Crisis 30 Aug 2019

Challenges of HOT and COLD crises and how to address them

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The circumstances around risk have changed. It is imperative that we understand the new corporate landscape and change our approach, moving away from traditional strategic and tactical crisis management procedures. We now live in a digital, hyperconnected, VUCA (Volatile, Uncertain, Complex, Ambiguous) world undergoing constant evolution, one in which, according to cyber-anthropologist Amber Casewe are all cyborgs due to the simple merit of carrying a smartphone an essentially permanent extension of ourselves.

Thus, there is now constant risk of public exposure, as well as other potential risk areas (including cybersecurity and business-unrelated issues), which all companies must consider. These changes are largely a result of the social and environmental justice movements, shifts in public perception and the spread of fake news campaigns.

In this new era of hypervulnerability, the best ways to mitigate risk and manage efficiently all revolve around investing in anticipation, with every possible solution carefully considering the technological revolution. A common problem is basing solutions for new crises on outdated ideas, forgetting to make the necessary adaptations to our VUCA world.

Types of crises in a world of disruption

Disruption has led to two major types of crises, separated by their main characteristics: HOT and COLD crises. Their names are acronyms for their key features.

HOT Crises

In line with the current digital landscape, HOT crises arise quickly and abruptly, with strong immediate impacts and short-term effects. They occur quite often and usually attract significant media attention. The name stands for:

  • High Velocity: Spreads quickly thanks to the hyperconnectivity of “cyborg” citizens.
  • Over Information: Infoxication surrounds the event, often including fake news, partial or out-of-context information and hoaxes
  • Tricky Context: Stakeholders are more involved, with increased pressure from organized social activism and opposing digital entities

COLD Crises

Unlike the HOT variety, COLD crises pose a high risk of long-term repercussions. They can have extended impacts and stronger effects on company reputation. Strategically preparing for them is essential. The name stands for:

  • Calm Development: Issue develops slowly, potentially laying dormant in an organization’s core or resulting from a recurring problem
  • Old Issue: Often originates from an old risk that was not fully controlled
  • Low Initial Digital Spread: Slow initial spread in digital media, with risk of acceleration once it becomes public
  • Damage: Once public, potential for serious damage to the business and its reputation

When considering possible strategies for addressing these two types of crisis, we can isolate two types of company: Slow (Minimal Reaction Capacity) and Fast (Maximal Reaction Capacity). These distinctions refer to a company’s capacity to deal with crises using the resources they have in place, depending on their investment in anticipation.

How has disruption affected recent crises?

We have analyzed some specific cases of organizations seeing the immediate effects of this hurricane of technological development and digital disruption, as well as how well- or ill-prepared companies were for the subsequent new methodologies and mindsets required.

A more widely felt, global case was that of Huawei, a company which faced a crisis directly related to political and economic relations. U.S. President Donald Trump had finally lifted the country’s export ban on Chinese tech companies, but Huawei was left extremely vulnerable, partially due to its operational methodology. The brand reacted with a strong advertising campaign in traditional media, using no digital channels or tools, an effort which ultimately did little to maintain consumer trust.

Past dissemination methods for brand messaging or influencer creation now no longer work, or must be propped up with additional digital approaches. Even elite soccer players, such as Brazilian front player Neymar, have begun utilizing new communication methods in times of crisis. After being accused of sexual assault, Neymar posted a 7-minute video on Instagram in which he claimed the situation was a ‘’setup,” showing screenshots of conversations and private photos. He was heavily criticized for this content.

What we can learn from a disruptive world

The following are the lessons we can learn from the current landscape and the strategies we can take away from them:

 

    1. We live in a volatile, hyperconnected world
    2. Crises are global and borderless
    3. Anticipate risks outside normal business scope
    4. Social hypersensitivity: Ethics and action
    5. Influencers as “reputation shields”
    6. Companies must act on an individual scale
Eva Pedrol
Director of the Corporate Communications and Crisis areas at LLYC in Barcelona
Pedrol has more than 10 years of experience in communication and reputation consultancy for different companies in Spain and around the world, helping to strengthen and protect their business and market positioning. She has specialized in helping international companies from sectors such as retail, aviation, technology, or the sharing economy “land” in Catalonia. Pedrol is vastly experienced in Spanish and international media and communications as she worked at the EFE News agency, both in Barcelona and as a foreign correspondent in Panama. She has also provided her communications expertise to UNICEF’s Latin America and Caribbean Regional Office. Pedrol has a degree in Journalism from Universidad Autónoma de Barcelona (UAB) and a master’s degree in Communication Management from Universidad Pompeu Fabra (UPF).
Natalia Sara
Manager at the Crisis and Risks area at LLYC en Madrid
Specializing in managing and safeguarding reputation in the digital environment, Natalia has 17 years of experience in strategic corporate consultancy for national and international companies, having been an account manager at agencies such as ACP and Ketchum. She is highly skilled in risk prevention, crisis management, preparing communication plans and Crisis Manuals tailored to different sectors, and in training managers and spokespersons to face crisis situations. She was previously a journalist for such national media outlets as Expansión and Actualidad Económica. Sara holds a degree in communication sciences from the University of Navarra, a postgraduate degree in communication for leadership and people management and a master’s degree in marketing, Internet and new technologies from ESIC Business & Marketing School.
María Cura
Partner and Managing Director at LLYC in Barcelona
María Cura joined in April 2010 as Managing Director of the Barcelona office and has been a Partner in the company since 2012. Since she joined the company, the Barcelona office has experienced significant business growth.Mrs. Cura has provided consultancy services at Gené & Asociados to institutional clients such as the Regional Government of Catalonia, the Government of Andorra and F.C. Barcelona, among others. She then joined USP Hospitals as Corporate Director of Marketing and Communications, where she was made artner and member of the Executive Committee and where she set up the CSR Department and the Alex Foundation. She was also a member of the Board of Trustees of the Alex Foundation.
Paco Hevia
Senior Director of Corporate Communications area at LLYC in Madrid
He has a bachelor’s degree in advertising and public relations from the Complutense University of Madrid and more than 20 years of experience in communications in both consultancy and corporate settings.He was a part of the LLYC team between 2000 and 2007, leaving to join the Siro Group as communications and human resources manager. For the past three years, he was communications and CSR manager at Calidad Pascual. At present, he is an independent director of the José María Group and chairman of the Spanish Association of Corporate Social Responsibility Directors (Asociación Española de Directivos de Responsabilidad Empresarial – DIRSE).

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