Mismanagement, White Collar Crime Top 2015 Business Crises
Once again in 2015, many of the oldest and most trusted organizations in the world found themselves in crisis. The Institute for Crisis Management tracked a total of 212,115 crisis stories in the news in 2015, a six percent decrease from the previous year. The crises in the news were no less alarming than 2014, however. Perhaps more so.
Cyber-crime and data breaches at industry stalwarts like Hyatt, Hilton and Starwood, Jeep, T-Mobile, Experian, Scottrade and others continue to challenge hundreds of organizations of all kinds. In the US alone, 781 breaches were reported. And for every breach that was reported, there are surely dozens more that we never heard about.
FedEx captured headlines when the company was indicted in federal court with allegations it knowingly shipped illegal prescription drugs from two online pharmacies. Money laundering charges later were added, alleging the online pharmacies paid their FedEx bill with money obtained illegally. UPS settled similar charges in 2014, paying $40 million in fines. Brazil’s state-run oil firm Petrobras stayed in the news throughout the year amid a widening corruption scandal.
General Motors admitted to criminal wrongdoing and paid a $900 million fine in the mishandling of a defective ignition switch that has been linked to 124 deaths. Turing Pharmaceuticals’ nefarious CEO Martin Shkreli, already pilloried for raising the price of an antibiotic more than 50-fold, from US $13.50 to more than $700 per pill, stepped down amid securities fraud charges unrelated to Turing. In an interesting twist on a social media crisis, the US Food and Drug Administration charged that social media posts by reality-TV star Kim Kardashian violated FDA labeling rules for prescription drugs.
Sports scandals hit universities, professional athletes and international organizations. Fédération Internationale de Football Association (FIFA) reeled in the wake of U.S. criminal charges leveled at more than a dozen current and former officials and sports marketing executives. President Sepp Blatter resigned just a few days after he was elected to a fifth term by FIFA’s 209 national associations. The University of Louisville athletic program was back in the news amid charges that assistant coach Andre McGee paid for sex parties to entertain UofL basketball players and recruits. McGee resigned shortly after the story broke in early October.
Natural disasters killed thousands across the globe, from a devastating 7.8 magnitude earthquake in Nepal that claimed 8,800 lives, to deadly flooding across several US states including Oklahoma, Texas and South Carolina. Plane crash fatalities rose to 898 worldwide, the most notable being Germanwings flight 9525, which crashed into a mountain in a deliberate act by the first officer. In the US, more than 1,850 train accidents cost another 821 lives.
Automakers recalled more than 51 million vehicles during the year, nearing 2014’s record 52 million. Volkswagen, the world’s 3rd largest carmaker, continues to suffer from an engineering scandal where software designed to fool US emissions tests was installed in hundreds of thousands of cars bound for America. VW’s CEO and other executives have resigned. Takata’s CEO also resigned following a massive airbag recall affecting millions of vehicles worldwide.
Criminal charges stemmed from several massive recalls related to foodborne illness. Among the costliest was at Denver-based Chipotle Mexican Grill, Inc., reeling from multiple outbreaks in several states that sickened hundreds, closed dozens of stores and sent the company’s stock tumbling more than 40%. Food giant ConAgra paid a record $11.2 million fine related to tainted peanut butter.
Twelve major work stoppages in the US idled 47,000 workers, primarily in the oil & gas industry. More than 598,000 jobs were lost to downsizings and layoffs. CEO turnover was slightly lower than 2014 at 1,221, several of which were directly linked to crimes and mismanagement.
To learn more about the kinds of crises that made the most headlines in 2015, download the Institute for Crisis Management 2015 Annual Crisis Report at http://crisisconsultant.com/crisis-intel-reports/icm-annual-crisis-reports/