The fast-paced world of emerging technologies brings unprecedented opportunities alongside equally unprecedented risks. For companies operating in artificial intelligence, cryptocurrency, biotechnology and defense sectors, the stakes have never been higher.
A recent CLE session with Fenwick’s Jon Lenzner, David Bell, and TLG founder and CEO Molly Levinson revealed critical insights for preparing for and handling crises and building organizational resilience in an environment where technological advancement and regulatory scrutiny are intersecting at breakneck speed. Here are some key considerations.
Today's innovative companies face a fundamentally different threat environment than their predecessors. Information travels at lightspeed across social media platforms, while misinformation campaigns can damage reputations before companies even learn about emerging threats. The convergence of public skepticism toward emerging technologies with regulatory uncertainty, cybersecurity, executive behavior, and other incidents creates a perfect storm for unprepared organizations.
Companies in sectors like AI and cryptocurrency face particular challenges because their technologies often outpace regulatory frameworks. This regulatory lag creates uncertainty that can trigger government investigations, congressional inquiries, and media scrutiny. Meanwhile, biotech and defense technology companies must navigate complex federal contracting requirements and national security considerations that can amplify the consequences of any perceived misstep.
The most successful companies approach crisis preparedness as a strategic investment rather than a reactive expense. This preparation begins with conducting comprehensive vulnerability assessments that examine risks from multiple angles, including cybersecurity threats, regulatory changes, leadership transitions, and potential product liability issues, among others. These assessments should specifically consider the unique challenges facing innovative companies, such as intellectual property theft, clinical trial failures, or regulatory approval delays, as well as the various stakeholders that are important to a company and its freedom to operate.
Leadership teams must establish clear frameworks for crisis response that can adapt to any situation, rather than trying to anticipate every possible scenario. This framework should identify core team members including general counsel, outside legal counsel, crisis communications specialists, and relevant business leaders. Equally important is maintaining updated contact information for all team members through multiple channels, recognizing that the primary communication systems may be compromised during certain types of incidents.
Periodic tabletop exercises can prove invaluable for testing these frameworks under simulated pressure. Companies should use their vulnerability assessments to design realistic scenarios that challenge decision-making processes and reveal gaps in preparation. These exercises also help teams internalize the delicate balance between maintaining legal privilege and ensuring effective communication during actual crises.
For companies facing potential government investigations or litigation, protecting attorney-client privilege becomes paramount. This protection requires structuring crisis response efforts under the direction of legal counsel from the very beginning of any incident. Business and technical personnel must resist the temptation to conduct preliminary investigations independently, as this can jeopardize privilege protections later.
When engaging third-party specialists like cybersecurity forensics firms or crisis communications consultants, these relationships should flow through legal counsel with clear engagement letters establishing the legal purpose of their work. Work should also be conducted at the behest and direction of counsel. Payment should come from legal budgets rather than operational budgets, and if possible, payments should be made by the law firm, with reimbursement by the company, to maximize privilege protection.
The modern information environment demands sophisticated communication strategies that account for multiple stakeholder groups with different information needs and consumption patterns. Employees often require different messaging than customers and suppliers, investors are focused on timing and value impact, regulators need different information than the general public, and each group consumes information through different channels.
Companies should develop capabilities to track stakeholder sentiment continuously, rather than waiting for crises to understand how key audiences perceive the organization. This ongoing monitoring becomes particularly crucial for companies in more controversial sectors where public opinion can shift rapidly based on broader industry developments.
The rise of misinformation presents special challenges for innovative companies whose technologies may be poorly understood by the general public. Focus on ensuring that accurate information reaches key stakeholders through credible channels, rather than engaging in public battles against false narratives that may inadvertently amplify misinformation. Being deliberate over time about promoting positive, on-message earned media coverage will help dilute the negative stories when they come.
The traditional approach of remaining silent during government investigations may no longer serve companies well in today's information environment. While legal strategy must drive the overall response, companies often require integrated teams that also include government relations professionals who can help navigate complex political dynamics.
Government scrutiny increasingly involves coordinated campaigns across multiple agencies, congressional committees, and media outlets. Companies may find themselves responding to congressional inquiries about matters they first learned about through media reports, requiring rapid coordination across legal, communications, and government affairs functions.
Every incident, regardless of size, provides valuable learning opportunities for strengthening organizational resilience. Companies should conduct thorough post-incident reviews that examine not only the underlying issues but also the effectiveness of their crisis management processes. These reviews should identify improvements in preparation, response procedures, and communication strategies.
Successful crisis management also requires completing promised remediation efforts and communicating those completions effectively to relevant stakeholders. Failure to follow through on commitments made during crises often leads to more severe secondary incidents when stakeholders lose confidence in leadership credibility.
The rapidly evolving landscape facing innovative companies demands proactive preparation, sophisticated response capabilities and continuous learning. Companies that invest in building these capabilities during calm periods position themselves to not only survive crises but emerge stronger and more resilient than before.
Watch the full webinar and learn more about Fenwick’s crisis management capabilities.