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8 80 Crisis Communication
Authoritative answers are harder to come by. Journalists are largely
oblivious to the PR/IR distinction (or, if they recognize it, are happy to
exploit it). They will ask public relations people to clarify financial
issues and investor relations people to review product or public affairs
issues. In short, under crisis conditions it is easy to stray from one’s
competence or say things one shouldn’t. The consequences, which can
wind up in the morning newspapers, span the full panoply of crisis
communication setbacks: inaccurate and/or inconsistent information,
selective disclosure, release of confidential information and rumour.
Integration of the IR and PR functions is not something that can
happen in the midst of crisis. It just doesn’t work. It needs to be insti-
tutionalized long before a crisis strikes. Doing so is a function of an
emerging executive position, the Chief Communication Officer
(CCO). The primary task of the CCO is to manage both investor rela-
tions and public relations as an integrated communications function.
He or she makes certain that IR and PR departments meet regularly,
that their offices are placed in close proximity to each other, and that
their compensation packages are structured to incentivize teamwork
and cooperation. The CCO has ultimate responsibility for managing
all corporate stakeholders, including employees, shareholders, finan-
cial analysts, public affairs and press relations.

A house divided (2): the lawyer/communications disconnect

Similar potential conflicts exist between the legal and public rela-
tions/investor relations departments. The reason has to do with a glass
half full/glass half empty view of external communication. From the
legal perspective, external communication usually carries down-side
risk; for PR and IR executives, it’s full of upside potential. When crisis
strikes and communication policy becomes a strategic imperative,
these views can clash.
When forced to choose between these views during a financial crisis
(or for that matter, most other types of crisis), management usually
adopt some variant of the legal perspective on communication. It is no
mystery why. Financial communication operates within a complicated
web of regulations that lawyers are often uniquely positioned to inter-
pret. Attorneys are trained to identify risk and apprise management of
what could go awry in any proposed action. Every crisis, but especially
a financial crisis, involves legal risk. Many CEOs perceive both the
investor relations and the public relations functions to be more techni-
cally than managerially oriented. Finally, when we are threatened, it
always seems safer to be quiet and keep our head down.
The problem with an overly legal approach to crisis response is that
it can encourage a hunker-down stance that cedes the high ground to