Chaos and Crisis: The Swiss Bank Case Study

Abstract

ABSTRACT The spate of financial crises that have thrown international financial companies into the media spotlight has soared over the past decade. Whatever their size, companies today all have to operate in a crisis environment. In today's world business crises are no longer a matter of if, but rather when; no longer the exception, but the expected even the inevitable. Helping to manage both crisis and opportunity is the ultimate assignment for public relations professionals. From a public relations perspective, the management of issues and crises can be viewed as related processes, because issues can quickly escalate into a crisis if not dealt with effectively. A proactive approach to crisis management can be regarded as an organisation's ability to prepare for, and deal with, the very unexpected, both in operational and in communication terms. Chaos theory suggests that the concept of crisis needs to be reconceptualised as a transforming event that may lead to opportunity or to beneficial restructuring. Dealing effectively with a crisis should entail both image restoration strategy and business strategy, which can seize imminent opportunities resulting from the crisis. In this article, chaos theory is used as a framework for analysing the Swiss banking crises which began in 1995 and which evolved over a period of five years. Chaos theory is used as an analogy to structure the persistent problem situations that characterised the Swiss banking crises, and to explain why the crisis became intractable. From this analysis it is suggested that the failure of the Swiss banks to consider the non-linearity of human and organisational systems proactively gave rise to a protracted crisis situation that escalated into a global scale crisis, and resulted in tarnished reputations, not only for the banks involved, but also for the whole Swiss banking sector.