PM2: Crisis and reputation

management

Tess Woodcraft, Chair: Communications consultant,

coaching comms and Vice Chair, Rationalist Association

Siobhan Sheridan, Director of Human Resources,

NSPCC

Judith Miller, Accountant, Sayer Vincent Accountant

Rosamund McCarthy, Partner, Bates Wells Braithwaite

PM2: Crisis and

Reputation Management

Presentation by

Judith Miller, Partner, Sayer Vincent, Auditors and Advisors

Fraud • Context – size and types

• How to

• prevent it

• detect it

• respond

• Guidance

Context - size • £147m estimated total cost

• 9% respondents victims

• 70% external, 30% internal

• 47% payment/banking fraud (Source: Annual Fraud Indicator 2013)

Context • The sector is attractive

• Practice is evolving

• Internal or external

• Role of the trustee

Examples • Misuse of the charity’s bank account

• Fraudulent card transaction

• Stealing or ‘skimming off’ money from cash collections

• Fake fundraising events and requests for donations

• Thefts from charity shops

• Fake invoices

• Charities set up for improper purposes

• Fraudulently obtain grants

• Fake letters - suppliers

How to prevent it • Assess the risk

• Create the right culture

• Develop proportionate policies,

systems and controls

How to prevent it • Anti-fraud policy

• Balanced framework of controls

• Review approach regularly

How to prevent it – framework

of controls Preventative Detective

Objectives Direct controls

Planning processes Monitoring

Accountability Employee welfare and management

Training, continuous learning & competency framework

Independent review

How to detect it • Robust controls

• Whistleblowing policy

• Warning signs

• In numbers

• In behaviours

How to spot it • Unusual or unexplained items in accounting records &

reconciliations

• Missing documents or account books

• High numbers of cancelled cheques

• Common names regularly appearing as payees

• Duplicated payments/ cheques

• Payments for ‘round’ numbers to unknown recipients.

• Suppliers submitting electronic invoices in non-PDF

formats that can be altered

• Payments made to individuals/ companies with family or

business connections to trustees

• Reluctance by staff to accept assistance with finances

• Staff trying to delay work reviews or audits

How to respond • Policies & plans

• Anti-fraud policy

• Whistleblowing policy

• Fraud response plan

How to respond • Anti-fraud policy - What should it contain?

• What fraud & theft mean to the charity

• How the charity expects to deter fraud

• How it will react to actual frauds

• Key responsibilities of senior staff &

trustees

• Details of any whistleblowing plan

• How to respond to allegations of fraud, as

part of a Fraud Response Plan

• How the charity assesses exposure to

fraud risk

How to respond • Reporting to

• The police

• Charity Commission

Guidance • National Fraud Authority

• Action Fraud

• Fraud Advisory Panel

• CFG “Charity Fraud” guide

• Charities Internal Audit Network

• Charity Commission – CC8, Compliance toolkit chapter

3

• Sayer Vincent “made simple” guides – Risk

management

• Contact

• Judith Miller

• judith@sayervincent.co.uk

• 0207 841 6360

PM2: Crisis and

Reputation Management

Presentation by

Siobhan Sheridan, Director of Human Resources, NSPCC

Experiences

• Financial services

• Government

– Defra

– Department for Work and Pensions

– Home Office

• NSPCC - employee

• Crisis at Christmas - volunteer

• Build Africa - trustee

Keeping it Simple

Crisis about people and / or crisis involving people

– Before a Crisis

– During a Crisis

– After a Crisis

Before a Crisis

• Practice – seriously

• Build big relationships

• Understand yourself

• Know your organisation

• Context is king

During a Crisis – Don’t

• Panic – easily said…

• Forget the day job

• Create further casualties

• Close out those who could help

During a Crisis - Do

• Walk in the corridors

• Focus on containment

• Communication is the crisis

• Clarity re stakeholder management

• Take decisions mindfully

• Manage confidentiality

• Maintain clear governance

• People are watching your leadership

After a Crisis

• Take time to review…with support

• Remember there may still be casualties

• Consider the impact on your

organisational culture going forward

• Reflect and learn

PM2: Crisis and

Reputation Management

Presentation by

Rosamund McCarthy, Partner, Bates Wells Braithwaite

• Governance/internal administration

– Board dispute e.g. about mission and vision

– Board and wider membership in conflict

– Board and Founding Body at loggerheads

– Unauthorised benefits

– Acting outside objects

What can cause a crisis?

• A triggering event - e.g. fraud, child protection,

terrorism, fire, flood, storm damage, which will

have governance implications

• Conduct of Board Members, CEO, Finance

Director, Chair, Patron – whether act or

omission relates to charity or another entity

What can cause a crisis?

Duties of Trustees

• Trustees must safeguard the good name,

assets, property and work of the Charity

• Trustees must asses and manage risk, which is

of utmost importance in a crisis

Crisis is a threat… and an opportunity

Aim to:-

• Pull together and come out stronger

Don’t:-

• Use the crisis to settle old scores

Is the Charity’s constitution and are its policies fit for purpose for a crisis? • Short notice for urgent Board Meetings –

virtual/by email

• Quorum

• Majority decisions out of a Board Meeting

• Conflicts of interest

• Trustee Code of Conduct?

• Removal of Trustee and/or Members

Crisis and Constitution

Investigation by Trustees (where necessary)

• Board to approve process for the

investigation

• Trustees may be allocated different roles

• Smaller group to oversee investigation

• Some Trustees sealed off to hear Appeal?

• Ultimately, responsibility for decision

making still lies with the Board as a whole

Reporting to the Charity Commission

• Which incidents should a charity report?

• When should the report be made?

• How to make a report

WHICH?

Annual Return: A charity with an income over £25,000 must, as part of the Annual Return, sign a declaration that there are no serious incidents

General rule: Charity Commission advise that you should make a report to the Charity Commission if you have reasonable grounds to suspect a serious incident

“serious incident”: any incident that has resulted or could result in a significant loss of funds or a significant risk to the charity’s property, work, beneficiaries or reputation

Examples of “serious incidents”

The Charity Commission suggests:

• Fraud and/or Theft

• Significant loss

• Significant donation from an unverified donor

• Known or suspected links to terrorism

• A disqualified person acting as a trustee

• Lack of safeguarding policy

• Abuse or mistreatment

• Criminal or regulatory investigation

Also…

• Incident reported to the police and/or other

statutory agency

• Charity or individuals subject to an

investigation by another agency

• You believe it is a serious incident

• Professional advisers advise you to report

Reports of serious incidents

2011 -2012

From Charities Back on Track 2011-2012

Concerns about charities identified

or reported from other sources

From Charities Back on Track 2011-2012

Please DO NOT Report….

• Disagreements with trustee decisions,

policies or strategies

• Complaint that the charity is delivering a

poor service

• Disputes in the way a contract is handled

• If there is no serious risk to the charity, its

assets or beneficiaries

WHEN?

General Rule: The Charity Commission say as soon as possible* and, if very serious, immediately

• Allowances will be made for the trustees gathering information and establishing facts

• Declaration on the annual return *The legal obligation is to report a serious incident in the Annual Return.

HOW?

Include the following information:

• A summary of the circumstances and details

• How it was discovered

• If there’s a relevant policy/procedure and whether it was followed

• What action has been taken to deal with the incident

Send via email: rsi@charitycommission.gsi.gov.uk

Multiple incidents

The Charity Commission may accept periodic, rather than individual reports

Different ways to report

Use of Information

The charity may forward the Charity

Commission a copy of a report to

another agency or an internal report

to the board.

Signposting

• Charity Commission – Reporting Serious Incidents: guidance for trustees

• Charity Commission – Risk Framework

• Charity Commission – Application for Charity Commission’s Risk Framework

Rosamund McCarthy

rmccarthy@bwbllp.com

0207 551 7819

PM2: Crisis and

Reputation Management

Presentation by

Tess Woodcraft, Chair: Communications consultant, Chair

of Rationalist Association

Media Management in a Crisis

Protecting your Reputation

• Prevention – this is where Board plays

major role

• ‘Cure’

Prevention 1: Risk Assessment

• Risks to your reputation: What is your reputation based on? – Brand values

– What is your organisation’s credibility based on?

– Key strengths: the 4 pillars of your reputation?

– What do you uniquely contribute to your stakeholders?

• Where are you most vulnerable? What might go wrong? • People

• Places

• Services

• External factors

• Buildings

• Activities

• Money

When a crisis strikes – what is a journalist

looking for? • Reckless disregard of safety: Your failure to protect the public, eg. failure

to put in place health and safety procedures

• Lack of investment leading to accidents or poor performance

• Negligence: eg. Your failure to check the suitability or training of your operatives (eg. child abuse checks)

• Complacency: eg. failure to investigate or act on past allegations

• Bad management: Your failure to recognise a problem as a problem

• Arrogance (nb. Schadenfreude; the big machine against the little guy)

• Bureaucracy and red tape leading to failure

• Dishonesty

• Sexual impropriety

• Controversy

• Hypocrisy

Prevention 2: Risk Management

Systems to put in Place • Information: Ensure you have the information you need, and

all key people are familiar with it. EG regulatory guidance, company procedures, risk analysis reports, signposts to other data.

• Relationships: establish links external stakeholders and agencies involved in your highest risk areas (eg. police, fire service, local authority, health authority, regulator.)

• Internal communication: Ensure staff understand the importance of quality and the dangers inherent in risks, and that they know how to act if a crisis occurs.

Prevention 3: Planning ahead

• Appoint a Crisis Team

• key people

• clear roles

• train them

• Keep up-to-date names, contact numbers, etc. for the team

• Procedures and information needed by crisis team • Process for initiating a meeting

• Chart with flow of information (who should be kept in the loop?)

• Up-to-date press lists

• List of key stakeholders and agencies and contact details

• List of basic questions they will need to answer – Where did it happen

– When

– Why

– Who is involved

– What are you doing about it?

If a Crisis Hits......

• Don’t make statement until you have facts

• Call together crisis team

• Get information

• Decide ‘line’

• 1 spokesperson (until it becomes clear you have to

move up a gear)

In a Crisis – put a CAP on it!

• C Concern 50%

• A Action taken 40%

• P Perspective (your excuses) 10%