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The H1N1 Effect: When, faced with perceived health risks, consumers make purchasing decisions about a given product based on fear, conjecture and media hype versus the facts concerning the actual risk.

In the first two years after the term "Swine Flu" was used to describe the illness that mutated and jumped to humans from pigs, the U.S. Pork Industry suffered losses estimated to be in excess of $5 billion.  This despite the reality that what came to be known more frequently as H1N1 - partially as a result of the outcries from farmers - cannot be contracted from eating pork.  And those loss figures do not, of course, include either the collateral damage caused to meat retailers and restaurants or comparable figures from other regions of the world.

Global reaction to the threat of BSE - most of us know it as "Mad Cow Disease" - was far in excess to the actual threat to humans.

Have you heard anyone say, during the past year or two, "I'll never buy anything made in China again" or the more frequent variation "I'll never eat food containing ingredients from China again - or give it to my pets."

Any number of U.S. food recalls, even after government announcements made it clear that the problems impacted or originated from a limited geographic area, prompted much more widespread consumer avoidance until the fear subsided - usually non-coincidental with the media and blogosphere finding something else to panic about.

I'm not a psychologist and hence will not try to explain why people react as they have.  As a crisis management professional, I need only to know that they have, and will again, demonstrate what I call "The H1N1 Effect,", which occurs when consumers make fear-based irrational decisions about a perceived health risk that wreak extensive financial damage, threaten organizational and/or brand reputations, and cause severe business interruptions.

Knowing this, it is incumbent on crisis managers, particularly those involved with products which could potentially impact consumer health and/or safety, to be prepared when their stakeholders could be the next victim of "The H1N1 Effect."  Some elements of preparedness would include:

• Closely tracking developments related to the health/safety of your products, using expert resources to help you spot early warning signs of risk.
  
  
• "What if..." brainstorming involving internal parties and external experts, the goal being to think through the process you would have to follow to respond should a worst-case scenario occur.
  
  
• Creating educational materials about your products and/or industry and its health/safety practices that could be widely and rapidly disseminated in response to the demand that would no doubt be created by an "H1N1 Effect" event.
  
  
• Ensuring that your organization/industry has a very strong online presence that can be used in the near-term to build a cushion of goodwill and during a crisis for rapid communication.
   
• Creating business continuity and crisis communications plans, with the latter including internal and external elements, both B2B and direct-to-consumer.
   
• Ensuring that appropriate personnel are trained to use those plans, to include media training and simulation exercises.

A lesson learned the hard way by some industries is that you shouldn't rely on the U.S. government or even your own trade organizations to protect your reputation and bottom line when the stuff hits the fan.  For weeks after BSE was finally detected in a U.S.-based cow, I couldn't find a single restaurant server, or grocery store employee, who could tell me with certainty that the beef I bought at their locations was safe to eat.  The government's announcements were all in consumer-unfriendly jargon, and the industry associations were completely unprepared despite the known threat.  If they had been prepared to support their distribution chain with messaging that would minimize loss of sales, I would have been given a reassuring handout right on the scene.

The next "H1N1 Effect" is coming.  Are you prepared?

A massive environmental crisis in the Timor Sea off northwestern Australia provides some telling lessons in branding identification in a crisis.

On 21 August 2009 an oil rig began leaking oil and gas, which started spreading to the Australian coast and also towards fishing grounds off nearby Indonesia.

Repeated efforts to plug the leak failed and the entire rig eventually burst into flames, providing dramatic television pictures shown around the world.

After more than ten weeks (3 November) the leak was finally plugged and the fire extinguished, but not before thousands of  tons of oil escaped into the sea, probably Australia's worst ever oil spill.

The drilling rig operators claimed oil was leaking at up to 400 barrels a day, while the Australian Federal Government estimated it was in fact up to 2,000 barrels a day.

A major government inquiry will eventually answer some of the technical and environmental questions. But there is an immediate lesson for crisis managers about branding in a crisis.

Throughout weeks of intense news media coverage, reporters were uncertain what to call the leaking rig. Some initial news referred to it as the West Atlas Rig, or the Timor Sea Rig, and later the Montara Well. But the name of the oil company was never in the headlines.

The operator is a little known company called PTTEP Australasia, and the company name was always correctly used to identify the operator and the company spokesman. However most Australian journalists and the public had never heard of the company, and even fewer knew, even after the crisis, that it is a wholly owned subsidiary of PTTEP of Thailand.

From the perspective of crisis communication, how differently would the media coverage have been if the rig had been operated by BP or Shell or Chevron?

The company name would certainly have been in every headline and, as the environmental damage ballooned, it is highly likely that there would have been protests in the street and consumer backlash.  In the event, Australian environmental groups and Green politicians were extremely vocal and extremely active, but without a recognised local target their efforts were dispersed and muted.

Contrast this with the Brent Spar crisis of 1995 which led to a boycott of Shell petrol stations in Europe and even fire bombing of some facilities. Although the offshore facility itself did not carry the Shell name, the operator was a high profile and very visible company. And of course in that case the alleged environmental danger never actually took place. 

In the wake of the notorious Exxon Valdez oil spill of 1989 one lesson learned was that oil companies around the world quickly removed their identity from the names of oil tankers.  Today vessel names such as Shell Enterprise or BP explorer are a thing of the past. In fact Exxon Valdez herself was renamed Sea River Mediterranean.   

One important lesson for crisis managers is that the news media demand a "shorthand" way of identifying any story, and a company brand is a very convenient option, especially in a crisis. Witness the "BP Texas Fire", the "Tylenol disaster", the "Intel Pentium chip" failure, and the "Firestone tyre" scandal. Each of these, and many more, have entered into the public conscience and the brand will always be associated with the crisis.

Yet, even after ten weeks of daily headlines, most Australians still would not know who owned the leaking oil rig so close to their shores. This is not to suggest that companies in high risk operations should deliberately disguise their identify.  But it certainly should be remembered when over-enthusiastic corporate managers get a yearning to "build the brand".

Tony Jaques is Principal of Issue Outcomes Pty Ltd, a Melbourne based consultancy operating in then field of issue and crisis management in Australia and across Asia-Pacific.

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GUEST AUTHORS are very welcome to submit material for "Crisis Manager." There is no fee paid, but most guest authors have reported receiving business inquiries as a result of appearing in this publication. Case histories, experience-based lessons, commentary on current news events and editorial opinion are all eligible for consideration. Submission is not a guarantee of acceptance.

ABOUT THE EDITOR & PUBLISHER

Jonathan Bernstein is president of Bernstein Crisis Management, Inc., a national crisis management public relations agency providing 24/7 access to crisis response professionals. The agency engages in the full spectrum of crisis management services: crisis prevention, response, planning & training. He has been in the public relations field since 1982, following five-year stints in both military intelligence and investigative reporting. Write to [email protected].