Risk Management and Communication where pundits reign

23 Sep

I spoke to a banker a few days back who was practically blaming Suze Orman for the panic about money market accounts. That’s not entirely fair, because Ms. Orman does distinguish between the the FDIC insured kind and the one that isn’t.

“If you own a money market through your bank, it is insured by the FDIC. But that’s not the same as a money market mutual fund…”

(from her web site as of 09/17)

Orman was the face of personal financial crisis management on cable, and these kind of panic-attack shows tend to get recycled a lot.

But how do those entrusted with Risk Management in the face of pundit-induced media panic, plan to communicate through a crisis? Fidelity is taking out full page ads in The New York Times. Like that would calm the nerves! How did the financial juggernauts plan for it, I wondered.

I came across a group calling itself the Counterparty Risk Management Policy Group (CRMPG), with members form Goldman Sachs, Merill Lynch, Morgan Stanley, B of A, Citigroup and others that had put together a plan to prevent ‘future financial shocks.’

The word Communication occurs about 25 times in the 176-page document, which

“recommends strengthening the relationship between intermediaries and counterparties in sales, marketing, and ongoing communications associated with high-risk complex financial instruments.”

and encourages

“prompt and coherent flow of risk-related information within and across business units and, as needed, the prompt escalation of quality information to top management.”

In other words get the message across fast and furious –top-down, bottom-up, even sideways.

But as we all know, the information is stuck in the silos. And what happens then? The media try to pry open these silos and feed us tid-bits of information from pundits. Prompting Talking Points like this from Washington Mutual whose stock had begun to slide:

“On the morning of September 16, personal finance personality Suze Orman made some incorrect comments on the Today Show about the role a bank’s stock price plays in the safety and soundness of a bank…”

To get back to the CRMPG document, the lesson for all organizations is to begin to bridge the gaps between sales, marketing and communication departments long before Suze Ormans of this world communicate on their  behalf.

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Posted by on September 23, 2008 in Social Media


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