Bolt from the Blue by Mike Pullen and John Brodie Donald
This excellent contribution to the literature on corporate crisis management is, in reality, three books in one. It is partly: a risk manager’s guide to navigating a Rumsfeldian world of “knowns” and “unknowns”; a series of case studies for practitioners; and reflections on how reputational risk is concocted from regulation and amplified via social media.
Mr Pullen’s and Mr Donald’s proposed analysis of “Cardinal Points of Risk” is a useful methodology, highlighting that “unknown knowns” — failures understood further down an organisation or its supply chain, but not shared with senior management until too late — often cause reputational damage.
Failures in the way a company does its everyday business. Responses are often cack-handed and markets unforgiving in these situations, especially when senior management deny responsibility, dump on juniors or reach for the lawyers rather than uncovering and solving the problem.
Varied, compelling examples add to the book’s strength. BP and Lehman Brothers are commonplace studies, but the addition of the Challenger space shuttle crisis for Nasa is valuable.
As the book points out, “having a teacher blown up on live TV in front of masses of children is probably the worst PR disaster imaginable”. I also enjoyed the analogy between horsemeat in burgers and the CDO crisis. The examples are up to date, including well-handled crises (the Boeing Dreamliner’s battery problems), as well as some still rumbling on, such as Standard Chartered’s encounters with regulators.
The discussion of regulation and its relationship with crisis management is fascinating. Enron begat Sarbanes-Oxley... Lehman Brothers begat Dodd-Frank — the book is compelling in its argument that comprehensive legislative responses show how regulators typically fight the last crisis, not the next.
Regulatory risk is hugely significant and compounded by the extraterritorial ambitions of many regulators. The tensions between an increasingly localised patchwork of regulators is well explored here, as is the difficulty for companies caught between inflexible regulation and fast-moving social media comment.
Does the book work as a ‘how to’ guide? The case studies are helpful, as are the sections on coping with whistleblowers, cyber-risk and NGOs. The proposed five rules for coping with a crisis and re-building corporate culture make sense too, though its emphasis on hiring external consultants from the fields the authors work in is slightly self-serving: sometimes the best advertising is subliminal.
Published by Elliott & Thompson
John Godfrey is corporate affairs dorector of L&G
