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Dreamworld: a nightmare crisis

By Wright Communications - 27 October 2016
The tragic quadruple fatality at Dreamworld is a terrible reminder for businesses that numerous small issues, if left untended, can develop into a major crisis.

It's hard to imagine a worse scenario for a business than the death of a customer. Gold Coast theme park Dreamworld experienced that this week when four people died on the Thunder River Rapids ride on Tuesday. It is believed the raft they were riding on hit another raft, causing theirs to tip backwards.

The entire park has been closed while authorities and park management investigate what caused the incident. Whether it was human error, a mechanical malfunction or something else it begs the question whether there was a chance the tragedy could have been averted with better risk and crisis management processes.

In high-risk fields the margin for error is slim. All it took to bring down the Challenger space shuttle back in 1987 was a tiny O-ring. Not only did this small piece of equipment cost the lives of seven crew members, but it led to the grounding of the entire Space Shuttle fleet for nearly three years.

Similarly, the accident at the Gold Coast will affect many people beyond the families, friends and the community of those who were killed, and park staff.  Queensland's tourism industry, which is worth more than A$20 billion and provides 220,000 jobs, will likely be severely impacted by the deaths.

Dreamworld has 1.8 million visitors a year, so even a small drop in patronage would hurt the wider Queensland and even Australian economy. The more immediate economic impact is on the share price of the theme park's owner, Ardent Leisure, which was down around 20% in the two days' trading since the accident.

Shutting the park for a few days will cause a drop in revenue, but the bigger impact on the business will come from the damage to its reputation. People come from around the world to visit Dreamworld, but because of this accident many will not trust the brand or feel safe to go on its rides.

Poor handling of these sorts of incidents can do immense damage to a company, as was the case with BP's Deepwater Horizon oil spill in 2010. Dreamworld's response, on the other hand, has been textbook crisis management, with the company's CEO Craig Davidson responding quickly and decisively.  The company's website was quickly updated to reflect the scale of the tragedy and reflect the sober mood of the situation and a Memorial Day promptly organised for affected families, staff and friends of the theme park.

The same cannot be said of the holding company, Ardent Leisure. In complete contrast, chief executive Deborah Thomas and chairman Neil Balnaves have been invisible to the public since the accident unfolded.  Even more grating, the CEO is in line to receive an AUD$860,000 bonus today, on the dawn of the Memorial Day.

Tactlessly in Ardent's case, its Dreamworld theme park, which has been closed since the accident, was still being touted as one of its major attractions on the company's website yesterday.  It appears to be operating in a parallel universe to its subsidiary.

Ask any PR expert worth their salt and they will advise you that in a crisis senior executives cannot communicate enough.  Senior executives must demonstrate leadership and front the crisis otherwise the gap in information can lead to a vacuum which will be filled by other, often more critical, voices.

It appears that the Dreamworld executives had previously tested a crisis communications plan for this type of scenario and have been able to swing into action swiftly. This has likely involved the setting up of a crisis room with a dedicated crisis team (made up of internal executives and external advisors) to deal with the crisis and co-ordinate responses to all stakeholders from the media, staff and external groups such as the police.

However, this is still not enough to fully reassure investors or customers. The best form of crisis management is risk management. One of the reasons modern crisis management is so challenging is the way we digest news in 2016.

The Challenger crash was seen by more than 80% of Americans within an hour due to television news, but news of the Dreamworld accident mostly spread via online news and social media.

In this new media environment, we do much more than just watch the story. We share it and chat about it on Facebook, leave our condolences to the victims on Twitter and in many cases, we Google other theme parks we can go to with safer rides.

When people search for Dreamworld, stories about the deaths will be displayed prominently. There is no communications strategy that can stop that from happening. The only way to stop it is to avoid having these incidents in the first place. Depending on your business, this can require considerable planning and investment.

What should be concerning, to both investors and customers, are the claims being made by the Australian Workers' Union. Damningly, it has been reported that Dreamworld's owner Ardent Leisure sought to block the release of 143 pages of critical information relating to ride safety and inspections earlier this year, including a report the Thunder River Rapids ride was "not fit for service".

This suggests deeper issues with maintenance and risk management in general. Lots of little issues can sometimes develop into a full-blown crisis, if they are not managed methodically or indeed governed intentionally.

It is too early to say what caused the accident, but the natural question is whether profit was put before safety. As the plunging share price shows, this would be a false economy. Investing in safety is investing in building and protecting not only people but your reputation, which is a big part of the value of your business.

Also, reputation and crisis management need to be considered a governance issue. It is absolutely crucial risk management is handled at that level and not left to those in charge of maintaining the machines. If the Board and senior management take an active role at the start, they are less likely to have to deal with a CEO's worst nightmare.

 

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