Crises hit firms harder in digital age

Crises hit firms harder in digital age

It's no surprise that news travels fast in this day and age, but just how fast it travels still catches many companies off guard.

In 28 per cent of crisis incidents, news spreads across the border, to international media, within an hour, and over two thirds spread within 24 hours, according to a global study conducted by international law firm Freshfields Bruckhaus Deringer.

"Today, largely as a result of social media, the window to buy more time has virtually disappeared," said Mr Chris Pugh, partner, crisis management, Freshfields. "The moment a negative story breaks, it has the potential of spreading like wildfire to the other side of the world."

Compare that to the average amount of time it takes most companies to respond to these crises - 21 hours - and it's obvious then that there is a problem.

In most of the cases covered by Freshfields, the company suffered a major blow - affecting its value, revenue and long-term reputation - from the inability to control reputational crises in the early stages.

Fifty-eight per cent experienced a significant disruption to their operations, while 53 per cent suffered a loss of revenue, and 27 per cent, a drop in share price.

On top of that, news of crises tends to stay in the media spotlight for months, rather than days or weeks - 53 per cent of cases were still in the public eye a month after the story first broke.

This clearly presents new challenges for companies today.

Mr Stephen Revell, a partner at Freshfields' Singapore office, told The Business Times that the Singapore business community is definitely adjusting to the new paradigm.

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