**Abstract**

No company is immune to crisis situations, an affirmation which, despite its triviality, is undeniably true. However, from the early 2014, such statement may have become even more true to Russian corporations, as the annexation of the Crimean Peninsula gave start to rounds of economic sanctions that are still perpetrated today. Such measures, which were initiated in response to the Kremlin's political maneuvers, have hit a number of Russian companies, and increased the degree of uncertainty in which they have to operate, as they see economic restriction's impact not only on the business activity tangible factors—i.e., economic rewards, service, and performance—but also on intangible factors—i.e., image and reputation—as well. Crises are integral parts of all world systems, unfortunately. While they are a theoretically well-understood issue, in practice, crises are perceived as a very painful phenomenon. A crisis can be compared to riding a roller coaster. First, as we gain speed and climb up the tracks we are filled with a sense of joy and delight. These feelings are quickly replaced with anticipation, panic, and fear as the roller coaster plunges into the "abyss."

**Keywords:** crisis management, crisis, communication strategies, RUSAL, risk management

### **1. Introduction**

Crises are integral parts of all world systems, unfortunately. While they are a theoretically well-understood issue, in practice, crises are perceived as a very painful phenomenon. A crisis can be compared to riding a roller coaster. First, as we gain speed and climb up the tracks we are filled with a sense of joy and delight. These feelings are quickly replaced with anticipation, panic, and fear as the roller coaster plunges into the "abyss."

Given the likeliness of finding itself in the midst of crises resulting from the geopolitical crossfire between Russia and the U.S., some guidelines in the form of a strategy are needed, and the paper will aim at providing them. It should be made clear, though, that the strategy does not seek to attain this purpose only, as it also intends to formulate a set of directives to mitigate negative repercussions for the corporate reputation within unstable geopolitical conditions. More precisely, by taking into exam the case study of RUSAL—a leader in the Russian metal and mining industry, which after being put on the U.S. Congress blacklist on the base of presumed closeness to the Russian government last April has recently obtained to have sanctions against it terminated—a communications strategy that could serve companies to ease the sanctions-lifting process will be outlined.

A crisis is something that can stimulate an almost infinite number of associations in one's mind. Due to the extremely various scope of actions that this word may include—from natural catastrophes to personal problems—it is extremely hard to find a definition which can perfectly fit any critical occurrence. As has already been established, the research will deal with crises at the international political level, e.g., geopolitical tensions between the U.S. and Russia, which have led to crises at the business level, e.g., sanctions and blacklisting of Russian companies. Even if the idea of crisis is narrowed down to these two specific contexts, it may still be hard to find a generally accepted definition, although some consistency among all the diverse descriptions might be observed. In the field of international politics, Coombs [1] affirmed that there is no commonly accepted idea of international crisis, as a crisis is usually defined by and in the terms of the involved parties. For example, Tucker and Melewar [2] described the Cuban Missile Crisis during the Cold War by mentioning some elements necessary to understand the nature of such crisis, including the perception of high threat to important values and objectives, the feeling of being caught unaware, and having short time to respond.

These elements were seen by the American decision-makers as the reasons to classify the Cuban Missile situation as crisis. Conversely, according to other scholars, an international crisis is any situation in which there is some significant change in the normal interaction patterns between nations [3].

More precisely, as explained by Young, an international crisis consists of "a set of rapidly unfolding events which raises the impact of destabilizing forces in the general system substantially above 'normal' (i.e., average) levels and increases the likelihood of violence occurring in the system" [3]. Thus, at least as far as international politics is concerned, the definition of a crisis closely depends upon the approach which is used to analyze a situation. If, on the one hand, a crisis can be defined by the definitional approach focusing on the decision-making perspective, on the other, it can be defined by the way decisions taken by nations that have an impact on the system and the ordinary flow of politics. Defining a crisis in corporate context is equally difficult. As a matter of fact, despite increasing scientific interest in the issue and the importance that crisis management functions are recognized, there is still no generally accepted terminology for organizational crises. Based on a sample of 20 in-depth interviews conducted in 2014 with senior crisis communicators about organizational crisis recovery, crises were largely defined as "events which have the potential to negatively impact organizations' operations" [1]. Well before, O'Rourke [2] had claimed that although such bad events may be all unique, they do share some common characteristics. These characteristics include an element of surprise, which can make crisis management even more difficult, insufficient information, which makes it hard for a company to explain all the questions it is usually asked right away. In addition, the quick pace of events and the fact that the

**5**

in place.

*Crisis Management and Communication Strategies: RUSAL's Case*

attention to which the whole matter is normally accompanied with.

situation can go south very rapidly are reflected by the intense scrutiny and media

Similar to O'Rourke's view is the one of Coombs [1] for which a crisis is a threat that can potentially damage an organization and its stakeholders in three regards public safety, financial loss, and reputation loss. In particular, a crisis represents a threat to corporate reputation because it gives people reasons to think badly of the organization. Alongside many of the accusations raised by OFAC against Russia were not proved to be true and the motives behind sanctions also came into question, a crisis here could trace the idea of scandal which, according to Davis [2], derives from extensively publicized allegations that damage or attempt to damage the reputation of another party. A scandal can lead to stakeholders having more distrust for the party involved, which is likely to come out of the situation with a damaged reputation. Many other definitions and synonyms for the term "crisis" exist. However, it is the idea conceptualized by Coombs [1], the one that will be referred to in the course of the paper. Such choice was dictated both by the fact that further theories of his will be cited later on in the work, and also by the fact that in his definitions he stressed the potential impact of crises on corporate reputation. As previously mentioned, crises can affect a company's tangible and intangible assets. Therefore, it is logical that crisis management is among the most important management functions. In fact, due to the inevitability of a crisis developing, crisis preparation may be a critical determinant of survival for any organization. Thus, strategic crisis preparation is becoming increasingly important as companies try to cope effectively with potential crises [1]. Once again, as for the concepts of corporate reputation and crisis, there are many definitions to crisis management. The first ground of debate comes with the differentiation between crisis management and risk management, which both deal with threats that impact the well running of the organization's systems and the well-being of its individuals [3]. Despite often being mistakenly thought to be the same, crisis management and risk management are two distinguished parts of the general domain of organizational management. Crisis management deals with critical situations mostly from a reactive perspective—e.g., it tries to limit the negative effects of an event by putting certain actions

Risk management approaches threats proactively as it is concerned with identifying and correctly assessing a possible threat. Also, while risk management is treating risks individually, crisis management tries to identify the possible connections between different individual threats. Risk management consists of three different actions: the identification of risks, the evaluation of risks, and mitigation. Given the proactivity that characterizes it and the fact that it assesses threats before they actually materialize, risk management can also be referred to as crisis prevention, as it aims to create a reference framework that will allow companies to handle risk and uncertainty [2]. If implemented within a company as a continuous process, crisis prevention or risk management will considerably diminish the probability for the organization to face a crisis. The three actions of crisis prevention are just components to the larger crisis management process, which deals with crises before, during, and after they have occurred. Therefore, the concepts of risk management and crisis management do not overlap, rather, they are two different organizational practices that aim at increasing the capacity of a company to cope in the most efficient way with any crisis that arises, which might put in danger its functionality or even existence. Having clarified this point, some definitions of crisis management will be discussed further. Coombs [1] intended crisis management as a process designed to prevent or lessen the damage that a crisis can inflict on an organization and its stakeholders. As hinted earlier, such process can be divided into precrisis, crisis response, and postcrisis phases. In order to be effective, crisis management

*DOI: http://dx.doi.org/10.5772/intechopen.91644*

#### *Crisis Management and Communication Strategies: RUSAL's Case DOI: http://dx.doi.org/10.5772/intechopen.91644*

*Public Sector Crisis Management*

coaster plunges into the "abyss."

These feelings are quickly replaced with anticipation, panic, and fear as the roller

Given the likeliness of finding itself in the midst of crises resulting from the geopolitical crossfire between Russia and the U.S., some guidelines in the form of a strategy are needed, and the paper will aim at providing them. It should be made clear, though, that the strategy does not seek to attain this purpose only, as it also intends to formulate a set of directives to mitigate negative repercussions for the corporate reputation within unstable geopolitical conditions. More precisely, by taking into exam the case study of RUSAL—a leader in the Russian metal and mining industry, which after being put on the U.S. Congress blacklist on the base of presumed closeness to the Russian government last April has recently obtained to have sanctions against it terminated—a communications strategy that could serve

A crisis is something that can stimulate an almost infinite number of associations in one's mind. Due to the extremely various scope of actions that this word may include—from natural catastrophes to personal problems—it is extremely hard to find a definition which can perfectly fit any critical occurrence. As has already been established, the research will deal with crises at the international political level, e.g., geopolitical tensions between the U.S. and Russia, which have led to crises at the business level, e.g., sanctions and blacklisting of Russian companies. Even if the idea of crisis is narrowed down to these two specific contexts, it may still be hard to find a generally accepted definition, although some consistency among all the diverse descriptions might be observed. In the field of international politics, Coombs [1] affirmed that there is no commonly accepted idea of international crisis, as a crisis is usually defined by and in the terms of the involved parties. For example, Tucker and Melewar [2] described the Cuban Missile Crisis during the Cold War by mentioning some elements necessary to understand the nature of such crisis, including the perception of high threat to important values and objectives,

companies to ease the sanctions-lifting process will be outlined.

the feeling of being caught unaware, and having short time to respond.

in the normal interaction patterns between nations [3].

These elements were seen by the American decision-makers as the reasons to classify the Cuban Missile situation as crisis. Conversely, according to other scholars, an international crisis is any situation in which there is some significant change

More precisely, as explained by Young, an international crisis consists of "a set of rapidly unfolding events which raises the impact of destabilizing forces in the general system substantially above 'normal' (i.e., average) levels and increases the likelihood of violence occurring in the system" [3]. Thus, at least as far as international politics is concerned, the definition of a crisis closely depends upon the approach which is used to analyze a situation. If, on the one hand, a crisis can be defined by the definitional approach focusing on the decision-making perspective, on the other, it can be defined by the way decisions taken by nations that have an impact on the system and the ordinary flow of politics. Defining a crisis in corporate context is equally difficult. As a matter of fact, despite increasing scientific interest in the issue and the importance that crisis management functions are recognized, there is still no generally accepted terminology for organizational crises. Based on a sample of 20 in-depth interviews conducted in 2014 with senior crisis communicators about organizational crisis recovery, crises were largely defined as "events which have the potential to negatively impact organizations' operations" [1]. Well before, O'Rourke [2] had claimed that although such bad events may be all unique, they do share some common characteristics. These characteristics include an element of surprise, which can make crisis management even more difficult, insufficient information, which makes it hard for a company to explain all the questions it is usually asked right away. In addition, the quick pace of events and the fact that the

**4**

situation can go south very rapidly are reflected by the intense scrutiny and media attention to which the whole matter is normally accompanied with.

Similar to O'Rourke's view is the one of Coombs [1] for which a crisis is a threat that can potentially damage an organization and its stakeholders in three regards public safety, financial loss, and reputation loss. In particular, a crisis represents a threat to corporate reputation because it gives people reasons to think badly of the organization. Alongside many of the accusations raised by OFAC against Russia were not proved to be true and the motives behind sanctions also came into question, a crisis here could trace the idea of scandal which, according to Davis [2], derives from extensively publicized allegations that damage or attempt to damage the reputation of another party. A scandal can lead to stakeholders having more distrust for the party involved, which is likely to come out of the situation with a damaged reputation. Many other definitions and synonyms for the term "crisis" exist. However, it is the idea conceptualized by Coombs [1], the one that will be referred to in the course of the paper. Such choice was dictated both by the fact that further theories of his will be cited later on in the work, and also by the fact that in his definitions he stressed the potential impact of crises on corporate reputation.

As previously mentioned, crises can affect a company's tangible and intangible assets. Therefore, it is logical that crisis management is among the most important management functions. In fact, due to the inevitability of a crisis developing, crisis preparation may be a critical determinant of survival for any organization. Thus, strategic crisis preparation is becoming increasingly important as companies try to cope effectively with potential crises [1]. Once again, as for the concepts of corporate reputation and crisis, there are many definitions to crisis management. The first ground of debate comes with the differentiation between crisis management and risk management, which both deal with threats that impact the well running of the organization's systems and the well-being of its individuals [3]. Despite often being mistakenly thought to be the same, crisis management and risk management are two distinguished parts of the general domain of organizational management. Crisis management deals with critical situations mostly from a reactive perspective—e.g., it tries to limit the negative effects of an event by putting certain actions in place.

Risk management approaches threats proactively as it is concerned with identifying and correctly assessing a possible threat. Also, while risk management is treating risks individually, crisis management tries to identify the possible connections between different individual threats. Risk management consists of three different actions: the identification of risks, the evaluation of risks, and mitigation. Given the proactivity that characterizes it and the fact that it assesses threats before they actually materialize, risk management can also be referred to as crisis prevention, as it aims to create a reference framework that will allow companies to handle risk and uncertainty [2]. If implemented within a company as a continuous process, crisis prevention or risk management will considerably diminish the probability for the organization to face a crisis. The three actions of crisis prevention are just components to the larger crisis management process, which deals with crises before, during, and after they have occurred. Therefore, the concepts of risk management and crisis management do not overlap, rather, they are two different organizational practices that aim at increasing the capacity of a company to cope in the most efficient way with any crisis that arises, which might put in danger its functionality or even existence. Having clarified this point, some definitions of crisis management will be discussed further. Coombs [1] intended crisis management as a process designed to prevent or lessen the damage that a crisis can inflict on an organization and its stakeholders. As hinted earlier, such process can be divided into precrisis, crisis response, and postcrisis phases. In order to be effective, crisis management

needs to handle the threats in a sequential way. Some additional criteria to assess the effectiveness of such process were suggested by Pearson and Clair [2].

Essentially, given the variety of negative effects crises are usually accompanied by, to judge as effective all the efforts of a company aimed at pulling it out of a crisis would be inappropriate; likewise, the simple survival of the company may not be enough of an indicator of the effectiveness rather ineffectiveness of such efforts and of the crisis management process in general. However, it is possible to define crisis management as effective when operations are sustained or resumed, and internal and external stakeholders' losses are minimized, and learning occurs so that lessons are transferred to future incidents [4]. More precisely, crisis management was viewed by Pearson and Clair as a "systematic attempt by organizational members with external stakeholders to avert crises or to effectively manage those that do occur" [3], whose effectiveness is evidenced when "potential crises are averted or when key stakeholders believe that the success outcomes of short and long-range impacts of crises outweigh the failure outcomes" [1]. Apart from the issues that arise when considering the definition, the complexity of the concept is also reflected by the number of crisis management models in the existing literature. Given the fact that the quantity of information in the volumes on crisis management can be overwhelming, only the three crisis management models that have been indicated by Coombs [1] to be the most influential—the three-stage model, Fink's four-stage model [2], and Mitroff's five-stage model [5]—will be overviewed. Among the first crisis management models is the three-stage one, which is attributed to no particular scholar. Such model is characterized by three stages—precrisis, crisis, and postcrisis. The precrisis stage deals with all the proactive aspects of crisis prevention; the crisis stage refers to the measures taken in response to the occurrence of the crisis event; and the postcrisis mostly about ensuring that the crisis is over, and learning from the event. Similar to the three-stage model is the model proposed by Fink [2]. Essentially, S. Fink compared the crisis to a life cycle, which can be divided into four different stages: the prodromal stage, the acute stage, the chronic stage, and the resolution stage.

The prodromal stage—the denomination comes from the Greek term "prodrome" which means "running before"—can be traced back to the three-stage model precrisis stage, during which the professionals need to adopt a proactive approach in order to detect the signals of an impending crisis. Then, following a trigger event, the acute stage initiates and the actual crisis begins. This stage is characterized by the crisis event and the resulting damage. The severity and damage can depend upon the prevention activities carried out during the prodromal stage. The third phase is labeled as chronic stage, as here the main crisis occurrence might have been managed. However, the lasting effects of the incident might extend the duration of the life cycle and make the shift toward the resolution stage—which is identified with the clear end to the crisis—more difficult. Some of the elements firstly introduced by the three-stage model and then readapted by Fink have also been shared by Mitroff's [5] five-stage crisis management model, which includes signal detection, probing and prevention, damage containment, recovery, and learning. The first two stages include all the proactive steps that an organization can take prior to a crisis event. As signal detection consists of identifying the signs of possible crises, it is much like Fink's prodromal stage; probing and prevention, instead, constitute a new phase in which known crises are observed and researched in order to determine ways to prevent them from happening. The last three phases of Mitroff's model vary just in a minor extent from Fink's acute, chronic, and resolution stages. As a matter of fact, they are all devoted to the containment of the crisis and to the operations that should be undertaken to facilitate the return to the precrisis status quo. The slight differences between the two

**7**

*Crisis Management and Communication Strategies: RUSAL's Case*

Further clarifications will be made throughout the paper.

Here, deductive reasoning might be applied as follows:

• premise 1: RUSAL had sanctions against it lifted in a short period of time;

• premise 2: a strategy serves to solve a problem, and sanctions are such; and

To ascertain whether a strategy was actually used, a content analysis of press releases and media articles coming from the involved parties and a number of diverse media sources and newswire agencies was conducted. Another aim of the analysis was to seek to identify the strategical measures that RUSAL had employed, so that they could be implemented in the overall aim of the research—to provide a global communications strategy for companies operating under economic sanctions, or in the context of adverse geopolitical situation at the state level. In terms of time, contents taken into account span from sanctions imposition—April 6,

• conclusion: therefore, RUSAL must have resorted to a strategy.

authors arise from the way in which they have structured their models. As it was mentioned before, Mitroff's model [5] is cyclical, unlikely from Fink's. Thus, the learning stage allows an organization to integrate what it has learned from the crisis into its organizational philosophy, and to further apply it in the future. The model by Fink simply states that resolution occurs when the crisis is no longer a concern and does not bring any mention for what concerns future applications. Although disregarded by Fink, the idea that organizations can and should learn from crisis—because otherwise they would be susceptible to similar critical events—was acknowledged by the three-stage model as well. As the idea that companies should consider crises and other activities from the past will return in a number of passages later in the composition, which happens to be divided into three parts itself, the paper could also be referred to as a three-stage crisis management model.

As RUSAL obtained to be delisted from the U.S. Treasury OFAC sanctions list on January 27, 2019 [6], after being put under economic restrictions less than 1 year before, on April 6, 2018 [7], it was thought that Deripaska's former company might have had some strategy, or at the least some guidelines to resort to in case of sanctions imposition. Subsequently, a more in-depth analysis of the whole sanctions on RUSAL affair was carried out by the process of deductive reasoning. Deductive reasoning—as opposed to inductive reasoning—can be defined as the process for which the truth of the input propositions—or premises—logically guarantees the truth of the output proposition—or conclusion [6]. Such premises may be propositions that the reasoner believes, or assumptions that the reasoner is simply exploring. An example of deductive reasoning is displayed in the following: premise 1: every football player must wear a helmet while playing in a football game; premise 2: Joseph is a football player; conclusion: as Joseph is a football player, then he must be wearing a football helmet while playing in a football game. Before applying deductive reasoning to the RUSAL case, it should be reminded that a strategy is a method or a plan intended to bring about a desired future, such as the achievement of a goal, or solution to a problem [7]. In case of RUSAL, the possible solution could be connected with the plan to ease the sanctions-lifting process, given the fact that the company was freed from U.S. economic restrictions within a rather short period

*DOI: http://dx.doi.org/10.5772/intechopen.91644*

**2. RUSAL's case**

of time [8, 9].

#### *Crisis Management and Communication Strategies: RUSAL's Case DOI: http://dx.doi.org/10.5772/intechopen.91644*

authors arise from the way in which they have structured their models. As it was mentioned before, Mitroff's model [5] is cyclical, unlikely from Fink's. Thus, the learning stage allows an organization to integrate what it has learned from the crisis into its organizational philosophy, and to further apply it in the future. The model by Fink simply states that resolution occurs when the crisis is no longer a concern and does not bring any mention for what concerns future applications. Although disregarded by Fink, the idea that organizations can and should learn from crisis—because otherwise they would be susceptible to similar critical events—was acknowledged by the three-stage model as well. As the idea that companies should consider crises and other activities from the past will return in a number of passages later in the composition, which happens to be divided into three parts itself, the paper could also be referred to as a three-stage crisis management model. Further clarifications will be made throughout the paper.
