Top Business Crises: White-Collar Crime, Workplace Violence Most Common

June 4, 2009

Despite a seemingly endless flow of negative economic news in the second half of the year, overall business crises remained at a relatively low level in 2008 and numbered 10,386, up only slightly from 10,010 in 2007, according to a report from the Institute for Crisis Management.

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The ICM Crisis Report (pdf), which chronicled news coverage of business crises in 2008, found that the banking, food, and security/investment industries were the most crisis-prone industries for the year, while Madoff Investments, Boeing and Societe Generale N.A. were the most crisis-prone businesses.

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As in previous years, white-collar crime and workplace violence made up the largest percentage of crisis news:

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There were also significant increases in negative coverage in eight of 16 broad crisis categories that the ICM tracks: Workplace violence was up by 18%, while defects and recalls, business financial losses, hostile takeovers, workplace accidents and deaths, and environmental incidents were up between 21% and 48% each. The other eight crisis categories hovered around the same levels as 2007, ICM said.

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Actual Crises Relatively Low

While the percentage of increased crises in several categories seems large, ICM noted that the actual number of crisis events in each of these categories was still relatively low.

For example, defects and recalls, including automobiles, toys, pet food, baby food and infant formula were up 44% compared with 2007, but accounted for just 410 major events that drew the attention of editors in the most recent year for which data is available.

Internet Plays Larger Role in Crises

ICM said the increase in negative news coverage is likely related to a number of factors:

  • The ease with which news travels on the internet and social media spread the news of crises more quickly than before these media existed.
  • An election year that emphasized “bad news” as part of campaign rhetoric.
  • The crashing economy (i.e. Madoff, GM, mortgage crisis, etc.)
  • Terrible natural disasters around the world
  • A significant increase in financial damages, hostile takeovers, business failures, workplace violence, casualty accidents in the workplace and an increase in the number of environmental issues that drew public attention.

Crisis Highlights

Though the first hint of trouble in the sub-prime market began in late 2006, and a significant amount of bad news began to make headlines in Q3 and Q4 of 2007, the multi-faceted economic crisis spread to almost every corner of the world in 2008.

Other significant crises:

  • CEOs were bailing or getting the boot in record numbers.
  • Food poisoning incidents – including those related to beef, tomatoes, jalapenos, pancake mix, cereal and bottled water, along with melamine tainted eggs, milk and infant formula – rose.
  • Class-action lawsuits totaled at least 525 in the US.
  • Hospitals made negative news because of shoddy care.
  • FaceBook, MySpace and Twitter activity contributed to business crises, including those involving Motrin.

About the report: ICM monitors 1,500 business print publications around the world, tracking 16 broad crisis categories. The report has been published annually since 1990. ICM defines a business crisis as any problem or disruption that triggers negative stakeholder reactions that could impact the organization’s financial strength and ability to do what it does.

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