Compliance & Crisis Communication: Do's & Don'ts - Case Study III
Imagine the following scenario:
An unfortunate accident...
5 December 2017 was a beautiful, sunny day. At 13.12 in the afternoon, scaffolding being used to construct a service flat complex came crashing down and collapsed on the already inhabited section of the new building.
The contingency plan was set in motion, and the small fire which had broken out was brought under control in a matter of minutes. Relatives of the residents as well as people living in the neighbourhood are understandably very concerned.
… which luckily causes only property damage.
Once the dust has settled and the initial shock subsided, the situation becomes clearer.
- The scaffolding collapsed due to human error - a mason placed too many large concrete blocks on the wooden boards.
- The collapse triggered an explosion inside the building (a subcontractor had left half-empty gas canisters inside).
- Handover of a portion of the building had already occurred. Indeed, the contractor used all its connections and influence in order to speed up the construction process (activation of penalty clauses, intimidation, etc.).
In the first hours after the accident: the board(s) of directors of the undertaking(s) concerned orders implementation of the contingency plan.
Karel De Smet (Litigation & Compliance Associate) has one key piece of advice: doing nothing immediately after an accident is not an option. "After an accident like this one, it's no longer possible to develop a comprehensive legal and communication strategy (in particular a contingency plan). Determination of a legal strategy entails assessing the risks and then looking at how they can best be managed. It is of the utmost importance that a strategy be worked out in advance". The board of directors of the company must meet as soon as possible in order to decide which actions, in terms of legal and communication strategy, should be taken and will have to deal with urgent operational issues.
It is important to verify not only the damage for which the company can be held civilly liable but also whether the company or those acting on its behalf made any mistakes that can result in criminal liability. In the days immediately following an accident, the available information will not be completely accurate and it will not be clear who was responsible (was the scaffolding itself faulty or was the collapse due to improper maintenance, employee oversight or negligence by a subcontractor?) According to Karel De Smet, for this reason, it is not possible to establish a good legal strategy after the fact. A good legal strategy allows for flexibility and should be regularly evaluated and, if necessary, adjusted. Once the risks and potential liability have been clearly identified, it can be verified if reserves should be set aside for subsequent indemnification.
Mistakes or careless remarks by persons acting on the company's behalf can have significant legal consequences, both for the company itself and the natural persons concerned. It is unwise to admit liability too quickly, for example by making a public apology. On the other hand, it is not advisable to deny all liability if the facts are not yet clear. This means, certainly in the first days after an accident, that it is important to ensure nuanced communication and express the necessary reservations. Usually, a spokesperson is appointed, to whom the employer will refer journalists.
Work is at a standstill. What happens next?
After the dust settles, it is important to consider the operational continuity of the company. Is there still work for the employees, for instance at another site equipped with the appropriate infrastructure? Will it be possible to comply with current contracts? How should customers be informed of the situation? How can the practical consequences of the situation be dealt with? These issues are very important. Accidents and disasters can release a party from its contractual obligations when there is an event of force majeure. However, if it will only be more difficult or more expensive to fulfill an obligation, the existing commitments remain valid. Therefore, it is wise to insert a clause in all important contracts explaining what happens if there is no event of force majeure but it becomes more difficult or practically impossible to perform the contractual obligations.
A quick, adequate response can avoid lengthy and uncertain legal proceedings
Especially when there is no bodily harm, it may be possible to avoid legal proceedings and reach a reasonable settlement. Indeed, the other parties involved often wish to avoid lengthy litigation. In this regard, close follow-up with the relevant insurers is essential. The settlement strategy may include the joint establishment with the other parties involved of an emergency fund to cover urgent expenses such as home repairs and medical bills, pending a final determination of liability and insurance pay-outs.
Although each crisis will require a different approach, there are various ways to manage the risks involved. A proactive approach after an accident occurs is of course essential, but, above all, it is crucial to take in advance the necessary organizational measures to ensure that crises can be dealt with appropriately when they arise.
The golden rule of crisis communication: choose the right strategy!
According to Kristien Vermoesen (Managing Partner FINN) crisis communication should be adapted to the perception of the outside world rather than to the company's view of the situation. The contractor's position that "it's normal for a structure to occasionally collapse", even when erected in accordance with the applicable standards in the sector, can be perceived by other parties involved as very harsh and out of touch.
On the crisis communication spectrum, three types of situations, and corresponding communication strategies, can be distinguished.
- The first possible strategy is denial. This strategy can be used when the crisis is perceived as an "act of God", a completely unforeseeable event for which the company holds no responsibility, such as the storm at Pukkelpop or a terrorist attack. It should be noted that many crises start out as an “act of God” but are later attributed to “human error” (e.g. couldn’t this attack have been avoided if people had done a better job?).
- The second type of communication is minimalisation or diminishment of responsibility for the crisis. This type of response is used when the crisis is attributable to technical problems which can be resolved and avoided in the future by means of better procedures.
- The third type of communication is designed to rebuild. This type of communication is called for in the event of human error, when apologies are in order. Under such circumstances, repairing the reputational damage is key.
It is therefore of the utmost importance to accurately analyse the perception of the crisis so that you don't try to explain a crisis perceived as attributable to human error as due to an act of God. Of course, perception of a crisis can also change. Therefore, the company should keep its finger on the pulse of public opinion and adapt its communication strategy accordingly, insofar as possible.