Lorraine Ruff, President, Milestones the critical thinking company
(formerly Charlton Ruff Communications, acquired by Milestones - the critical thinking company in 1997)

Table of contents

• Caught in the middle of a major transition in communications

• You must think and perform strategically

• CEO as communicator-in-chief of your own corporation

• Four tactics that work

• A good risk manager is a good communicator

I should tell you that I considered calling my speech “What Is Communications Coming To?” because I believe we are all, myself included, caught in the middle of a major transition in communications. It is an evolution of the age of television where news shows have learned that plot sells. As a result, when we see something that resembles entertainment, we respond as if it is entertainment. And newspapers have followed suit. Story has eroded and corrupted the information content of much that we see and read.

The most egregious example I can think of in the United States is the reporting a year or two ago on our savings and loan debacle. Articles on America’s worst financial crisis in the 20th century appeared on page three or four or eight. The front pages were reserved for the latest “news,” and I use the word guardedly, about the Nancy and Tonya figure skating fiasco. Although I am less familiar with the European press, I know that similar stories are usurping the front page every where, from Charles and Diana in England, to King Juan Carlos’s recent problems with the press.

Do you know who this is? Why, I ask you, should people around the world recognize Kato Kaelin? How can a hanger-on rise from obscurity to worldwide recognition simply by testifying in a murder trial? What are we coming to when magazines are running articles on the prosecuting attorney’s household budget?

Moving to the business world, the state of communications is equally unnerving to us as individuals. It used to be communications was the province of the public relations and advertising departments. Not any more. Now everyone’s telling you you’re a communicator. Did you hire on to be a communicator? Of course not. You hired on as a risk manager, someone comfortable with numbers, with good sound analysis, with insurance, for heaven’s sake. Now you’re supposed to be a what? A communicator. What is a communicator? What does this mean for a risk manager? If a horrible accident happens, God forbid, are you the one who gets to defend your corporation to the press...the people looking to turn your misfortune into a scandalous media circus? Possibly. Or does being a communicator mean you’re the lucky person who gets to explain to your CEO why the maximum foreseeable loss at a key facility has just been raised to US$3 billion, half of which is uninsurable? Yes, that’s you. Or is being a communicator mean knowing all of the factory employees on a safety committee?

Again, yes.

Communications And The Changing Role Of Risk Managers

I realize that if many of you had to give my speech you’d call it “I Never Wanted to Be A Communicator.” But, like it or not, you are. The role of the risk manager is changing in many ways; this is one of them. And my role here is to talk about communications in a way that is relevant to risk managers, not to journalists, not to PR or communications specialists. I want to make the whole issue of communications and being a communicator easier for you.

Let’s talk for a minute about how your role is changing.

• For starters, there have been a lot of gradual functional changes over the last twenty years or so from the old “guy who buys insurance” image to someone with the financial savvy to deal with a whole host of risk retention and transfer options.
• Along with the need for greater financial sophistication, today’s risk manager needs a special kind of mental agility to appreciate, identify and manage an increasingly wider and more complex range of exposures.
• This complexity, coupled with escalating values that bring tears to one’s eyes, gives risk and its management a strategic importance that, for the most part, they never had before. So now you’re a strategic player as well.

And all of this is happening at a time when many corporations, of necessity, are asking the risk management department, as a cost center, to justify its existence. What do you do about this? Can communications help you deal with your evolving functional responsibilities? Yes. In fact, I don’t believe you can fulfill those responsibilities if you’re not a good communicator. But where do you begin?

Most of the literature I have seen about communications in risk management focuses on tactics, specific things you can do, most notably publishing a risk management manual, frequent bulletins, and a risk management annual report. These are solid risk communications vehicles, and I’ll talk more about them later. But I believe it is important to first discuss the strategic foundation on which they must be built. Without such a foundation, even proven techniques can inadvertently prove damaging to shareholder value in this current environment. It’s worse than putting the cart before the horse; it’s trying to pull the cart without a horse.

You Must Think And Function Strategically.

I can’t emphasize this enough. Today, I’d like to review six aspects or tenets of good strategy, some of which I’m sure you’ve heard before. But I want to discuss them from the perspective of how they will shape your approach to communications.

1. Get in line with your company’s strategic focus. Make it your business to know not just the broad brush strokes of your corporation’s strategy, but the details as well—how it gets interpreted at different levels of the organization and for different functional areas. Accordingly, any information you present to any audience should be strategically aligned with its major concerns and directions.

2. Know your own strategic focus. What are your goals or objectives? Are they in line with corporate strategy? With the strategies of other departments? All of your planning must devolve from these. For instance, if you’re a pharmaceutical manufacturer, you must be aware of your company’s business, financial and clinical goals.

It becomes quickly apparent that there are different possible answers, depending on your situation. Someone who works in an environment where the value of risk management is not disputed, who has a receptive audience, whether of senior executives or plant managers, can take a fairly high road. Goals might be to deploy risk management information as a strategic weapon for the corporation and to provide more strategically relevant information to specific departments. If, on the other hand, you’re fighting for your life, your primary objective must be to communicate the value risk management adds to the corporation.

These answers are not mutually exclusive. All risk managers must continually show how and where they add value. All risk managers should be thinking of the information they provide as a strategic weapon. But where you stand obviously affects how you see the situation. What is important is that you have a clear goal. You can’t reach your destination if you don’t know where you’re going.

3. Know your audience and speak their language. I know you’ve heard this before; it’s one of the basic tenets of good communication. Often in risk management, the definition of language gets translated as numbers or, perhaps more accurately, the need for quantitative evaluation persuade a CFO or CEO. This is an important recognition, as much of the solid information to support decisions must often be numerically or financially stated to make its impact.

But I would suggest that that’s not the only definition of speaking the language. In its fullest sense, it means getting inside your internal customers’ heads, seeing situations from their perspectives, identifying and speaking to their hot buttons, recognizing their sensitivities.

Let’s say you’ve experienced a lot of a specific type of accident in many locations, you may want to recommend an extensive training program. Who needs to be involved to make this happen? Initially, perhaps you need senior management sign off, then support from various levels of managers down to the site level. How many audiences do you have to talk to? What’s important to each of them that affects how you present your recommendation? Your top management is going to want to know the scope of the problem company-wide, how much these accidents are costing the corporation, how much your proposed training will cost and the ultimate savings. That may not be exactly right, but you get my point.

Now bring it down to the manager of a single plant in A, a small town. The corporation is thinking of merging his operation with a similar one in Town B. Your accident profile isn’t exactly at the top of his list. But he’s got the message that his superiors care, so he’s going to listen to you. But does this guy care about the information your CFO wanted to see? No. You have to prove to him he has a problem, that it’s affecting his plant’s performance and or costs. He might also be interested in knowing that the plant in Town B has a much better record and has been working to improve it.

If you are working from the bottom up in trying to get approval or agreement to something, there is a corollary to speak their language that sometimes gets overlooked. And that is to speak to someone’s boss’s language. If that person wants additional information, or information stated in another way, make sure you have it. This goes for your own boss, by the way. How effective a communicator is he? How do you need to reshape your message to be heard by the next level of authority when your boss presents it?

In terms of external audiences, namely the public at large, these audiences vary tremendously, but I do have one word of advice that I think is probably valid anywhere in the world. I believe, as a society, we don’t process scientific and technological information very well; we’re not that smart in this area, and we see things in absolutes. This can create a real dissonance between a knowledgeable risk manager saying, as company spokesperson, that the probability of the chemicals you use combusting is so low that it’s not an issue, and the mother of five children who lives next door and wants to hear only there is zero possibility. That simply may not be possible, but to speak in technical terms, accurate as they may be, is to run a serious risk of being perceived as arrogant and unfeeling. I say this because I have worked extensively with companies in scientific and biotech arenas and have seen it happen time and again. It may not be the lady next door, it may be the chief of the fire department who truly doesn’t understand what you are saying, but who certainly can set you up on the evening news. I’m not saying that you lie to or patronize the public, simply that you remember that much of the world is, to a very real degree, technologically illiterate.

4. Build relationships. Regardless of your specific situation or goals, there is another strategic consideration involved in how you communicate within your organization and that is your relationship with other departments. This has several ramifications:

My guess is your strongest relationships have been with the operating departments that have been the focus of most of your recommendations for physical protection, for training, for safety committees and disaster planning. Perhaps you’ve already noticed a change in these relationships as you have been increasingly thrust into a position of having to convince them to implement one recommendation or another. This will continue. In the future you will be providing more information, not less, than will affect their operations and decisions.

This brings up an interesting point, the movement towards team management and matrix organizations. More and more, you (and other managers) will be asked to function as a member of a team, or of many teams perhaps. Let me give you an example, one which, by the way can do great deal to enhance the visibility and contributions of risk management.

Every corporation should have a crisis management group, or CMG, to think through and orchestrate how the company will respond in the event of a crisis. The CMG should include your CEO, both internal and external legal counsel, your public relations director and agency, including your community relations specialist if you have one, and, of course you, the risk manager. The CMG is based on the belief that the best defense against a crisis you can’t anticipate is to have gone through a strategic planning exercise to determine the best ways to prepare for and respond to it. For instance, you may well decide to establish what we call early distant warning listening posts—people whose responsibilities include being alert to signs of a problem, such as unhappy or disgruntled employees.

The CMG can provide an invaluable service to your organization, both in preparing for an emergency and in a post-crisis evaluation of how the company performed. It is also an excellent way for you to build relationships on a very strategic plane.

In the future, they say, who we work with will be just as important as who we work for. In fact, I know of a large worldwide company that is restructuring its entire employee incentive program so that employees in support areas are rewarded not on their own department’s performance, but on the success or failure of the business lines they are supporting. Think about it.

The point is that interaction with other departments is becoming more important. The better your relationship, based, let’s face it, on what you can do for them and how easy or difficult it is to work with you, the more you will be listened to, respected, and sought out for advice. If you don’t have strong relationships in some areas, get to work.

One such area may well be your corporate communications or public relations department. If join hands with only one other department, public relations is a good choice. You need that relationship as a part of good crisis planning, as I indicated. Lest you think I speak from a somewhat biased perspective, imagine a disaster at one of your facilities. Toxic substances in the air or local water supply. Workers dead and injured. Rumors that normal safety procedures had been dropped in order to meet a rush production requirement. Who do you hope is on the scene immediately? Right, your public relations officer. I would hope that you already have a good working relationship with your PR people. The time to plan how to react in a crisis is not after it occurs.

5. Leverage technology. I know, there's always some aspect of technology that’s new and intimidating. Just as we finally became comfortable with personal computers, they threw faxes and modems at us. Now, you have the ability to leave a voice or e-mail message on thousands of phones or computers in seconds. I’m not suggesting you put a risk management tip of the day on every monitor in your organization, but I am suggesting strongly that you take advantage of the speed and ease of reaching wide audiences, even with customized messages, electronically. Some examples:

• A risk management bulletin board

• An electronic risk manual...wouldn’t that be easier for you to maintain as well as for others to access?

• Automatic transmission of reports via information systems

• Video conferencing when important issues are on the table and a face-to-face meeting with all concerned isn’t viable.

Technology is can also be your ally in receiving information as well. Through the Internet and World Wide Web, you can obtain an incredible amount of surprisingly specific information, as well as maintain easy contact with many other professionals.

6. Lastly, think of communication as a competitive weapon, for your department and for your entire corporation. What I say to you, as risk managers, I could say to other functional heads or to your corporate leaders. When a company fully recognizes the power of communications, it can be a way of adding value to the corporation. Let me give you an example.

It’s hard to forget the truly catastrophic disasters, the ones that become known worldwide simply by a single name, like Bhopal or Perrier. Two other such disasters happened at about the same time and, although very different in nature, both received a great deal of press. The communication strategies of the two companies involved were the complete opposite of one another and achieved dramatically different results. I’m talking about Exxon Valdez and Johnson & Johnson’s cyanide-contaminated Tylenol.

In the first instance, the basic policy was one of “no comment.” Arrogant silence I might say, perhaps inspired by a financial strength that enabled Exxon to weather what very, very few companies could survive. Exxon’s president never said the A word, apologize in any way, shape or form. He refused initially to go to Alaska, making an appearance more than a week after the event. He instead sent an arrogant spokesperson in his place. Although Exxon has since spent billions in reparations and environmental clean-up, there is a permanent blot on its reputation. And, sadly, they haven’t learned anything from this. They only spent money after they figured out how to write off the expense so it wouldn’t affect shareholder value.

By comparison, when just three bottles of Tylenol were contaminated with cyanide, panic gripped people everywhere. Johnson & Johnson CEO James Burke immediately went public with a message that reflected the company’s mission statement: “Our first responsibility is to our customers, to the mothers and children...” That’s just part of it, but you can almost predict how J&J would respond to the crisis. He directed his vice presidents to recall all bottles and, in what I believe was a stroke of genius, invited all consumers to return bottles for a voucher. “Don’t risk it,” he said, “Take the voucher so that, when this crisis is over, we can give you a product we both know is safe.”

At all times, he was willing to speak with the press and to speak openly, sharing concerns and issues, not playing a political game of damage control at all costs. In the end, this communication strategy proved to be the best damage control. Tylenol not only regained its former share of market, it increased its share. The public and Wall Street found it easy to restore its faith in a company that dealt honestly with them.

Today, Johnson & Johnson and Jim Burke have secure places as models of superb crisis management and communications. They are known as the originators of a worldwide movement to tamper-proof packaging. This case is part of every MBA program in world demonstrating both good management and responsible behavior. Contrast the residual value of Exxon Valdez.

Now these are very high-profile incidents involving communication with an external audience. But they illustrate the power of communication, especially when the CEO sees himself as the company’s chief communicator, as Jim Burke did. It is important that you know, however, that this is not a position in which all CEOs are very comfortable. It is very easy for management to distance itself from a dramatic and very public mess. That’s another reason why a crisis management group is such a good idea; it involves your CEO from the very beginning.

If you can help to cultivate the idea of the CEO as communicator-in-chief of your own corporation, you can also open another door for risk management. Much of what we have heard at this symposium has focused on the valuable information you can provide throughout your organizations. Providing critical information positions you as a communicator and as a strategic player. Your value to the company can, in a very real way, be measured by this.

To find examples of good internal risk management communication, one need not look far. In fact, show me a man or woman who is considered to a good risk manager, respected in his own organization and by his peers, and I will show you a good communicator, someone who follows these strategic principles. Their tactics may vary, depending on their particular situations and needs, but you will find a great similarity in the strategic foundations. But what about tactics?

Four Tactics That Work

The first tactic I’d like to suggest is one with which you may be unfamiliar, but one that can help you establish risk management as a strategic management function in the organization. This is the risk management communications audit.

As with any audit, it involves speaking with a variety of people at all levels and from all departments in your organization can be a superb way to build both visibility and rapport, while at the same time generating information about your internal customers and the best methods of reaching them. You might even want to enlist the help of your PR department; they should be familiar with communications audits and your audit is a good way to build a working relationship with them.

A communications audit focuses specifically on issues related to the transmittal of information, both within the company and to external audiences. Do you remember learning in geometry that the shortest distance two points is a straight line? In reality, many people and forces may be acting, often inadvertently, to filter your message. Your communications audit can help you identify those filters.

Using focus groups (no managers with their employees, please) and some one-on-one interviews, you can establish a baseline for your communications program by determining what employees believe about your current communications.

• Are the lines open?

• Is the information you receive relevant?

• Is it in the format you need?

• What forms of communication from risk management—memo’s, face-to-face meetings, e-mail messages, risk bulletins, whatever—do they like best and value most?

• Does the communications environment in the company affect their (or your) ability to get the job done?

• How could things be better?

Then, if you are feeling brave, call some of your external customers with whom you have good and honest relationships. These could include your insurer or broker, or peers you know well. Find out how they perceive your risk management function, and compare what they say with what your internal audiences said. Are there any dissonances?

A few years ago I performed a communications audit for the international consulting group, Arthur D. Little. At the time, the company was in some turmoil. The president was new, the company was faced with the possibility of a leveraged buy-out, and there was little sense of unity among ADL’s offices around the world. The goal of our audit was to find out just how employees saw their company and how they thought it should be represented to the world visually.

We did find the sense of unrest we expected, but we also got a few surprises:

• The old logo struck people as irrelevant or stodgy.

• They didn’t know the delta represented change or that it incorporated the founder’s initials, ADL. Most couldn’t even replicate it.

• Employees described the company’s strengths as intelligence and innovative thinking, but described the appearance of the logo and written materials as conservative, traditional, safe. “We’re a lot smarter than we look,” they said.

In the end, we ended up with an entirely new typographic logo—we found few people could identify corporate marks by themselves—and new standards for the appearance of all printed materials worldwide. The new materials were received well and with a sense of ownership. More important, by surfacing attitudes and issues that had been getting in our way, we were able to create a communications system that visually transmitted the message we wanted and let our employees concentrate on business.

Getting back to your risk management communications audit, although you are focused on communication, I guarantee you will also learn a lot about how risk management as an issue and as a department are perceived within your organization. Communication audits can be very powerful avenues of communication in and of themselves, as well as helping to make your other communications tactics more effective.

There are, to be honest, all sorts of techniques you can use to get your message across. How well they work for you depends on how well they meet your strategic agenda. I’m going to about three more tactics, but quite briefly, as there is a lot of information available on these. These tactics are:

• A risk management manual

• Risk management bulletins

• A risk management annual report

In these, as in any printed communications you issue, there are some basic rules that are worth repeating:

• Make it easy to read: use big type, short paragraphs and bullets that the eye can follow.

• Avoid jargon or high-tech talk.

• Keep your business writing brief and to the point. Save your well-constructed but lengthy paragraphs for the novel you plan to write.

• Make information available online.

• Communicate often, at all levels of the organization. Never take for granted that once is enough. Your communications objective is to keep awareness of your department, your programs and your results visible.

• Create a clear, easily identified image or look for risk management within the organization. This should not be a logo; that could compete with your corporate logo, but just a look or image, perhaps a way of printing the department name on all reports, memos, etc. leaving the department.

The risk management manual explains your function and concerns, i.e., the company’s exposures and provides guidelines for dealing with those concerns. It should include your risk management policy, key issues, personnel, locations, policy register, insurance costs and policy summaries.

The problem is in doing all of this, it will probably put anyone who reads it to sleep. It is not the biggest gun in your communications holster. But here are a few tips for making it more readable:

• Put a simple policy statement up front that indicates corporate management support, then get on with it and focus on procedures.

• Make it easy to use; loose-leaf, an index and glossary.

• Update it frequently so it is regarded as a good source of current, pertinent information.

Risk management bulletins serve the dual purpose of both being informative and creating visibility for your department. Your selection of topics is a good way to demonstrate your understanding of the issues that concern others in the corporation and to introduce ideas and considerations they may not have had.

The risk management annual report is another communication vehicle you hear quite a bit about these days. They are a good idea, for here is the place where tooting one’s own horn and drawing attention to one’s accomplishments is not only legal, it’s expected. Take advantage of the opportunity; tell them what you did and how it benefited the company.

Annual reports are incredibly flexible vehicles you can use for different purposes:

• To focus attention on specific issues;

• Clarify how your goals and how they link to corporate success, set future direction

• Present a self-analysis

Managing By Communication

• Has clear goals;

• Provides information, services and proposals in line with corporate strategy;

• Understands his or her different audiences and speaks to each in language meaningful to them;

• Has built relationships throughout the organization that engender respect for risk management’s perspective, information and services;

• Values and uses communication as a competitive advantage; and

• Leverages available technology.

The beautiful thing is that following this strategic approach makes you a good communicator, even if you die a thousand deaths speaking from a podium, even if you don’t have the gift of gab, as we say in English, even if writing is not your favorite activity. You may not have hired on to be a communicator, but you can do the job and do it well. It’s important.

As I looked at some of the presentations made by risk managers at previous Arkwright symposia, I was struck by what Tony Rodolakis of Holiday Inn said in Brighton, England, two years ago. “I believe communication is critical to doing an effective job of risk management. We could have the same organization, the same mission and strategy and, without a well thought out communications program, we couldn’t get the job done nearly as well.” There’s nothing I can add to that.