Why do crises get worse just when you think it’s all over 

Once the immediate crisis is over, the real challenge begins. Dr Tony Jaques takes a look at legal proceedings, public enquiries, and lawsuits that can linger for years post-crisis, citing the Black Saturday Australian bushfires and Exxon Valdez oil spill as cases to learn from.


Image by Freepik.

While it’s essential to respond effectively when a crisis strikes, what happens after the crisis seems to be over can be an even greater risk to reputation and financial security. Yet post-crisis management is perhaps the least understood phase through the continuum from preparation, prevention and crisis response to review and eventual recovery.

An American academic recently suggested that post-crisis management is primarily about reflecting on what happened and some ongoing psychological assistance, as well as a thoughtful memorial for those affected.

Such actions are helpful, but they are by no means the main issue. Nor is the frequent emphasis on business restoration and continuity. This is undoubtedly very important, but business continuity is just one, largely tactical and usually fairly brief, element of post-crisis management.

Far more fundamental for longer-term reputation and organisational resilience is the risk associated with post-crisis proceedings such as inquests, commissions of inquiry, official investigations, prosecutions and lawsuits, which can extend for months, years, or even decades, generating endless harmful headlines.

Unfortunately, many CEOs breathe a sigh of relief once the immediate crisis event seems to have passed, and they try to leave whatever follows to the lawyers so they can ‘get on with running the business’. However, the proceedings which follow are often more damaging and far-reaching than the crisis event itself, and crisis managers and communicators need to keep the executive closely focused on the ongoing risk.

Consider the catastrophic Black Saturday Australian bushfires in Victoria in October 2009, which killed 173 people and destroyed more than 2000 homes in a single afternoon. In the immediate aftermath, the news media and public were full of praise for the courageous work of firefighters, police and other emergency responders.

However, an 18-month Royal Commission, which heard heart-breaking evidence from over 400 witnesses, was scathing about many organisations and individuals. Three very senior public servants lost their jobs or resigned, and politicians had to apologise for their failures.
The reputation-sapping legal action which then followed against a power company and others involved dragged on for five years before finally concluding with Australia’s largest ever class action settlement.

However, the mother of all post-crisis disasters has to be the massive oil spill when the tanker Exxon Valdez ran aground in Alaska in 1989. While the company’s immediate reaction became a textbook example of how not to manage a crisis, the legal response to the post-crisis lawsuits stands as a case study of what happens when lawyers take charge.

A local court originally ordered Exxon to pay US$ five billion in compensation to local residents and businesses, equivalent to about its annual profit at the time. Following what one legal expert described as ‘scorched earth litigation’ involving scores of petitions and appeals and over 1,000 legal briefs, requests and demands, by 2008 the penalty was progressively reduced to just US$507 million, along with around US$480 million in interest.

By then, thousands of claimants had died waiting for the outcome, and Exxon Mobil recorded a record-breaking annual profit of US$45 billion. It was only in 2009 that the company finally gave up its last line of appeal.

The lawyers were likely pretty pleased with themselves for shaving about US$ four billion from the original judgement. Yet it came at the cost of almost 20 years of continuous legal wrangling, widespread negative publicity and reputational damage.

Although not every post-crisis phase is as big or as dramatic as Black Saturday or Exxon Valdez, the essential steps are the same for every organisation. For starters, restore business/operations. Then, establish a cross-functional team, including top management and experienced communicators, to monitor and manage any legal proceedings. Lastly, review how the crisis was managed and make any amendments to the process.

Remember, the second step is by far the most important for survival and lasting success.