• Back to articles

How crisis communications can prepare for ‘black swan’ events

For corporate affairs and communication professionals, 2018 has already highlighted the increasingly uncertain nature of protecting a corporate reputation. Global events have left many brands on the back-foot, managing a rapidly changing reputation landscape that moves at the speed of a tweet.   Whether it’s Harley Davidson managing fallout from the Trump Administration’s tariffs, to…

favicon

Jul 4, 2018

For corporate affairs and communication professionals, 2018 has already highlighted the increasingly uncertain nature of protecting a corporate reputation. Global events have left many brands on the back-foot, managing a rapidly changing reputation landscape that moves at the speed of a tweet.
 
Whether it’s Harley Davidson managing fallout from the Trump Administration’s tariffs, to Mercedes Benz and the cost of Brexit, household brand names are responding to an increasingly uncertain global environment.
 
Of course, not every company is going to be in the cross-hairs of a global trade crisis. However, there’s a broader trend here that sits beyond the headlines. The risks that organisations face and that could spiral into a full-blown reputational crisis are greater than ever. It’s these ‘black swan’ events – incidents that on paper have a low chance of occurring – that are leaving companies on the back-foot.
 

What are black swan events?

The term black swan event was popularised by risk expert Nassim Nicholas Taleb in his book The Black Swan. In it, Taleb argues that black swan events have three key features:
 
  • They are outlier events that we do not expect.
  • They have an “extreme impact”.
  • That human nature compels us to rationalise these events after the fact to explain away they’re unpredictability.
A black swan event is an event that we assume can’t happen. Until it does.
 
The idea is actually one with strong ties to Australia’s history. For centuries, Europeans had only ever encountered white swans, and used a ‘black swan’ as a metaphor for something impossible (similar to how we now refer to something being “as rare as hen’s teeth”).
 
This all changed when European explorers reached Western Australia and discovered black swans did in fact exist. Now, a black swan event is an event that we assume can’t happen. Until it does.
 
Taleb argues that these events aren’t just a serious risk for businesses, but they are becoming more frequent. Organisations are getting caught up in global cyber attacks, trade disputes and environmental and supply chain disruption. These external shocks are posing a serious threat to businesses, not just to their financial performance but they’re reputations as well.
 
Western Australia's black swans have become a metaphor for business risk.
 
For corporate affairs professionals, the possibility of a black swan event comes with new challenges. After all, how can you manage the potential reputational fallout of an event that may never occur? And how do you get buy-in from senior leaders to plan for risks they may never face? It’s going to take a step-change in the way corporate affairs teams plan for different crises if companies are going to meet this new challenge.
 

A shift in focus for reputational risk management?

Reputational risk can be thought of in a matrix between high/low probability and high/low impact events. The most dangerous for any organisation are those that sit in the high-probability, high-impact space. These are the risks that any corporate affairs specialist will already be focusing the majority of their efforts on.
 
Black swan events, on the other hand, sit in the low-probability, high impact space – although what makes them such a concern is how hard it is to quantify the risk posed by a black-swan event using traditional reputational risk management methods.
 
For most corporate affairs professionals, managing these black-swan events will feel like part and parcel of their reactive media planning – there will always be a degree of preparing for the unknown. However, the takeaway from Taleb’s work is that companies are facing even more of these ‘once-in-a-lifetime’ challenges, from an increasing range of sources. At some point, business-as-usual reputational risk management practices have to change to keep up.
 
CEOs and their comms teams will be under new pressures from black swan events.
 

Broadening the perspectives on reputational risk

The nature of a black swan event is that it is a surprise for those who are faced with it, but that doesn’t necessarily mean it was a surprise for everyone. As an article from the International Project
Management Association described it: “What may be a Black Swan surprise for a turkey is not a Black Swan surprise to its butcher”.
 
In this case, it may be that external commentators, or even individuals within an organisation, are aware of issues that could turn into a major reputational risk. A drought that affects the supply chain for an FMCG company might seem like a black swan event for senior leaders and their corporate affairs team, but that doesn’t mean it was a surprise for supply chain specialists in the business who are regularly talking to farmers and growers.
 
Black swan events require a rethink of the way we understand reputational risk management. These risks, however small the likelihood of them occurring, demand a much more holistic approach to measuring and mapping risk, that draws on expertise from across the organisation. It also highlights the renewed importance of social listening, taking corporate affairs professionals beyond media monitoring and into a more holistic approach that bridges social and traditional media to identify emerging reputational risks.
favicon

Jul 4, 2018

Discover insights.

12.13.2023
Visuals hit the mark in a fast-paced world

Creating messages that cut through social media, news cycles and even the humble inbox has never been easy, but, with more noise across more channels, it’s become more important than ever to create messages that stand out and land with impact. Visual communications tools are gaining traction as a way of shaping messages that hit…

05.10.2023
Rapport yields exceptional results for contractors

Looking for greater choice in the contract options available to you? Having history and rapport with a specialist recruiter like Fraser Clapcott will open doors to opportunities you may have missed for yourself, that add value for both contractor and employer. In the current climate of uncertainty, a willingness and propensity for flexibility comes with…

05.04.2023
Curious about the current state of play for communicators?

If you’ve been ruminating on changing-up your comms career, now may be the ideal time to talk with your trusted recruiter about making a move. Salt & Shein Director, Lucy Newcomb, sees significant scope for motivated communicators to broaden their career horizons, and make the job of their dreams a reality, in 2023. “A rapidly…

Discover insights.

12.13.2023

Visuals hit the mark in a fast-paced world

Creating messages that cut through social media, news cycles and even the humble inbox has never been easy, but, with more noise across more channels, it’s become more important than ever to create messages that stand out and land with impact. Visual communications tools are gaining traction as a way of shaping messages that hit…

05.10.2023

Rapport yields exceptional results for contractors

Looking for greater choice in the contract options available to you? Having history and rapport with a specialist recruiter like Fraser Clapcott will open doors to opportunities you may have missed for yourself, that add value for both contractor and employer. In the current climate of uncertainty, a willingness and propensity for flexibility comes with…

05.04.2023

Curious about the current state of play for communicators?

If you’ve been ruminating on changing-up your comms career, now may be the ideal time to talk with your trusted recruiter about making a move. Salt & Shein Director, Lucy Newcomb, sees significant scope for motivated communicators to broaden their career horizons, and make the job of their dreams a reality, in 2023. “A rapidly…

Salt & Shein
10.21.2022

How to Drive Value Using Digital Marketing

Digital marketing drives value – for those who keep pace Faster communication, lower costs, higher conversion – is there anything digital marketing can’t do? Its ability to drive value from every step of the marketing process is unprecedented, but maximising this value is a demanding exercise. We asked two specialists in this area to tell…

06.14.2022

Economic Challenges Threaten to Cloud the Focus on ESG

ESG is just one challenge on Government’s long list The government’s election promises around environmental, social and governance (ESG) issues were instrumental in its victory a few weeks ago, reflecting a mandate to treat climate change, gender equity and other ESG matters as essential. “Australian businesses know that action on climate change is good for…

05.31.2022

Addressing the skills shortage

Unlocking opportunities for families across Australia As a boutique executive search firm, we’ve seen up close the impact of Australia’s labour shortage as the pool of candidates continues to shrink, limiting the growth of careers and businesses – and hampering national productivity. With some 425,000 job vacancies across Australia, no wonder the OECD recommended that…

04.04.2022

Leadership: Why showing employee appreciation and care can go a long way

Everyone has to start from somewhere. Meaning you’ve probably held an entry-level position at one point or another, in which trying to impress the higher-ups in your company was a major part of your job.   This article will explore why employee appreciation and recognition are a vital part of holding a leadership role not…

03.18.2022

The future of recruiting includes ESG initiatives

Whether or not a company acknowledges how much their social, environmental and governance (ESG) decisions impact the world around them, candidates are taking notice. Most job seekers will pass over a company that is not taking steps to improve how they show up outside of their business metrics for an organisation that does.    This…

01.31.2022

Changes to the work environment in the new norm

People all over the world and especially in Australia have faced incredible challenges in the past two years. Those businesses that survived multiple shutdowns and policy changes are finding new ways to adjust as they enter the post-COVID work environment. As offices begin to reopen, enterprise leaders are not only deciding among the options of…

12.16.2021

Solving the skills shortage: Closed borders and adjusting expectations

With the revolving door of new COVID-19 regulations, variants, opened (then closed again) borders and an exodus of non-Australian workers, the workforce across the nation is facing a severe skills shortage.  Despite these challenges, there are solutions. The secret to overcoming this qualifications shortage lies in taking a proactive approach to hiring through policy changes…