If you buy shares in a large company, at some point there will be a crisis – usually from external influences but something which is not the company’s “bread and butter” issues. To the company it is important, but it does not make them money, however to the customers it could and sometimes does erode trust.

Companies spend great deal of time and energy trying to ensure they have the trust of the customers to do the right thing and constantly improve. Understanding no system is perfect, but customers do what to see how the company reacts. If a company is under crisis, according to Melanie Paradis of McMillian Vantage Policy Group, the company should:

Step 1 – acknowledge the crisis. The three things which one tries to do is explain what happen? what are you doing about it? and how do you feel?

Very often the difference between a well managed crisis and a corporate disaster is executives overlooking the importance of empathy in maintaining trust. ( a classic case was when there was a oil spill in the Gulf of Mexico after a few weeks, the President said he want to get back to his old life and go sailing) The crisis took 100 days, everyone who used the Gulf of Mexico wanted to go back to their old lives when you could use the Gulf of Mexico).

How you feel, makes you relatable. Your willingness to express yourself vulnerable and authentically will strike a cord with your audience, just make sure it is consistent with your responses.

Step 2 – 72 hours after the crisis, which has hopefully found a solution, you must redouble your efforts to build, maintain and restore trust. It will not happen overnight.

Step 3 – most people have an idea about a fire drill. If there was a fire in your house what would you do? Ensure you have reasonable ideas for the things which would keep you up at night. What are the worst-case scenarios? Think about trust and the answers you will be giving both to shareholders and the press.

Linking to dividend paying stocks, one of the reasons why these companies are attractive is they have been through many crisis situation and people continue to use their goods and services. In your research see how the company has reacted to crisis and you will know whether in the future crisis to buy more shares when the prices are down.

There are more questions than answers, till the next time – to raising questions.