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This week's intra day share price plunge of ASX-listed coal miner Whitehaven serves as a very real and graphic example of the constant risks of a digital world where information can go viral fast (and often unquestioningly).
The alleged Whitehaven hoax is now in the hands of the regulator ASIC while media is reporting that legal action against the alleged hoaxer is also expected soon by Whitehaven.
As reported, activist Jonathan Moylan confessed to issuing a false online media release. The hoax release, issued under the logo of high street bank ANZ, was sent to online media announcing that the Bank had withdrawn funding of $1.2 billion in loans to Whitehaven.
A sharp sell-off ensued, wiping some $314 million in value from the company's shares, before later recovering once the truth was revealed.
The hoax is a powerful example of two things: 1. the need for all corporates to better protect the integrity of their corporate communications and brand with stronger security of their PR collateral; 2. that the speed of information flow - whether accurate or patently false - can move markets.
This is the online nature of the digital beast. It’s quick. It reaches many. And when it charges, it can leave a trail of reputational wreckage in its wake. In this instance, the reputations on the line are the innocent bystanders - Whitehaven, ANZ, the ASX and ASIC, and also the media outlets that covered the ‘story’.
The full reputational fallout will become clearer in coming weeks. What can we learn? I believe there are three morals to this story (each linked to the other), that if well understood, can put us in the best position to deal with reputational risk.
- Understanding the digital world: Activists with an axe to grindknow that the Internet allows information – both good and bad, accurate and untrue – to travel to mass audiences in a matter of nanoseconds. Organisations that also understand and can react well to this fact are in the best position to deal with misleading / damaging information expediently.Monitoring traditional, online and social media is vital to allow for swift responses and reactions. It may be worthwhile to buy or register emails and usernames to mitigate the risk of spoof identities damaging the brand’s reputation.
- The power of relationships: Strong relationships with media are crucial to managing corporate reputation. Time-pressured journalists are more likely to call a reliable contact to verify a story before going public.For this reason it is important to have an internal Corporate Affairs representative or a trusted PR consultancy to provide counsel and respond to media enquiries immediately. Market rumour, false accounts or simple errors can be shut down or corrected quickly and before any enduring damage is done.
- Your reputation: Your crisis communication plan should incorporate the immediacy that surrounds digital technology. This means having an online rapid response and crisis management capability established and tested.Again, engaging in real-time monitoring that is linked to business and reputation risk data / systems, along with the establishment of a rapid response team, will allow for quick reactions in the case of an incident. Having clear processes and protocols in place will allow you to respond appropriately and in turn should minimise damage to your reputation.
As we are still in the early part of 2013, there is no better time to review your organisation's capability to protect its reputation in the case of a crisis – or from digital bandits.
Need help getting started? Ask us for a copy of the BlueChip Communication online reputation checklist.
