The Institute for Crisis Management expanded its

news tracking research database for 2016, tracking

more than six hundred thousand crisis stories in

the news world-wide. We broadened our review

of the news in 2016 with more media outlets and

adjusted to account for some extraordinary occur-

rences in highly-charged environments across the

globe. Some crisis trends remained consistent year

over year, while others grew from spikes in some

categories in politically charged election-year cli-

mates such as the United States and Europe.

Discrimination and workplace violence led dis-

turbing trends for the year, with discrimination

stories showing a four-fold increase over 2015 and

stories of workplace violence spiking, in part due to

several mass casualty events attributed to terror-

related activities. ICM included its study stories of

terror attacks in places like Orlando, Florida, Nice,

France and Brussels, Belgium because of heavy

media coverage and the impact on the businesses,

churches and organizations where the attacks took

place.

Cybercrime and data breaches continued to

make headlines in 2016, with a reported breach

increase of 25% in the U.S. alone. There were 15

major work stoppages in the U.S. involving 99,000

workers. U.S. restaurant chain Chipotle continued

to struggle to recover from its 2015 food safety

crisis when the company’s head of marketing was

indicted on drug charges and its co-CEO was oust-

ed. The so-called Panama Papers took the world

by surprise when 11.5 million leaked documents

were released, leading to significant embarrass-

ment and questions by law enforcement officials.

Politics ruled the headlines and the airwaves with

the UK’s surprise “Brexit” vote and a contentious

presidential election in the U.S. Popular food

brands including Dole, Pilgrim’s Pride and Kellogg

recalled best-selling foods due to potential con-

tamination issues. Hoverboards, the “it” toy of the

2015 holiday season, were quickly recalled due to

fire hazards from lithium ion batteries. Samsung

suffered a double-whammy when its Note 7

phones were pulled from the market due to ex-

ploding batteries, followed by a recall of 2.8 million

malfunctioning washing machines.

A toddler vacationing with his parents at Walt

Disney World in Florida died when he was attacked

by an alligator in one of the resort’s many man-

made lagoons. Concerns about the

Zika virus kept many people home

last summer, including some

Olympians who chose not to par-

ticipate in the Brazil summer

games due to the threat.

Volkswagen pleaded guilty to criminal charges

related to its diesel-emissions scandal, and Takata

recalled 34 million auto airbags. Embattled retailer

American Apparel filed for Chapter 11 bankruptcy

protection. Pharmaceutical companies found

themselves in a glaring spotlight in several cases

ICM ANNUAL CRISIS REPORT GLOBAL NEWS COVERAGE OF BUSINESS CRISES IN 2016

Issued April 2017

ICM DEFINITION of a

BUSINESS CRISIS

Any issue, problem or disruption which

triggers negative stakeholder reactions that

can impact the organization’s reputation,

business and financial strength

TYPES OF BUSINESS CRISES

Sudden Perceptual Smoldering Bizarre

© 2017 Institute for Crisis Management. All Rights Reserved

®

where they were unable to defend huge price

increases on popular drugs like the Epi-Pen. Au-

tomakers again set a record with more than 53

million vehicle recalls in 2016, up from a previ-

ous record 51 million in 2015.

Natural disasters claimed 8,250 lives, less than

half the 2015 death toll. Just 271 lives were lost

in plane crashes in 2016, a significant decrease

from the previous year. In its worst rail disaster

since 1999, 150 people died and another 150

were injured in a November train derailment

near Kanpur, India.

Mismanagement

Largely because it is the category that consist-

ently generates the most news stories, ICM re-

ceives many questions about how we define mis-

management. Our research in this category in-

cludes stories that involve topics like profession-

al malpractice, misappropriation of resources,

misconduct, negligence, collusion and unethical

or questionable practices that lead to adverse

impact on organizations.

In 2016, Mismanagement accounted for 29.2%

Most Crisis-Prone Industries in 2016

• Automotive

• Pharmaceuticals

• Food

• Banking, Insurance and Financial Services

• Health Care

• Manufacturing

• Government agencies

• Transportation

• Energy

2 © 2016 Institute for Crisis Management. All Rights Reserved

2016 CRISIS CATEGORIES

OTHER: Catastrophe 1.01%; Casualty Accidents 0.14%; Financial Damage 0.14%; Hostile Takeover 1.64%; Labor Issues 0.14%; Sexual Harassment 0.48%

© 2017 Institute for Crisis Management. All Rights Reserved 2

of the stories tracked, compared to 31.41% the pri-

or year. Among the headlines last year were stories

of price gouging in the pharmaceutical industry,

including embattled Mylan NV, maker of EpiPen.

CEO Heather Bresch was grilled by reporters and

lawmakers alike over what was viewed as excessive

profit from a relatively inexpensive drug. Valeant

Pharmaceuticals also faced scrutiny and its financial

results suffered following similar grilling that even-

tually drove out the CEO.

Volkswagen continued to generate headlines all

year as its emissions scandal from 2015 unfolded.

Beleaguered clothing company American Apparel

filed for bankruptcy protection following years of

controversy over misbehaving former CEO Dov

Charney. In May, LendingClub’s CEO was ousted

over misleading sales practices. Accounting giant

PricewaterhouseCoopers LLP settled a $5.5 billion

lawsuit over its alleged failure to catch the massive

fraud that led to one of the most expense bank fail-

ures in U.S. history. And in Paris, a French court

convicted and fined Uber and two of its executives

for deceptive commercial practices and illegal busi-

ness activity.

Discrimination

Discrimination stories skyrocketed, especially in

the U.S., to 20.61% of stories tracked. According to

the Pew Research

Center’s 2016

study, nearly half

of Americans sur-

veyed say that

race relations are

generally bad.

Just 19% said that race relations were improving,

while four-in-ten said they were getting worse. Race

relations in the U.S. suffered during the year, with

reports of violent acts by police and others. Papa

John’s Pizza made headlines when a Denver-area

employee printed a racial slur on a pizza box ‘as a

joke.’ Papa John’s also found itself in the news

when a Louisville, Ky., area employee used a racial

slur about an Asian customer. Another restaurant

chain, Noodles & Co., suffered when an employee

refused to serve police officers in uniform.

In North Carolina, the so-called “bathroom bill”

cost the state millions of dollars and thousands of

potential new jobs when businesses spoke out

against the law, called off planned expansions or

canceled events. The NBA moved its 2017 all-star

basketball game out of the

state, and the NCAA relo-

cated seven championship

games that had been

scheduled there. PayPal

canceled a planned expan-

sion that would have cre-

ated an estimated 1,300

new jobs and $285 million economic impact.

Deutsche Bank halted a planned expansion that

would have employed 250. Entertainers and the

film industry also boycotted the state, canceling

concerts and film projects. Legislators’ attempt to

repeal the controversial law failed in December.

Natural Disasters

Natural disasters accounted for just one percent

of stories tracked in 2016. In what some termed

the “year of the earthquake,” natural disasters

claimed 8,250 lives, a significant decrease from the

more than 19 thousand reported in 2015. Still, dev-

astating quakes hit in Italy, New Zealand, Indonesia,

Japan, Nepal, Ecuador and other areas in the Pacific

“ring of fire.” Among the largest natural disasters

of 2016 were a quake in Taiwan that claimed 117

lives; 6,938 wildfires in California that destroyed

more than 565 thousand acres; August flooding in

Louisiana that killed 13 and forced 30 thousand

from their homes. Hurricane Matthew in October

killed 1,600 and left more than $10 billion in dam-

age in its wake. August floods in China caused 181

reported deaths and Typhoon Lionrock in North

Korea claimed an estimated 100 lives.

Data Breach and Cybercrime

Cybercrime stories creeped up slightly to just un-

der 5% of stories tracked. The Identity Theft Re-

source Center tracked 980 reported U.S. breaches

3 © 2016 Institute for Crisis Management. All Rights Reserved © 2017 Institute for Crisis Management. All Rights Reserved 3

comprising more than 35 million records, an in-

crease of 25% over the ITRC’s 2015 results.

Healthcare accounted for 36% of breaches and an

alarming 44% of records, while Government com-

prised 6.7% of breaches for 37% of records compro-

mised. In their annual study, Ponemon Institute and

IBM reported the average cost of a data breach at

$4 million, a 29% average cost increase since 2013.

The study noted an average per-record-breached

cost of $158 USD.

Among the notable breaches reported were in-

dustry stalwarts like retailer Eddie Bauer, Verizon

Enterprise Solutions, Capital One and Charles

Schwab, Habitat for Humanity and the Florida Bar

Association, Omni Hotels and Wyndham Vacation

Resorts, Chicago Public Schools, Dropbox, Tumblr

and Google, even Krispy Kreme Donuts.

More alarming were well-planned attacks that

knocked out electric utilities in Ukraine and the

summertime hack of the U.S. Democratic National

Committee’s network. Officials in several countries

have raised concerns about the security of critical

infrastructure such as

power and water utili-

ties. Three years ago, at

least four American

electric utility compa-

nies were hacked,

threatening to destabi-

lize large areas of the

power grid. A variety of

malware programs

were used, including BlackEnergy, KillDisk and oth-

ers. Ransomware demands ramped up in 2016, as

well, with disturbing attacks on large healthcare

systems, including against Washington, D.C.-area

hospital chain MedStar Health.

White Collar Crime

White-collar crime stories decreased by about 30

percent from 2015, to 10.45% of stories tracked.

Embattled pharmaceutical company Valeant was

hammered again when charges were filed alleging a

multimillion-dollar fraud and kickback scheme in-

volving an employee and a mail-order pharmacy

company. In March, the federal government

charged 12 current and former Detroit, Michigan

school principals with a nearly $1 million-dollar

bribery and kickback scheme. In a wide-ranging in-

vestigation into generic drug price fixing, 20 states’

attorneys general

accused two in-

dustry leaders,

Teva Pharmaceuti-

cals and Mylan, of

engaging in brazen

price-fixing

schemes. In Penn-

sylvania, a former

employee of Utz

Quality Foods, Inc. was charged in a false invoice

scheme that defrauded the company out of $1.4

million.

Workplace Violence

ICM noted a significant increase in workplace vio-

lence stories in 2016, to 5.91% of stories tracked,

up from less than one-half of one percent the previ-

ous year. Part of the increase is attributable to

ICM’s addition of more English-language news out-

lets covered. But several high-profile stories, includ-

ing mass shootings in Orlando, Florida and terror

attacks in Nice, France and Brussels, Belgium, also

accounted for some of the dramatic increase in

news coverage for acts of violence. Thirty-one

people were killed and hundreds injured in Brussels

in March in an ISIS-inspired attack. Fifty people

died in a terror-inspired mass shooting at the Pulse

nightclub in Orlando, Florida in June. At least 84

people were killed and dozens more injured when a

truck deliberately drove into crowds of people cele-

brating Bastille Day in Nice, France, on July 14.

Labor Disputes

Labor issues accounted for less than one-quarter

of one percent of stories tracked. In December,

nearly 5,000 doctors and nurses across Kenya went

4 © 2016 Institute for Crisis Management. All Rights Reserved © 2017 Institute for Crisis Management. All Rights Reserved 4

on strike, demanding an increase in pay and better

working conditions. Union leaders said that the

government had not honored terms of an agree-

ment reached in 2013. Rail workers in Great Britain

walked off the job for 48 hours, impacting hun-

dreds of thousands of commuters in a dispute

about whose job it should be to open and close

train doors. In June, an unprecedented strike at

China’s Taiwan Airlines ended after less than 24

hours when management agreed to all the de-

mands by flight attendants. Korea’s Hyundai Motor

was hit with its first walkout in 12 years in Septem-

ber over wage increase demands. In the U.S., work-

ers at Verizon Communications staged the largest

reported work stoppage in that country, involving

more than 36 thousand workers and 1.2 million

workdays idle. And at Harvard University, striking

dining hall workers reached a tentative agreement

with administrators after three weeks off the job.

Executive Dismissals

Executive dismissal stories dropped nearly 40

percent from 2015. Embattled Wells Fargo CEO

John Stumpf was forced out after a customer fraud

scandal involving millions of bank accounts opened

by employees without

customers’ knowledge in

an attempt to meet ag-

gressive sales goals.

Chipotle co-CEO Monty

Moran was forced out by

its Board after the com-

pany’s multiple food safety crises. German au-

tomaker Daimler fired one its executives following

his anti-Chinese rants and use of pepper spray in a

dispute over a parking spot in Beijing. Rolls-Royce

Holdings removed one of its directors from the

Board after he was fired from his executive job at

mining giant Rio Tinto. Duke Energy Corp. agreed

to a $27 million settlement of claims that directors

wrongfully concealed their plan to oust CEO Wil-

liam Johnson just minutes after the company

closed on a multi-billion-dollar merger with Pro-

gress Energy Inc. Two top executives at the non-

profit Wounded Warrior Project were sacked fol-

lowing media reports of outlandish spending on

conferences and other outings.

Defects and Recalls

Product defects and recall stories were virtually

unchanged at 2.99%. In one of the biggest recall

stories of the year, Samsung Electronics was forced

to recall millions of its new Galaxy Note 7

smartphones within weeks of their launch due to

exploding lithium ion batteries. In an unprecedent-

ed move, the U.S.

Federal Aviation Ad-

ministration banned

the devices from all

commercial flights.

Samsung was rattled

further when it re-

called 2.8 million

washing machines

due to malfunctions

that caused some

injuries. Toshiba recalled 91,000 laptop batteries

due to overheating and melting issues. In a long-

anticipated move, furniture retailer IKEA recalled

29 million chests and dressers after numerous inju-

ries and a few deaths from unstable dressers top-

pling over onto children.

Automotive recalls set another record with 53

million vehicles recalled during the year, including

52,000 Subarus for steering column issues, 58,430

Toyotas for airbag issues, 154,472 BMW cars with

fuel pump problems and 1.1 million Jeep Grand

Cherokees following the tragic accidental death of

actor Anton Yelchin.

Nestle USA recalled varieties of its DiGiorno pizza,

Lean Cuisine and Stouffer’s frozen foods over con-

cerns about small pieces of glass in spinach. Gen-

eral Mills recalled 10 million lbs. of flour linked to

an E.coli outbreak. CRF Frozen Foods recalled 47

million lbs. of frozen fruits and vegetables linked to

listeria. A supplier to Wal Mart recalled 90 thou-

sand lbs. of beef patties for possible contamination

with extraneous wood.

5 © 2016 Institute for Crisis Management. All Rights Reserved © 2017 Institute for Crisis Management. All Rights Reserved 5

Environmental Damage

Environmental damage stories decreased by more

than half from the previous year at just 2.51% of sto-

ries tracked. According to activist website trueactiv-

ist.com, three U.S. nuclear power plants suffered ma-

jor leaks, including

the Indian Point

plant in New York,

where a groundwa-

ter leak contami-

nated three moni-

toring wells. Gov-

ernor Andrew Cuomo has repeatedly called for shut-

down of the plant.

Environmental website rt.com reported that there

were 354 hazardous liquids pipeline spills by the end

of November, citing statistics from the Pipeline and

Hazardous Materials Safety Administration. Accord-

ing to the story, 16 percent of the leaks involved 100

or more barrels of product. In November, an explo-

sion along the Colonial pipeline in Shelby County,

Ala., killed one worker, injured five others and shut

down a major gasoline and diesel artery that moves

fuel from Texas to New York. In Peru, four large oil

spills were reported that polluted tributaries to the

Amazon River, all attributed to PetroPeru, the coun-

try’s largest oil company.

Consumer Activism

In 2016, stories about consumer activism decreased

by seventeen points to 6.45% of stories tracked. An

activist in Omaha, Nebraska, asked a federal court to

ban balloons released at University of Nebraska foot-

ball games, alleging the release of balloons violates

environmental laws. Anti-balloon campaigns have

pushed for stronger legislation across the U.S.

Whistle-Blowers

Whistle-blower stories accounted for 6.23% of sto-

ries tracked in 2016, a six percent increase over the

previous year. Perhaps the biggest whistle-blower

story of the year was the release of more than eleven

million records— known as the Panama Papers—

from the database of Panama-based law firm Mos-

sack Fonseca. The documents revealed the myriad

ways the rich exploit secretive offshore tax regimes,

causing embarrassment for numerous political lead-

ers, including Vladimir Putin and the father of former

British prime minister David Cameron.

A whistle-blower who received a $22 million payout

from Monsanto after he revealed accounting viola-

tions said he was not satisfied with the outcome be-

cause the problem “didn’t get fixed.” Oracle Corpo-

ration was sued by a former manager who claimed

she was terminated in retaliation for complaining

about improper accounting practices. Pennsylvania-

based Respironics Inc. agreed to pay $34.8 million to

settle kickback allegations. Two U.S. defense contrac-

tors paid $8 million to settle allegations of selling de-

fective counter-measure flares to the U.S. Army. In a

startling development, the first director of victim ad-

vocacy at the Peace Corps was suspended after she

complained that the nonprofit was not doing enough

to address problems related to the sexual assault of

volunteers.

Lessons Learned

Management denial is the biggest im-

pediment to effective crisis manage-

ment. About half of all organizations

worldwide have no crisis plan in place,

increasing both their risk and the

probability of severe financial impact

when the inevitable happens. Organi-

zations that plan and prepare for crisis are better po-

sitioned to prevent, mitigate and minimize financial

impact and reputational damage in case of crisis.

Among the most important crisis lessons of 2016:

• Understand your organization’s vulnerabilities and

develop strategies to address them.

• Know who your key stakeholders are and whether

they are advocates or adversaries.

• With social media, listen, then engage stakehold-

ers before crisis strikes to build a goodwill bank.

• Expect a crisis to break first on social media.

• If you haven’t already, invest in a crisis communi-

cation plan for the organization.

• If you have a crisis communication plan, update

and exercise it this year!

• CALL ICM TODAY TO HELP YOU GET IT DONE!

5 © 2017 Institute for Crisis Management. All Rights Reserved 6

Deborah Hileman, CMP ICM President and CEO

A certified communication management professional (CMP), business leader, coach and consultant with more than 30 years’ experience in public and private companies and non-profit organizations, Ms. Hileman has led high-performing communications teams in health care, manu-facturing, insurance and fi-nancial services, nonprofits and higher education.

Known as a voice of calm in the midst of chaos and crisis, Ms. Hileman has earned a reputation as a trusted communication strategist and advisor to board members and C-suite executives, operations leaders and other organizational stakeholders. She has developed and implemented successful communication strategies for numerous business issues, including mergers and acqui-sitions, bankruptcies, closures and layoffs, natural disas-ters, labor strikes, controversial development plans, criminal prosecutions and federal civil investigations, workplace violence, executive malfeasance, investor litigation, wrongful death, harassment and abuse investi-gations, social media attacks and cybercrime, among others.

She has delivered media relations training and coun-sel to hundreds of executives and managers, coaching them to “think on their feet” in a crisis and manage media interviews calmly and effectively.

A regular writer and blogger on business communica-tion topics, she is the author of "Building a Crisis Early Warning System by Empowering Employees to Speak Up", published in The Book of Employee Communica-tions Strategies & Tactics, vol. 5, PR News Press, and "Attorneys as Allies: Balancing Stakeholder Needs with Legal Concerns During a Crisis", published in The Writer’s Guidebook, Vol. 2, PR News Press.

Based in Denver, Colo., Ms. Hileman is involved with several community and professional organizations, in-cluding the South Metro Denver Chamber of Commerce, the Public Relations Society of America, the International Association of Business Communicators and other organ-izations. She will serve as 2017-18 chair of the Global Communications Certification Council, and is a Board member of the Invisible Disabilities Association, a Colora-do-based 501(c)3 non-profit organization.

6 © 2016 Institute for Crisis Management. All Rights Reserved

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