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Crisis and reputation management


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PM2 presentation from the 2013 NCVO / BWB Trustee Conference.
Tess Woodcraft (chair), Communications Consultant, coaching comms
and Vice Chair, Rationalist Association
Siobhan Sheridan, Director of Human Resources, NSPCC
Judith Miller, Accountant, Sayer Vincent Accountant
Rosamund McCarthy, Partner, Bates Wells Braithwaite

Published in: Government & Nonprofit
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Crisis and reputation management

  1. 1. PM2: Crisis and reputation management Tess Woodcraft, Chair: Communications consultant, coaching comms and Vice Chair, Rationalist Association Siobhan Sheridan, Director of Human Resources, NSPCC Judith Miller, Accountant, Sayer Vincent Accountant Rosamund McCarthy, Partner, Bates Wells Braithwaite
  2. 2. PM2: Crisis and Reputation Management Presentation by Judith Miller, Partner, Sayer Vincent, Auditors and Advisors
  3. 3. Fraud • Context – size and types • How to • prevent it • detect it • respond • Guidance
  4. 4. Context - size • £147m estimated total cost • 9% respondents victims • 70% external, 30% internal • 47% payment/banking fraud (Source: Annual Fraud Indicator 2013)
  5. 5. Context • The sector is attractive • Practice is evolving • Internal or external • Role of the trustee
  6. 6. Examples • Misuse of the charity’s bank account • Fraudulent card transaction • Stealing or ‘skimming off’ money from cash collections • Fake fundraising events and requests for donations • Thefts from charity shops • Fake invoices • Charities set up for improper purposes • Fraudulently obtain grants • Fake letters - suppliers
  7. 7. How to prevent it • Assess the risk • Create the right culture • Develop proportionate policies, systems and controls
  8. 8. How to prevent it • Anti-fraud policy • Balanced framework of controls • Review approach regularly
  9. 9. How to prevent it – framework of controls Preventative Detective Objectives Direct controls Planning processes Monitoring Accountability Employee welfare and management Training, continuous learning & competency framework Independent review
  10. 10. How to detect it • Robust controls • Whistleblowing policy • Warning signs • In numbers • In behaviours
  11. 11. How to spot it • Unusual or unexplained items in accounting records & reconciliations • Missing documents or account books • High numbers of cancelled cheques • Common names regularly appearing as payees • Duplicated payments/ cheques • Payments for ‘round’ numbers to unknown recipients. • Suppliers submitting electronic invoices in non-PDF formats that can be altered • Payments made to individuals/ companies with family or business connections to trustees • Reluctance by staff to accept assistance with finances • Staff trying to delay work reviews or audits
  12. 12. How to respond • Policies & plans • Anti-fraud policy • Whistleblowing policy • Fraud response plan
  13. 13. How to respond • Anti-fraud policy - What should it contain? • What fraud & theft mean to the charity • How the charity expects to deter fraud • How it will react to actual frauds • Key responsibilities of senior staff & trustees • Details of any whistleblowing plan • How to respond to allegations of fraud, as part of a Fraud Response Plan • How the charity assesses exposure to fraud risk
  14. 14. How to respond • Reporting to • The police • Charity Commission
  15. 15. Guidance • National Fraud Authority • Action Fraud • Fraud Advisory Panel • CFG “Charity Fraud” guide • Charities Internal Audit Network • Charity Commission – CC8, Compliance toolkit chapter 3 • Sayer Vincent “made simple” guides – Risk management • Contact • Judith Miller • • 0207 841 6360
  16. 16. PM2: Crisis and Reputation Management Presentation by Siobhan Sheridan, Director of Human Resources, NSPCC
  17. 17. Experiences • Financial services • Government – Defra – Department for Work and Pensions – Home Office • NSPCC - employee • Crisis at Christmas - volunteer • Build Africa - trustee
  18. 18. Keeping it Simple Crisis about people and / or crisis involving people – Before a Crisis – During a Crisis – After a Crisis
  19. 19. Before a Crisis • Practice – seriously • Build big relationships • Understand yourself • Know your organisation • Context is king
  20. 20. During a Crisis – Don’t • Panic – easily said… • Forget the day job • Create further casualties • Close out those who could help
  21. 21. During a Crisis - Do • Walk in the corridors • Focus on containment • Communication is the crisis • Clarity re stakeholder management • Take decisions mindfully • Manage confidentiality • Maintain clear governance • People are watching your leadership
  22. 22. After a Crisis • Take time to review…with support • Remember there may still be casualties • Consider the impact on your organisational culture going forward • Reflect and learn
  23. 23. PM2: Crisis and Reputation Management Presentation by Rosamund McCarthy, Partner, Bates Wells Braithwaite
  24. 24. • Governance/internal administration – Board dispute e.g. about mission and vision – Board and wider membership in conflict – Board and Founding Body at loggerheads – Unauthorised benefits – Acting outside objects What can cause a crisis? • A triggering event - e.g. fraud, child protection, terrorism, fire, flood, storm damage, which will have governance implications
  25. 25. • Conduct of Board Members, CEO, Finance Director, Chair, Patron – whether act or omission relates to charity or another entity What can cause a crisis?
  26. 26. Duties of Trustees • Trustees must safeguard the good name, assets, property and work of the Charity • Trustees must asses and manage risk, which is of utmost importance in a crisis
  27. 27. Crisis is a threat… and an opportunity Aim to:- • Pull together and come out stronger Don’t:- • Use the crisis to settle old scores
  28. 28. Is the Charity’s constitution and are its policies fit for purpose for a crisis? • Short notice for urgent Board Meetings – virtual/by email • Quorum • Majority decisions out of a Board Meeting • Conflicts of interest • Trustee Code of Conduct? • Removal of Trustee and/or Members Crisis and Constitution
  29. 29. Investigation by Trustees (where necessary) • Board to approve process for the investigation • Trustees may be allocated different roles • Smaller group to oversee investigation • Some Trustees sealed off to hear Appeal? • Ultimately, responsibility for decision making still lies with the Board as a whole
  30. 30. Reporting to the Charity Commission • Which incidents should a charity report? • When should the report be made? • How to make a report
  31. 31. WHICH? Annual Return: A charity with an income over £25,000 must, as part of the Annual Return, sign a declaration that there are no serious incidents General rule: Charity Commission advise that you should make a report to the Charity Commission if you have reasonable grounds to suspect a serious incident “serious incident”: any incident that has resulted or could result in a significant loss of funds or a significant risk to the charity’s property, work, beneficiaries or reputation
  32. 32. Examples of “serious incidents” The Charity Commission suggests: • Fraud and/or Theft • Significant loss • Significant donation from an unverified donor • Known or suspected links to terrorism • A disqualified person acting as a trustee • Lack of safeguarding policy • Abuse or mistreatment • Criminal or regulatory investigation
  33. 33. Also… • Incident reported to the police and/or other statutory agency • Charity or individuals subject to an investigation by another agency • You believe it is a serious incident • Professional advisers advise you to report
  34. 34. Reports of serious incidents 2011 -2012 From Charities Back on Track 2011-2012
  35. 35. Concerns about charities identified or reported from other sources From Charities Back on Track 2011-2012
  36. 36. Please DO NOT Report…. • Disagreements with trustee decisions, policies or strategies • Complaint that the charity is delivering a poor service • Disputes in the way a contract is handled • If there is no serious risk to the charity, its assets or beneficiaries
  37. 37. WHEN? General Rule: The Charity Commission say as soon as possible* and, if very serious, immediately • Allowances will be made for the trustees gathering information and establishing facts • Declaration on the annual return *The legal obligation is to report a serious incident in the Annual Return.
  38. 38. HOW? Include the following information: • A summary of the circumstances and details • How it was discovered • If there’s a relevant policy/procedure and whether it was followed • What action has been taken to deal with the incident Send via email:
  39. 39. Multiple incidents The Charity Commission may accept periodic, rather than individual reports Different ways to report Use of Information The charity may forward the Charity Commission a copy of a report to another agency or an internal report to the board.
  40. 40. Signposting • Charity Commission – Reporting Serious Incidents: guidance for trustees • Charity Commission – Risk Framework • Charity Commission – Application for Charity Commission’s Risk Framework Rosamund McCarthy 0207 551 7819
  41. 41. PM2: Crisis and Reputation Management Presentation by Tess Woodcraft, Chair: Communications consultant, Chair of Rationalist Association
  42. 42. Media Management in a Crisis
  43. 43. Protecting your Reputation • Prevention – this is where Board plays major role • ‘Cure’
  44. 44. Prevention 1: Risk Assessment • Risks to your reputation: What is your reputation based on? – Brand values – What is your organisation’s credibility based on? – Key strengths: the 4 pillars of your reputation? – What do you uniquely contribute to your stakeholders? • Where are you most vulnerable? What might go wrong? • People • Places • Services • External factors • Buildings • Activities • Money
  45. 45. When a crisis strikes – what is a journalist looking for? • Reckless disregard of safety: Your failure to protect the public, eg. failure to put in place health and safety procedures • Lack of investment leading to accidents or poor performance • Negligence: eg. Your failure to check the suitability or training of your operatives (eg. child abuse checks) • Complacency: eg. failure to investigate or act on past allegations • Bad management: Your failure to recognise a problem as a problem • Arrogance (nb. Schadenfreude; the big machine against the little guy) • Bureaucracy and red tape leading to failure • Dishonesty • Sexual impropriety • Controversy • Hypocrisy
  46. 46. Prevention 2: Risk Management Systems to put in Place • Information: Ensure you have the information you need, and all key people are familiar with it. EG regulatory guidance, company procedures, risk analysis reports, signposts to other data. • Relationships: establish links external stakeholders and agencies involved in your highest risk areas (eg. police, fire service, local authority, health authority, regulator.) • Internal communication: Ensure staff understand the importance of quality and the dangers inherent in risks, and that they know how to act if a crisis occurs.
  47. 47. Prevention 3: Planning ahead • Appoint a Crisis Team • key people • clear roles • train them • Keep up-to-date names, contact numbers, etc. for the team • Procedures and information needed by crisis team • Process for initiating a meeting • Chart with flow of information (who should be kept in the loop?) • Up-to-date press lists • List of key stakeholders and agencies and contact details • List of basic questions they will need to answer – Where did it happen – When – Why – Who is involved – What are you doing about it?
  48. 48. If a Crisis Hits...... • Don’t make statement until you have facts • Call together crisis team • Get information • Decide ‘line’ • 1 spokesperson (until it becomes clear you have to move up a gear)
  49. 49. In a Crisis – put a CAP on it! • C Concern 50% • A Action taken 40% • P Perspective (your excuses) 10%