Who Most Needs a Crisis Plan in 2018 - Part I: Financial Services
Why Financial Services Companies Should be Crisis Planning Right Now
Equifax and Wells Fargo both appeared before Congress in early October to be grilled by aggressive policy makers about the what, why and how of their respective crises.
In this series of blogs, we are looking at industries which have the most reasons to make crisis planning a priority for 2018.
The Equifax and Wells Fargo stories illustrate perfectly why financial services companies are near the top of the list.
Equifax has only recently revealed the full details of its gigantic data loss. There were so many mishaps in the company’s response that members of Congress had a long list of questions for Equifax’s (former) CEO.
The delay in reporting the loss internally, even to the company’s own board, was bad, but the many weeks it took to make public the threat to consumers was even worse.
The Wells Fargo saga has been going on for more than a year and just refuses to go away. This corporate trauma also led to a long tenured CEO losing his job, this time after the bank was found to be miss-selling products to unwitting customers.
The bank’s initial response was self-serving and grossly inadequate. Since then, despite announcing many changes within the bank, more aspects of its practices and behaviors have come under adverse scrutiny.
Both high profile cases do little to increase the sense of security of CEOs at other financial services companies. One suspects, and hopes, that a lot of crisis planning is going on right now across the sector.
A major reason why financial services companies are prone to adverse scrutiny is that there is little consumer trust for the entire sector.
In line with many such surveys over the years, a recent report placed Finance/Insurance as the third most distrusted industry in the US.
In the Reputation Institute’s list of the world’s 100 most reputable companies, you have to go all the way to 26th to find a financial name, Visa, and the only others on the list are Mastercard (#31) and American Express (#89)
Sadly, Equifax and Wells Fargo only underlined the reasons why there is so much distrust.
Financial services companies hold enormous amounts of sensitive data about us. Nobody owns more of that data than the credit bureaus. But when it came to the crunch, Equifax’s obligations to consumers was way down its list of priorities. Initially it even charged people to order a credit freeze.
Self-evidently, financial services also hold a lot of that other thing we Americans hold very dear – our money.
We want to believe they are taking great care of our savings and are true to their rosy marketing messages. When that is proved to be false, we punish them harshly.
Wells Fargo’s sales practices suggested that moving our money into their coffers was a higher ideal.
Which all goes to suggest that, in the event of a crisis, a financial services company is not going to get the benefit of doubt.
Any financial company must have a best practices crisis plan, enabled by technology, to deal with any threat quickly and efficiently. If it has a paper-based crisis plan which is more than two years old, then it has an urgent budget priority for 2018 to invest in a new plan.