's own computer and/or network, which may not meet all applicable security requirements, thereby increasing the risk of cybersecurity incidents. In addition, teleworking also raises questions about the work-life balance and is associated with a higher risk of employee burnout, which can result in bad press.

Furthermore, Covid-19 has resulted in a greater workload and more projects in certain sectors, caus-ing activity to boom. In other sectors, however, many businesses have struggled to stay afloat and are facing financial difficulties. Such companies will have to rethink their business model and possibly restructure their activities. Having an efficient and structured process to weather the coming months may be key to achieving a good outcome to the present crisis. Please find below a few tips on how to establish such a process.

Modern means of communication present a vast number of opportunities but also entail a wide varie-ty of risks. Managing these risks requires special attention. Without arguing for a mountain of paper-work and red tape, we believe it's important for each company to have at least the appropriate inter-nal procedures and mechanisms to manage the risks it faces. The size of the company and the sector in which it is active are decisive factors in this regard. A small business with five employees can get by with transparent internal communication at regular intervals. For a company active abroad, regard-less of its size, clear rules (which of course take into account cultural differences) are essential.

"Every company should be prepared to deal with crisis situations."

Every company should be prepared to deal with crisis situations. In this regard, preparation involves establishing a specific structure rather than trying to find solutions to the various situations that may arise.

To help with this, we've drawn up a checklist* which should be printed out and provided to two or three people within the company who are responsible for taking charge when a crisis occurs. It is the task of these individuals to quickly set up a structure to deal with the situation and prevent the crisis from taking on a life of its own.

In addition to the checklist, a script should also be prepared, clarifying who does what and when. Ideally, this script (like a fire drill, for example) should be enacted on a regular basis, to ensure that everything goes according to plan when a crisis arises.

*CHECKLIST OF POINTS FOR ATTENTION DURING A CRISIS

  1. Put together a core team
    • Determine who should be on the team based on their expertise or leadership role within the company:
      • compliance officer
      • chairperson of the board of directors
      • in-house counsel and external legal advisors
      • internal auditor
      • relevant department heads (possibly also HR and IT)
    • Extensively check the independence of team members to avoid subsequent problems.
    • Determine and specify the tasks of the team members.
    • Have each member of the core team sign a confidentiality agreement and stress the serious-ness of their assignment.
    • Determine who communicates on behalf of the team.

  2. Create a plan of action for the core team
    • Communicate, if appropriate, internally about the establishment of the team.
    • Concealing problems when there are rumours within the company is inappropriate; it is im-portant to communicate that the problem is being investigated/addressed.
    • Prohibit speaking externally about the issue, with the exception of the core team's spokesper-son.
    • Insofar as possible, ensure that it's "business as usual", without minimising the issues.
    • Prepare press releases and communications for the relevant parties involved.

  3. Gather evidence
    • Gather and secure paper and electronic documents.

  4. Analyse the facts
    • Investigate the facts and try to establish their accuracy and completeness.
    • Investigate the reputational and liability risk.
    • Investigate who is involved in the acts in question and the consequences thereof.
    • Determine a strategy based on the facts and how much goodwill can be obtained from the opposing party/government body/other stakeholders.

  5. Prevent (recurring) acts
    • Implement procedures to prevent (recurring) acts
    • Inform and train internal parties, so that they recognise the importance of these procedures and the procedures are respected.
    • Ensure that the board of directors and management implement and comply with these proce-dures.
    • Sanction violations of the procedures. o Inform external parties of the measures taken, if appropriate, and share any "best practices", if possible.
    • Insert the necessary clauses in contracts or have co-contracting parties agree to comply with the procedures and train their staff accordingly.

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