Crisis Communications: Developing an IR Strategy for COVID-19

DR Insights Series

Crisis Communications: Developing an IR Strategy for COVID-19

DR Insights Series

May 2020

The impact of COVID-19 is being felt broadly, across all regions, sectors and markets. The Investor Relations (IR) professional plays a critical role in how a company communicates through rapidly changing market dynamics. In addition to a well-thought-out crisis communications plan, it is crucial for companies to showcase basic tenets of good corporate governance, such as their leadership and business resiliency, as well as to maintain control of the dialogue when handling a crisis like COVID-19.

A clear message and plan to manage an organization through a crisis is an exercise in leadership. This is more than a soft skill. Companies that have not demonstrated their resilience may end up in a new, self-inflicted situation where they may have eroded or will continue to erode shareholder value.

 

It is critical for senior management to communicate in plain language the decisions they make and the metrics they use to make those choices. Investors may have questions about the monitoring systems firms have in place to reinforce their approach, or their ability to rapidly alter the course given a new set of business insights. An ability to clearly articulate what is both known and unknown will offer the market transparency and build credibility.

 

Experience in Action

 

We recently heard from a client, a large multinational manufacturing company, about their experience in this crisis. The market was fixated on their supply chain and the massive disruption to their normal processes. The company was able to convey based on the experience they had gained from past natural disasters that they would experience no business impact to their supply chain. They have been able to deploy redundancies and emergency responses developed following a previous crisis. While they still have the difficult task of forecasting the operational impact in an uncertain demand environment, they have been able to address the market from a position of strength by demonstrating their understanding of their own supply chain and processes to address weaknesses.

IR Best Practices: Crisis Communications

  • State a strong commitment to the health and well-being of all stakeholders
  • Outline the operational impact
  • Comment on the longerterm sustainability of the company’s value proposition
  • Summarize liquidity and/or cost containment plans
  • Amend or withdraw guidance as needed

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