Capital Markets, Crisis Communications, and COVID-19
As the COVID-19 pandemic continues to escalate around the globe, the communications framework necessary to maintain safety, general calm, and overall business operations has come under severe stress. Where to be, what to do, how to do it, why things are being done — it is essential that all of this be thoroughly planned and conveyed with precision and accuracy.
Capital markets have been through, and learned from, disasters in the past, and this case will eventually prove no different. However, this virus has revealed cracks in financial services communications, which we thought would be useful to analyze through a lens we recommend to our clients: a crisis communication plan.
Right now, any company’s crisis communications should be running at full steam.* There are plenty of resources on crisis communications and plenty of specialty firms that can help with the development of contingency plans. Having the plan is one thing, but you must maintain a perspective that allows you to keep your wits about you in a time of stress. As such, we are sharing best practices to consider during this period of crisis and the implementation of your communications strategy.
*Just a few things to consider for a crisis communication plan: Who is on the crisis comms team? What is their dedicated means of communication? Who are your key audiences? Who is your spokesperson? What statements can be pre-prepared for multiple contingencies?
Let’s rewind to the last week of February in the United States, when COVID-19 concerns were beginning to escalate. The first cases were onshore, but overall cases outside of China were still only around 2,000. Was your firm addressing what we call “urgency probabilities”?
Planning ahead for contingencies is vital. For us at 3Points, we started evaluating our approach to our calendar, as we expected to be in Florida to support a number of clients at the FIA Boca conference in the first week of March. As U.S. cases started increasing, it was quickly becoming clear that the conference might not happen. It was crucial to maintain a pragmatic approach, without letting the lure of business development, relationship reconnections, and time in the sun impede the key priorities: health and safety. With that in mind, we began to communicate with clients and provide alternative solutions to still fulfill our client obligations of brokering introductions, event-driven social media campaigns, and journalist engagements.
The crisis then kicked into higher gear, leading to a different problem. At first, bank employees in Asia acknowledged a reluctance to adjust to recovery sites and remote facilities. In non-pandemic circumstances, we’d recommend all employees, especially leadership, be physically present and accountable during a crisis. In this situation, we recommend maintaining digital connections to make sure no one falls off the grid with a brief, daily all-team check. Being generally inaccessible in times like this can damage respect between colleagues, appreciation for a firm’s culture, and the company’s overall reputation, sometimes beyond repair.
For another example, when companies began imposing restrictions on travel, it was not clear what “nonessential” meant in the context of business operations. Staff was left in the dark about decision-making processes, as was the public. We recommend using the power of social media to provide more transparency into how your company is dealing with the crisis, and deploying email, instant messaging, and video conferencing platforms for internal communications. There is a lot of noise to parse through out there right now, but silence can be truly deafening.
Once shutdowns started, the dominoes fell quite rapidly, with Cboe and CME closing their open outcry trading floors at the end of trading on March 13. But, it was not uniform, and it was not orderly.
In the period of time after the other exchanges announced their intentions, the status at the NYSE remained uncertain. If anything, the NYSE made clear its desire to keep its floors open during the pandemic, implementing separate cafeterias for staff and floor traders, taking temperatures of all who entered, “deep cleaning” the floor, and doing away with guest bell ringing ceremonies. So while the NYSE was communicating its plans, those plans flew in the face of everything else the financial industry was putting in place, leading to confusion about the practicality of the exchange’s policy position. The NYSE came under fire for staying open that extra week, deciding on March 18 to close its floors on March 23, a move forced when a trader and NYSE employee tested positive for COVID-19.
The NYSE situation is relevant, as it shows the need to protect the record. Have a process in place to quell the rumor mill — and, if necessary, prevent erroneous conclusions from being drawn. That situation also shows the benefit of having preexisting relationships with the media to leverage. Only reaching out when you obviously are in need and haven’t interacted before is not good practice.
If the record is clear, it will be easier to maintain a corporate voice that focuses on the key message — in this case, community safety. As it stood, the NYSE was communicating an array of differing angles, from the patriotic urge to stay open to prove American resiliency, to the business desires stemming from being an exchange with a hybrid electronic/floor-based auction framework, to the health and safety of New Yorkers and its employees. While it was clear to the public there were a variety of considerations being made, expectations regarding the importance of health in the hierarchy of those considerations were murky.
Overwhelming as all of this is, all the above considerations should simultaneously be happening while evaluating your business’s future. Markets hate uncertainty, but one thing that is certain is that some firms will not make it through to the other side of this. (All of the conference cancellations already took down research and event firm TABB Group and the market turmoil led proprietary trading firm Ronin Capital into trouble. More names will follow.)
With business operations disrupted, liquidity stressed, margin calls all around, and extreme volatility, now is the time to determine how to position your company for the future. Evaluation of your firm’s future should take into consideration the pulse of public opinion, which in times like these, can also exhibit extreme volatility. With the feedback outlets provided via social media platforms and comment sections, taking this pulse is not a tall task.
Eventually the dust will settle. The U.S. has made it out of difficult situations before, and markets have always regained their footing. Plenty of solvent businesses facing momentary stresses will come out on top in the end. But in the meantime, we wish you health and safety. If you would like to learn more about crisis communications and how they can be applied to the COVID-19 situation, please do not hesitate to reach out. Never has the cliche “we’re all in this together” been more appropriate.