Savvy bettors don’t plunk down money without checking the odds. So why do CEOs risk their company reputations without considering the odds of facing a serious crisis?
Oddsmakers weigh the probabilities of just about everything from sporting events to reality TV winners. Crisis communications specialists are the oddsmakers of crisis scenarios for corporations, brands, nonprofits, individuals and public agencies. They help identify what can go wrong and the probability of it going wrong.
Unlike oddsmakers who earn money when people place bets, crisis counselors earn their money by showing how to reduce the odds of catastrophic or reputation-damaging crisis.
Oddsmaking and crisis counseling have a lot in common. Oddsmakers simulate games, contests and anything people wager on to determine the ‘spread’. They talk to people and apply sophisticated algorithms. Crisis counselors employ issue audits to discover the ways an organization could become entwined in a crisis, even through no fault of their own. Part of that issue audit is to assess the likelihood of a specific crisis scenario and the consequence if it occurs.
A fast food restaurant could have a shooting in its parking lot or cause people to get sick from eating tainted or spoiled food. Both events would be serious, but not equally likely. It would be impractical for a fast food restaurant to employ an armed guard, but it would be prudent to install state-of-the-art food security systems because the odds and consequences of making customers sick are greater.
Back when, oddsmakers relied on ‘horse sense’ and ‘gut feelings’ to set odds. Now oddsmakers rely on computers and statistics. Setting accurate odds is critical for oddsmakers to manage risk and make money.
Once upon time, organizational leaders may have relied on horse sense and gut feelings to assess risk and make money. Now they have access to risk insurance experts, marketing metrics and crisis counselors who can help identify risk, opportunity and smart management actions.
Oddsmakers and organizations have notable differences. While oddsmakers have outsourced their statistical analysis, organizational leaders would be wise to in-source their risk assessment efforts. Oddsmakers spread their risk. Organizations bear the full weight of their risks.
Oddsmakers can make up for an upset loss in the Super Bowl with “wins” from other bets. Organizations immersed in a serious crisis can’t shift the cost or blame for the crisis somewhere else.
Getting the odds wrong is a business problem for oddsmakers. Getting the odds wrong in a crisis can be a business and reputational disaster for organizations.
Whether or not you are a betting man or woman, be like oddsmakers and know your spread. For most organizations that means knowing what crisis scenarios they could face and how they can prepare in advance to reduce their odds of experiencing a crisis or dealing with a crisis if it occurs.
Gary Conkling is principal and co-founder of CFM Strategic Communications, and he leads the firm's PR practice, specializing in crisis communications. He is a former journalist, who later worked on Capitol Hill and represented a major Oregon company. But most importantly, he’s a die-hard Ducks fan. You can reach Gary at email@example.com and you can follow him on Twitter at @GaryConkling.