With news that caught so many by surprise, Citi’s Vikram Pandit abruptly stepped down today as Chief Executive Officer. It left many wondering why and why now. Health problems? Major lawsuit or scandal coming? Revenues short? (Update: Good analysis here about “why now” came after my post)
The memo he issued and the stories now appearing certainly opens Citi up to so many questions about why Pandit left.
But the memo issued by incoming CEO Mike Corbat hints at some possible reasons:
“To thrive, we must be vigilant about how we allocate our resources to ensure we are serving our clients and offering the products with the highest potential in the most productive markets. At the same time, we must deliver sustained profitability, improved operating efficiency and shareholder returns while ensuring that vigorous risk management and mitigation are always the cornerstone of how Citi operates.”
Financial institutions are notoriously weak when it comes to communicating with stakeholders.
But I’m glad that Corbat inserted the section about “vigorous risk management” because too many executives don’t place enough priority on this part of their business. Of course, right now it’s just words and we’ll have to see if there are real actions that back up this well-written memo.
Some executives work hard at risk management but fail to communicate effectively when facing a crisis or serious challenge to their company’s reputation.
Others don’t pay enough attention to risks — like slow moving internal crises that might later result in lost business and customers.
That’s why it’s critical for a CEO and his/her management team to combine risk management WITH effective crisis management at all levels of the company. It means, for example, having a crisis communications plan that is easily executed and that takes into account a wide variety of scenarios – including the sudden departure of a CEO.
Executives surely need to be vigorous with risk management. But risk management alone, without matching those risks with effective crisis communications, is a big risk to any corporate reputation.
To learn more about crisis management and crisis communications, watch The Crisis Show on Wednesdays at 7 p.m. EDT.