New York partner John Carney, who serves as co-leader of the firm's national White Collar Defense and Corporate Investigations group, was quoted in the July 23, 2010, Bureau of National Affair's Corporate Accountability article, "Recent BP, Other Corporate Crises Highlight Necessity for Proactive Emergency Planning."
According to the article, recent high profile corporate crises—including the BP oil spill incident—serve as potent reminders to public company boards that in addition to an enterprise risk management plan, it is crucial to be proactive and have in place a comprehensive crisis management plan that incorporates all members of the organization’s board, management, and internal auditing in a cooperative process.
"Almost every kind of corporate crisis will have some form of financial impact—this is why the audit committee can play an important role in crisis management," said Carney, former SEC senior counsel. Even if a corporate crisis event involves, for example, a product recall, the audit committee may find itself becoming heavily involved in the response process, Carney said. "Such a problem would have a long term effect on the company's position in the marketplace and its daily operations. This ultimately would affect the company's financials," he said.
Depending on the circumstances of the crisis, the board may also want to form a special litigation committee to focus on the issues at hand, Carney said. "This group can include members of, or even shadow, the audit committee. The key is to include individuals who are independent from the company and can offer objective views," he said. According to Carney, "in situations where the government is involved, government investigators will be looking for a heightened level of independence from the management of the company."
Usually, before they step in to take action, the government feels more confident in allowing the company to address the problem on its own first when they know that independent members of the board are "steering the ship" with respect to the event, Carney said. Depending on the nature of the business of the company, boards may want to seek external advisors to aid in the development of the crisis management plan and in forming independent committees, Carney said. "Companies must remember that it is certainly worth spending the extra time and effort in crisis prevention and management planning," Carney said.