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Be Ready for a Crisis

By Tom de Kay

Crises come to even the best run organizations, and every leader — whether in management or on the board — needs to know how to react.

At the recent Vanguard Forum for General Counsels, we asked participants what they’d do in the fictional case of a beauty company facing a crisis. The company, they learned, had used a toxic chemical in one of its products, and then buried an internal memo laying out the dangers — a memo that had just surfaced.

In the highlights video below, Forum participants have a lot to say about what should happen next.

The first steps are critical, says David Sarratt, a partner at Debevoise and Plimpton, because this is the kind of situation that “becomes adversarial really, really quickly.”

For one thing, the board might swiftly start to wonder if it can trust management, adds Bob Bailey, the GC of Ciox Health.

From a management perspective, it's important to make sure the board is aware of what's happening — what the company's doing, the team that's been put in place to deal with this. [The message should be] structured in a way that highlights responsibility, urgency, key themes, so that the board has confidence right from the get go that the management team has got this.

— Bob Bailey, General Counsel

Ciox Health

Then comes the investigation, which may need to start with something as basic as “whether this is factual or not,” says David. In this case, “Is this chemical in our product? And if it is, who knew about it and how high did it go?”

Not that you want to throw anybody under the bus, adds John LaRocca, but in a situation like this one,

You want to make sure that if there's an impropriety that was undertaken, it was not blessed by the organization as a whole, as a practice. To the extent you can run that down, it’s key to addressing this.

— John LaRocca, General Counsel

Aerie Pharmaceuticals

Check out the video for more of the group’s insights on mobilizing in a crisis.


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