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Managing Outcomes
July 15, 2013, Vol 4, No. 14
Managing Outcomes is published by Tony Jaques, Director of Issue Outcomes Pty Ltd, for people who work in issue and crisis management
Crisis impact doesn't just add up, it multiplies

You know your organization is in trouble when the news media start compiling lists of your past misdeeds.

The financial and reputational impact of a crisis is well known.  Less well understood is the cumulative impact of subsequent incidents which can continue to damage reputation for years.

A case in point is Carnival Cruise Lines in the aftermath of the notorious “poop cruise”  when Carnival Triumph caught fire in February and drifted in the Gulf of Mexico with no power and no working toilets for five days.

Just days later Carnival Fascination marginally failed to pass a routine food safety inspection. It was an unremarkable breach, but when this report became public it made headline news as yet another stake through  the cruise line's reputation.

This multiplier effect will certainly be familiar to the people at Qantas which has come under intense scrutiny over a series of incidents which stared in 2006 and culminated in the near-disaster over Indonesia in late 2010 when a jet engine exploded in an A380 flight from Singapore.

Time Magazine recounted the list of mishaps in an article headed “Qantas: Airline safety’s golden child no more”.  And early this year the airline’s record was back in the news with a report that Qantas now ranks only 13th for global airline safety, behind kiwi rival Air New Zealand (#2) and local competitor Virgin Australia (#9).

Who do journalists trust?

Politicians? Experts? PR people? Academics? NGOs? A new international study ranks the trustworthiness of sources

Here's the answer

Once again journalists raked through the list of Qantas past incidents, some potentially serious and others minor.  But in the aftermath of the A380 crisis anything adverse about the airline is news and everything damages reputation.

The same applies to beleaguered oil giant BP, recently rebuked by Norwegian safety authorities over a North Sea oil platform spill in September 2012. While the incident itself was relatively minor, it came after a North Sea platform fire in 2011; the notorious Deepwater Horizon fatal fire and environmental disaster in 2010; and the Texas City refinery disaster in 2005, which killed 15 workers.

Less dramatic, but equally damaging to reputation, is the cumulative effect of two fatal accidents and a catalogue of lesser safety incidents for Melbourne construction company Grocon.

In all of these cases the impact of a crisis is multiplied into longer-term reputation damage as incidents start to accumulate. As crisis commentator Jonathan Bernstein has written: “You have no cushion of goodwill to fall back on, no brand ambassadors to leap to your defence, and reporters know that any story where a tarnished reputation is being heaped with more mud is an easy sell to editors and readers.”

The multiplier effect is yet another risk from any crisis, and all the more reason to be properly crisis-prepared.

A Parting Thought

Crises do more to define a company faster than any other singular event.
Scott Mills and David Calhoun

Tony Jaques PhD
Director, Issue Outcomes P/L

Mob: 0411 276 527
From overseas: +61 411 276 527
Email: tjaques@issueoutcomes.com.au Website: www.issueoutcomes.com.au
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