Confronting Crisis

When disaster hits, an organization’s board of directors needs to swing into action. 

“Public expectation is much clearer today than ever before and places the responsibility for proper crisis response squarely on the shoulders of the board,” writes Davia Temin in explaining step one— “Know the buck will really stop with you”—of her whitepaper, “The Role of Boards in Crisis: 10 Steps for Directors Before, During and After Crisis.”

Temin, reputation advisor and CEO of Temin & Co., New York, makes her living advising companies on how to maintain their reputations, especially during rough times. Her advice to directors is tailored for boards of both privately held and publicly traded companies—she cites examples of disasters ranging from the Volkswagen emissions scandal to the Target data breach to the Tylenol poisonings. But her advice could be applied to credit unions and other not-for-profit organizations as well. Adapting Temin’s recommendations for credit union boards:

• Use your disaster management plan as a starting point. Many crises are “unpreparable,” Temin notes. Your credit union’s disaster plan may provide some useful processes for the board, CEO, and executive team to follow but may not go far enough in addressing the range of action that may be necessary.
• Be proactive. Many credit union boards aim to keep their focus on high-level governance, but a more direct response may be required, depending on the nature of the crisis confronting the organization.
• Monitor emerging risks. Board committees assigned to monitor and manage risk can take the lead here, but the full board needs to be informed and ready to act if the crisis presents new significant financial, regulatory, and/or reputational risks to the credit union.
• Keep members in the loop. In this era of immediate communications and social media, members will expect a quick response from the institution they have entrusted with their finances. The board’s first crisis announcement might be as simple as, “We are working hard to address this crisis and will keep you informed.”
• Take immediate steps to head off further damage. And revisit policies and procedures, when necessary, to ensure a similar crisis will not recur.

Read “The Role of Boards in Crisis”.