Arx Nova

When It Starts to Break: What Pressure Actually Looks Like

Chris Johnson — Tue, 05 May 2026 10:01:19 +0000

Most businesses do not fail in a single moment. They move into pressure gradually. At first, nothing appears obviously wrong. Revenue continues to come in, the team continues to deliver, and from the outside, the business still looks stable. Internally, however, things begin to shift.

The Build-Up

Pressure builds quietly. Cash begins to feel tighter, even where the numbers suggest growth. Decisions take longer, not because they are more complex, but because alignment is no longer as clear. Conversations become more cautious, and issues are recognised but not properly addressed. At this stage, most businesses assume it is temporary. In my experience, it rarely is.

Where It Shows First

The first signs tend to be operational. Delivery becomes harder to manage, the team is stretched, and tasks that were previously straightforward require more effort. Small issues take longer to resolve, and the margin for error begins to narrow.

This then moves into the commercial side. Clients become more demanding, payment cycles extend, and contractual obligations begin to feel more restrictive. What was agreed starts to matter more than what was assumed.

At that point, the business is no longer operating from a position of control. It is reacting.

The Cash Flow Reality

Cash flow is where pressure becomes unavoidable. It no longer matters what the revenue looks like if cash is not coming in. The timing of payments becomes critical, and decisions begin to focus on short-term survival rather than long-term strategy.

The business starts managing its obligations rather than meeting them. Payments are delayed, relationships are tested, and flexibility is reduced. This is where the position becomes fragile.

The Control Shift

One of the most significant moments in a distressed business is when control begins to move. At first, it is internal, leadership becomes slower, decisions become more cautious, and the business starts to hesitate.

Then it becomes external, lenders begin to ask more questions, reporting becomes more frequent, and flexibility decreases. Conversations that were previously commercial become more formal.

At that point, the dynamic changes as control is no longer sitting fully within the business.

What This Actually Means

By the time these issues are visible, they have usually been building for some time. Structure has not kept pace with growth, people risk has not been controlled, and contracts have not been aligned with how the business operates.

What appears to be a sudden problem is almost always the result of earlier decisions.

Arx Nova Perspective

We are rarely brought in at the start of pressure. We are brought in when the business is already feeling it and, in many cases, when control has already started to shift.

At that point, the objective is not to analyse everything. It is to identify what the critical path items are to stabilise the position and regain control where possible.

That requires clarity, prioritisation, and decisive action, but most importantly, facing into the leadership team directly and outlining the medicine that needs to be taken. This is normally when the significant challenges are ventilated.

Final Thought

Pressure does not break businesses; loss of control does.

Once control starts to move from internal to external, even if this is simply to provide regular updates or oversight, the options available become more limited for you as the business leadership.

That said, as with any medicine, the earlier you start to take it, the better the chance of recovery.

Who’s behind this post?

Chris Johnson

Director & Co-Founder

Chris Johnson is a Chartered Legal Executive and Co-Founder of Arx Nova. He specialises in legal risk, governance, and business restructuring during periods of instability. With over 17 years of experience across the legal and professional services sectors, Chris supports leadership teams to regain control, navigate complexity, and stabilise quickly.

Read Chris’s full profile

The post When It Starts to Break: What Pressure Actually Looks Like appeared first on Arx Nova.

Your Contracts Don’t Protect You: The Way, You Use Them Does

Chris Johnson — Thu, 30 Apr 2026 11:15:32 +0000

Most businesses don’t have a contract problem. They have a thinking problem.

Contracts get signed, terms are agreed, and work starts. At that point, there is a natural assumption that risk has been managed. There is a document in place, expectations appear aligned, and if something goes wrong, there is something to fall back on.

In reality, the issue is rarely the absence of detail. Contracts are often comprehensive. The problem is that once they are signed, very few businesses stop to ask a more important question:

“How does this contract actually shape the way we operate?”

If that question is not answered, the contract becomes disconnected from the business almost immediately.

The Illusion of Protection

A contract creates a sense of security. It suggests that the relationship is defined and that boundaries are clear. However, in practice, most businesses do not operate in line with what they have agreed.

Terms are not revisited. Scope is not actively managed. Delivery evolves in response to pressure rather than by reference to the contract.

When pressure is applied, the contract does not protect the business. It exposes the gap between what was written and what has actually been happening.

Where It Starts to Break

Cash flow issues often develop alongside this drift.

Payment terms that appear clear on paper become difficult to enforce in practice. Invoices are raised but challenged. Payments are delayed but not escalated. The focus remains on maintaining the relationship rather than enforcing the agreement.

Over time, the business begins to fund its own growth. Revenue is recognised, but cash is not received. The contract may provide protection, but it is not being used.

The Risk That Only Appears When It’s Too Late

Liability is where the consequences become most visible.

Most businesses do not focus on liability provisions until something goes wrong. It is only at that point that they consider what has been agreed and what exposure they have taken on.

By then, the position is fixed. The risk has already been allocated and the opportunity to manage it has passed.

This creates a more serious problem than immediate financial exposure. The inability to control liability can lead to sustained pressure on the business, including reputational damage, loss of confidence, and in regulated sectors, potential intervention. These are not one-off issues—they are cumulative and difficult to reverse.

Contracts vs Reality

The consistent theme is not poor drafting. It is misalignment.

The contract says one thing. The business operates in another way. Over time, the gap between the two becomes significant.

As the business grows, that gap widens. More clients, more projects, and more pressure create an environment where consistency becomes harder to maintain. Unless this is actively managed, the contract becomes less relevant to the day-to-day operation of the business.

Arx Nova Perspective

We are rarely brought into situations where there is no contract in place. More often, there is a contract, but it has not been used effectively.

At that stage, the focus is not on rewriting terms. It is on understanding what has actually been agreed, identifying where the exposure sits, and bringing the situation back under control.

By then, the business is often dealing with commercial pressure, strained relationships, and the early stages of a wider issue. The contract becomes a reference point, but not necessarily a solution.

Contracts can protect a business, but only where there is clarity and alignment between what is written and how the business operates.

If your contracts do not reflect reality, they will not protect you when it matters.

They will simply show you where things went wrong.

Who’s behind this post?

Chris Johnson

Director & Co-Founder

Read Chris’s full profile

The post Your Contracts Don’t Protect You: The Way, You Use Them Does appeared first on Arx Nova.

Your People Are Your Biggest Asset: But Most Businesses Don’t Treat Them That Way

Chris Johnson — Thu, 23 Apr 2026 18:48:58 +0000

Everyone says people are their biggest asset. Very few businesses are actually structured like that’s true.

The reality is that people are often the most valuable part of a business, and at the same time, the least visible from a traditional financial perspective. You cannot capture experience, relationships, trust, or internal knowledge on a balance sheet, but that is where a significant proportion of value sits. If a business is not structured to retain and control that value, it does not really own it.

The Illusion of Control

In the early stages of a business, everything tends to revolve around the founder. Relationships sit with them, decisions run through them, and knowledge is often retained in their head rather than embedded within the business.

That model works, and in many cases, it is the reason the business grows. However, over time it becomes a limitation. What is being built is not a business that operates independently, but one that is dependent on a central individual to function.

At that point, the business may be growing, but it is not scaling.

When Value Walks Out the Door

Most businesses do not realise where their value truly sits until it leaves.

A key employee exits and takes client relationships with them. A contractor who has been heavily relied upon walks away, leaving a gap in knowledge or delivery. A senior individual departs and the business struggles to maintain momentum.

In each of these situations, the issue is not the individual leaving. The issue is that the business was structured in a way that allowed value to sit with that one individual in the first place.

From the outside, the business may still appear stable. Internally, however, the loss of control becomes immediately apparent.

The Problem Founders Don’t Want to Face

There is a difficult but important point that founders often avoid.

If the business depends on you to operate, it is not truly a standalone asset. If relationships, decision-making, and delivery all sit with you, then the value of the business is intrinsically linked to your continued involvement.

From a buyer’s perspective, that creates risk. Remove the founder, and the performance of the business becomes uncertain. That risk will either reduce valuation, change deal structure, or in some cases prevent a transaction from happening at all.

In simple terms, if a business cannot function without its founder, it is unlikely to be considered a scalable or sellable asset.

Creating Value Beyond Individuals

The businesses that successfully scale take a different approach. They focus on embedding value within the business rather than allowing it to sit with individuals.

Relationships are managed through the organisation rather than through a single person. Processes are documented and repeatable. Roles are clearly defined, and accountability is understood across the team. Contracts are used not just to protect against downside risk, but to ensure that value created within the business remains within the business.

This does not eliminate people risk, but it brings it under control.

The Contractor and “Loose Structure” Problem

One of the most common patterns seen in growing businesses is an over-reliance on contractors. At the outset, this provides flexibility and allows the business to move quickly without taking on long-term commitments.

Over time, however, those contractors often become embedded. They hold key knowledge, manage relationships, and play a central role in delivery. Without the right structure in place, the business can lose control over both the work being carried out and the value being created.

When those relationships come to an end, the impact is often more significant than anticipated. The issue is not the use of contractors itself, but the absence of a framework that ensures the business retains control.

Why This Is Often Avoided

In many cases, these issues are not addressed because doing so feels like it will slow the business down. It is easier to focus on immediate delivery than to step back and formalise arrangements.

However, that delay does not remove the problem. It simply pushes it further down the line, where it becomes more complex and more costly to resolve.

Arx Nova Perspective

By the time we are involved, the issue is rarely framed as a structural one. It is usually described as a people problem, a performance issue, or a breakdown in delivery.

In reality, the underlying issue is often a lack of control over where value sits within the business. The focus then becomes identifying the areas where that control has been lost and putting in place a structure that allows the business to stabilise and move forward.

This is not about creating a perfect model. It is about addressing the critical points of exposure.

Final Thought

There will always be rainmakers and people who hold a significant sway over certain clients and their relationship with the business; however, as we always say, it is about creating a structure within your business so that in the event of a rainmaker leaving your business, it can still retain its value.

If the value of your business sits with individuals, including the founder, then the business itself becomes fragile. Building a structure that allows value to exist independently of any one person is what turns a growing business into a scalable, investable and ultimately sellable asset.

Who’s behind this post?

Chris Johnson

Director & Co-Founder

Read Chris’s full profile

The post Your People Are Your Biggest Asset: But Most Businesses Don’t Treat Them That Way appeared first on Arx Nova.

Shareholder Disputes Don’t Start in Court: They Start Much Earlier

Chris Johnson — Mon, 20 Apr 2026 09:32:21 +0000

Most shareholder disputes don’t begin with a legal claim. They begin with silence.

A decision that isn’t challenged.
A frustration that isn’t raised.
A change in behaviour that no one properly addresses.

At the start, everyone is aligned.

Same vision.
Same energy.
Same appetite to build something.

But over time, things shift and that’s where the problem starts.

The Shift No One Plans For

What founders rarely account for is the fact that the business evolves but so do the people involved.

One person leans further into operations
Another steps back
Someone wants income
Someone else wants reinvestment
One is thinking long-term exit
The other is thinking of short-term return

None of that is unusual. What is unusual is how rarely it is dealt with properly.

Where It Actually Breaks

The breakdown doesn’t feel dramatic at first.

It shows up as:

frustration in meetings
decisions being revisited
conversations happening outside the room
a sense that things “aren’t quite right”

Then it escalates, and that is when trust starts to erode, and people’s positions become fixed.
At this point, people stop trying to resolve problems and start trying to win, which causes what was once a firm bond to become a broken relationship.

The legal process just formalises it.

The Control Problem

One of the biggest flashpoints is control.

Who actually has it?
Who thinks they have it?
And who is prepared to use it?

I’ve seen situations where:

The majority shareholders push decisions through without real engagement
Minority shareholders feel locked out but don’t know how to respond
Key individuals use their position in the business to shift the leverage

From the outside, the business still looks functional.

Inside, it’s fractured.

The Reality Most People Don’t Want to Hear

“We’ll deal with it if it becomes a problem.”

This has to be one of the most expensive sayings in business. What no one factors in when they say this is that they will eventually hit a problem, and before that problem hits, they will have lost the rose-tinted glasses of a new venture!

A better approach is to stand back and document what happens in the event of a dispute. This is slower and will cost you more money, but trust me, it will save you a lot of stress and money later down the line.

If you don’t document your agreement at the start, by the time it becomes a problem, it’s already too late.

Arx Nova Perspective

We are usually brought in when positions are already entrenched.

At that point, it’s not about “fixing everything.”

It’s about:

identifying what actually matters
understanding who holds real leverage
and finding a path through that stabilises the situation

Sometimes that leads to resolution. Sometimes it leads to separation.

But either way, clarity is what’s needed not more noise.

Shareholder disputes don’t destroy businesses overnight. They erode them over time.

The earlier you deal with misalignment, and start to take the somewhat distasteful medicine the more options you have.

Leave it too late, and the only option left is how the dispute ends.

Who’s behind this post?

Chris Johnson

Director & Co-Founder

Read Chris’s full profile

The post Shareholder Disputes Don’t Start in Court: They Start Much Earlier appeared first on Arx Nova.

Growth Is Not the Problem: What Sits Underneath It Is

Chris Johnson — Fri, 10 Apr 2026 10:28:16 +0000

One of the biggest misconceptions in business is that growth solves problems.

In reality, growth tends to expose them.

I’ve seen businesses:

Increase revenue
Expand teams
Take on new opportunities

…and assume that means the business is working.

But what’s actually happening underneath is something very different. The structure that got them to that point is often being stretched far beyond what it was designed to handle.

And like most structural issues, it doesn’t fail gradually. It fails when pressure is applied.

The Illusion of Progress

Growth creates momentum, momentum creates confidence, confidence creates speed and speed is where structure gets ignored.

With leadership teams are focused on:

Delivery
Sales
Hiring
Keeping up with demand

Very few step back and ask:

“Is this business actually built to scale, or are we just pushing it harder?”

That distinction is critical because a business that is growing is not necessarily a business that is scalable.

Where It Starts to Break

The issues don’t show up as obvious structural problems. They show up as friction.

At first, it’s manageable:

Decisions take longer
Responsibilities overlap
Conversations get repeated
Accountability becomes unclear

Then it escalates:

Disagreements between founders
Confusion around ownership and control
Investors are asking questions that the business can’t clearly answer
Key people are becoming frustrated or disengaged

None of this feel like “structural” problems in isolation; however, collectively, they point to one thing: The business has outgrown its framework.

The Shareholding Problem No One Fixes Early Enough

One of the most common issues I see is misalignment between shareholders.

Not because people fall out but because expectations change.

At the start everyone is aligned, roles are clear and contribution is high

Over time roles evolve, contribution shifts and priorities change

But the structure doesn’t.

That’s when tension builds without clear agreements in place:

decisions become political
progress slows
and in some cases, the business stalls entirely

This isn’t a personality issue. It’s a structural one.

Funding Pressure Without Structural Readiness

At growth stage, funding conversations start to become more serious.

This is where the cracks become visible. Investors don’t just look at the product or revenue.

They look at:

Ownership clarity
Governance
Decision-making
Risk management

If those things aren’t clear, confidence drops quickly. I’ve seen businesses with strong commercial performance struggle to secure investment, not because of what they do, but because of how they are structured.

Governance: The Thing Everyone Avoids Until It Matters

In early-stage businesses, governance is often seen as unnecessary. Too formal. Too slow. Too corporate.

But what governance actually provides is clarity:

Who decides
Who is accountable
What happens when people disagree

Without it, everything relies on personalities and that works until it doesn’t.

As pressure increases, the lack of structure becomes more visible:

Decisions get challenged
Authority becomes unclear
Progress slows at exactly the point the business needs to move faster

The Asset Problem: Value Without Protection

As businesses grow, value starts to build however very few stop to check where that value actually sits.

I’ve seen situations where:

Intellectual property sits with individuals, not the business
Key contracts are not properly structured
Value is created, but not protected

This becomes a major issue when:

Investment is introduced
The business is sold
Something goes wrong

At that point, what looked like a valuable business becomes far more complicated.

The Real Issue: No One Stops to Redesign

The consistent theme across all of this is simple: The business evolves. The structure doesn’t.

And that gap continues to widen until something forces it to be addressed.

Usually:

Funding
Dispute
Crisis

Very rarely is it addressed proactively.

Arx Nova Perspective

By the time we are brought into a business, the issue is rarely “we need to grow.”

It’s usually:

“we’ve grown, and now things don’t quite work the way they used to”. At that point, the objective isn’t to rebuild everything.

It’s to:

Identify where structure is breaking down
Isolate the critical issues
Implement changes that restore clarity and control

Not everything needs fixing, but the right things need fixing quickly. Growth doesn’t create strength; structure does.

Growth simply tests whether that structure is strong enough.

If you or your business is facing into a period of significant growth, then please reach out to us as our product Fortify for Growth may be a perfect fit for you

Who’s behind this post?

Chris Johnson

Director & Co-Founder

Read Chris’s full profile

The post Growth Is Not the Problem: What Sits Underneath It Is appeared first on Arx Nova.

Choosing the Wrong Structure: The Mistake That Follows You Through the Entire Business Lifecycle

Chris Johnson — Thu, 09 Apr 2026 10:27:34 +0000

Why Structure Isn’t an Admin Decision: It’s a Strategic One

One of the most common misconceptions I see with founders is that choosing a business structure is a formality. It isn’t.

It is one of the earliest decisions that quietly dictates:

Who carries the risk
How money is taken out
How investment comes in
and ultimately, how the business can be exited

The problem is, most businesses don’t feel the consequences of that decision immediately. The structure “works” in the early stages, so it’s left alone.

Until it doesn’t.

And when it breaks, it normally does so at the worst possible time during growth, funding, or crisis.

The Real Issue: Structure Is Chosen for Today, Not for What’s Coming

Very few founders deliberately choose the “wrong” structure.

What actually happens is:

The business is moving quickly
Decisions are made to get things live
Structure is chosen based on simplicity, cost, or speed

That works until the business evolves At that point, the structure that once felt efficient becomes restrictive as:

Investors won’t engage
Tax becomes inefficient
Liability exposure becomes real
or ownership becomes unclear

I’ve seen businesses spend significant time and cost trying to unwind early decisions that could have been avoided with a clearer view of where the business was heading.

Where It Goes Wrong in Practice

The issues tend to follow patterns.

1. The Sole Trader Trap

Simple, quick, and often the right place to start. But the moment risk increases, the exposure becomes personal.

I’ve seen situations where founders:

Sign contracts personally
Take on liability they didn’t fully understand
Realise they are significantly at risk when something goes wrong

At that point, the structure isn’t just inefficient it’s simply dangerous.

2. Partnerships Without Protection

Partnerships are often built on trust. The issue is that trust is not a legal framework.

Under the Partnership Act 1890, partners are:

Jointly and severally liable
Able to bind each other
Exposed to each other’s decisions

That works well until it doesn’t. Disputes, exits, or uneven contributions can destabilise the business quickly if there isn’t a properly structured agreement in place.

The biggest issue I have seen, however, in this type of structure is that Partners are often in different lifecycles of their career, and when that happens, you will always have a situation where growth stagnates as one Partner wishes to protect what they have, whilst the newer blood in the Partnership wants to “make their mark”.

3. Limited Companies (Right Vehicle, Wrong Setup)

Most founders move into a limited company at some stage, and in many cases, that’s the right move.

But this is where I see one of the biggest issues:

The structure is right, but the detail isn’t. Problems tend to arise from:

Unclear shareholdings
No shareholder agreement
No thought given to future investment
Directors not understanding their duties

Under the Companies Act 2006, Directors carry statutory obligations. When things are going well, those duties are often background noise. When pressure hits, they become very real.

A limited company gives protection, but only if it is properly understood and robustly managed.

4. No Structure Evolution as the Business Scales

This is probably the most common issue I see.

The business grows, but the structure doesn’t.

At that point:

Risk isn’t ring-fenced
Assets aren’t protected
Investment becomes harder
Exit becomes more complicated

Group structures and holding companies are often introduced too late, rather than being planned at the right stage of growth.

What Founders Should Actually Be Asking

Before choosing (or revisiting) a structure, the better questions are:

Where is risk sitting in this business, and who is carrying it?
How do we intend to fund growth?
Are we building for income, scale, or exit?
What happens if something goes wrong?
Can this structure evolve without disruption?

If those questions aren’t answered, the structure is usually being built on assumption rather than strategy.

Structure Doesn’t Break Immediately It Breaks Under Pressure

Most structural issues don’t show up when things are stable.

They show up:

When funding is needed
When disputes arise
When regulation tightens
or when the business hits crisis

At that point, options are limited, and decisions become reactive.

Arx Nova Perspective

We are often brought into businesses when something has already gone wrong.

Structure is rarely the only issue but it is often part of the problem:

Unclear ownership
Exposure that wasn’t anticipated
A framework that doesn’t support the situation the business is now in

The aim isn’t to rebuild everything.

It’s to identify the critical structural issues, address them, and create a framework that allows the business to stabilise and move forward.

There is no perfect structure, but there is always a structure that is more aligned to:

Risk
Ambition
Reality of the business

The earlier that alignment happens, the more options you retain.

The later it happens, the fewer you have. If anyone reading this is facing into setting up their business or restricting then please reach out to us as our Fortify For Growth product could well help and prevent heartache further down the line!

Who’s behind this post?

Chris Johnson

Director & Co-Founder

Read Chris’s full profile

The post Choosing the Wrong Structure: The Mistake That Follows You Through the Entire Business Lifecycle appeared first on Arx Nova.

“I Didn’t Understand the AI” Is Not a Defence: Why boards are already accountable for AI risk, whether they like it or not

Simon Larkin — Mon, 26 Jan 2026 15:41:33 +0000

Artificial intelligence is now embedded across financial services and increasingly across wider mid-tier businesses. It touches credit decisions, customer communications, fraud detection, pricing, marketing, operations and risk management. In many organisations, it is already business-critical.

What is striking is how often responsibility for AI is still treated as a technical issue. Something to be owned by IT, data, or a third-party vendor. Something abstract, experimental, or not quite “real” yet.

The UK Treasury Committee’s recent report on artificial intelligence in financial services makes one thing clear: that assumption is wrong… very wrong.

Accountability has not moved. The risk has.

The Committee’s evidence sessions and conclusions underline a position regulators have been signalling for some time. There is no imminent plan to create a neat, AI-specific regulatory regime that shields senior leaders from accountability. Instead, existing frameworks apply. Senior Managers and Certification Regime. Consumer duty. Operational resilience. Governance and conduct expectations.

In simple terms, AI has arrived, but the accountability model has not changed.

If an AI-driven system causes customer harm, financial exclusion, operational failure, regulatory breach or reputational damage, responsibility does not sit with “the algorithm”. It sits with the people who authorised its use, signed off on its deployment, and benefited from its outcomes.

Boards cannot delegate that away.

“I didn’t understand it” will not save you

One of the more uncomfortable themes in the report is the tension between AI opacity and senior management accountability. Many AI systems, particularly those using machine learning, are not easily explainable, even to specialists.

That creates a dangerous gap. Something that I covered in an earlier insight: AI’s Hidden Perils: Why Without Strong Governance, AI Becomes a Crisis in the Making.

If a senior leader is accountable for an outcome, but cannot explain how the system that produced it works, they are exposed. The report makes it clear that regulators are alive to this issue and are not sympathetic to the idea that technical complexity absolves responsibility.

Not understanding the technology does not remove accountability. It magnifies the risk.

From a board perspective, this matters because AI failures do not announce themselves politely. They surface as complaints, press interest, regulatory questions, system outages or sudden loss of trust. By the time leadership is engaged, the issue is rarely theoretical.

It is already live.

AI has expanded the crisis surface area

Traditionally, crises were easier to categorise. A financial issue. A legal issue. A communications issue. An operational failure.

AI does not respect those boundaries.

An automated decisioning model can create consumer harm. That triggers regulatory scrutiny. Which leads to media attention. Which exposes weaknesses in governance, data handling and leadership oversight. All while systems continue to operate at scale.

The Treasury Committee highlights growing concern around AI-driven fraud, financial exclusion, cloud dependency and third-party concentration risk. These are not future hypotheticals. They are present-day vulnerabilities.

The result is that AI incidents escalate faster, cut across more functions, and overwhelm leadership teams more quickly than traditional failures. This is exactly where decision paralysis sets in.

Why fragmented advice fails under AI pressure

When an AI-related issue breaks, most organisations default to what they know. Legal advice in one corner. Technical teams in another. PR or communications brought in once the story leaks. Each advisor operating correctly within their own lane.

The problem is that AI-driven crises do not have lanes.

Legal caution can conflict with communications urgency. Technical remediation can clash with regulatory disclosure obligations. Financial exposure and reputational risk move faster than internal alignment.

The Treasury Committee report indirectly exposes this weakness. AI risk is multi-disciplinary by nature, but most organisations are still structured to respond in silos. Under pressure, that fragmentation slows response, muddies accountability, and increases damage.

This is no longer about innovation. It is about control.

Much of the public conversation around AI still frames it as an innovation challenge. How fast to adopt. How far to push. How not to fall behind competitors.

The report reframes it more bluntly. This is a governance and control issue.

Boards are expected to understand where AI is used, what risks it introduces, how it can fail, and who is accountable when it does. Not in technical detail, but in operational reality.

That requires more than policy documents and ethics statements. It requires crisis-level thinking applied before and during incidents.

Where Arx Nova fits when AI risk turns real

At Arx Nova, we work with leadership teams when issues have already escalated beyond internal containment. When uncertainty, pressure and scrutiny collide.

AI-related crises are becoming a familiar pattern. Not because leaders are reckless, but because systems evolve faster than governance, and incidents move faster than decision-making structures.

Our role is not to explain algorithms. It is to stabilise organisations.

We deploy senior leadership across legal, financial, operational and communications fronts simultaneously. We remove fragmentation, impose structure, and take control of the moving parts that overwhelm boards in the first critical days.

When accountability is personal, time is compressed, and the narrative is already forming, leadership needs clarity, not complexity.

AI has not changed that truth. It has made it more urgent.

A final thought for boards

The most dangerous assumption in this space is not that AI might fail.

It is the belief that when it does, responsibility will sit somewhere else.

It will not.

If AI is already embedded in your business, this is no longer a future risk discussion. It is a present leadership obligation.

And “I didn’t understand it” is not a defence.

Who’s behind this post?

Simon Larkin

Director & Co-Founder

Simon Larkin is a Fellow of the Chartered Institute of Marketing and a Chartered Marketer. As Co-Founder of Arx Nova, he brings over 20 years of experience in crisis communications and marketing. Simon works with leadership teams to manage reputational risk, control the narrative, and restore stakeholder confidence during periods of uncertainty.

Read Simon’s full profile

The post “I Didn’t Understand the AI” Is Not a Defence: Why boards are already accountable for AI risk, whether they like it or not appeared first on Arx Nova.

The Dangers of Being Classed as a Shadow Director

Chris Johnson — Mon, 19 Jan 2026 12:58:43 +0000

In the ever-evolving world of corporate governance, the role of a company director is clearly outlined and scrutinised. However, there exists a lesser known, yet equally important, concept: the shadow director. Under the Companies Act 2006, individuals who influence the decisions of a company’s board without being formally appointed as directors may find themselves caught in this net. Being classed as a shadow director can bring significant legal risks and liabilities, often unexpectedly.

What is a Shadow Director?

The Companies Act 2006 defines a shadow director as a person in accordance with whose directions or instructions the directors of a company are accustomed to act.

This means that if you are exerting influence over the board, whether as an employee, consultant, or adviser, you may inadvertently be regarded as a director in the eyes of the law even if your name never appears on the official register.

Legal Risks and Liabilities

Being deemed a shadow director is not merely a technicality. Shadow directors can be held accountable for many of the same statutory duties and obligations as formally appointed directors, including fiduciary duties, the duty to promote the success of the company, and the duty to exercise reasonable care, skill, and diligence as prescribed in the Companies Act 2006.

If a company faces insolvency or legal action, shadow directors can be personally liable for breaches of duty or wrongful trading. This risk is of particular concern, as many individuals may not even realise that they are acting in a director-like capacity until it is too late.

Furthermore, shadow directors are also subject to disqualification proceedings and regulatory penalties in the event of misconduct or mismanagement.

Civil and Criminal Consequences

It’s vital to recognise that the consequences of being classed as a shadow director extend beyond civil liability. Individuals may face criminal investigation if their actions are deemed to constitute fraud, wrongful trading, or other breaches of company law. The Companies Act 2006 gives authorities the power to pursue not only civil claims but also criminal proceedings against those who act as shadow directors outside the scope of lawful authority.

How Administrators Use the Shadow Director Provision

In insolvency scenarios, administrators and liquidators often scrutinise the conduct of shadow directors to recover fees and funds for creditors. They may pursue claims via the professional indemnity insurance policies of shadow directors, but if wrongdoing or acting outside the scope of their retainer can be proven, personal assets may also be targeted.

This reinforces the importance of understanding and strictly adhering to the boundaries of one’s authority and role.

Common Scenarios Leading to Shadow Directorship

Consultants or advisers who regularly guide the board’s decisions.
Senior employees whose opinions are routinely acted upon by the board.
Former directors who continue to influence the company after stepping down.
Major shareholders who exert significant control over board decisions.

In each of these scenarios, the individual may be unaware that their influence is sufficient to be classed as a shadow director under the Companies Act 2006.

Consequences of Being Classed as a Shadow Director

Personal Liability: You may face personal financial liability for company debts, particularly where wrongful trading or breaches of duty are found.
Disqualification: Courts can disqualify shadow directors from being involved in company management for up to 15 years.
Regulatory Penalties: Fines and sanctions may apply where statutory obligations are breached.
Reputational Damage: Being named in legal proceedings can have long-term effects on career prospects and professional reputation.

Be aware of your scope

Given the seriousness of these risks, it is vital for all employees and consultants to be fully aware of the scope of their roles and the potential for being classed as a shadow director. Here are some practical steps to mitigate the risks:

Clarify your role: Ensure your position and level of influence are clearly outlined in your contract and in practice. Avoid giving directions to the board unless your role explicitly requires it.
Document interactions: Keep clear records of communications with directors and the board, particularly when offering advice or opinions.
Seek legal advice: If you are concerned about your influence or potential exposure, consult a legal professional with experience in company law.
Ensure adequate insurance: It is strongly recommended that directors and officers insurance (D&O insurance) is in place for all individuals who could potentially be classed as directors, including shadow directors. This provides a crucial safety net if legal proceedings arise.
As a consultant, clearly define your role in your retainer and never formally lead any projects as a sponsor which sit outside the scope defined in the retainer.

Conclusion

It is also worth noting that, as professional relationships mature, the boundaries between clients and companies can become indistinct. Familiarity, while beneficial for trust and collaboration, should not lead to inadvertent control or influence that might see you classed as a “controlling mind” of the business. Every advisor, consultant, and employee should take care to maintain appropriate professional distance and safeguards, ensuring that their involvement never crosses into territory that exposes them to the risks and liabilities associated with shadow directorship.

The concept of the shadow director is a critical one in UK company law, carrying far-reaching implications for those who inadvertently wield influence over a company’s board. By staying informed, clarifying responsibilities, and ensuring the right protections are in place, employees and consultants can protect themselves from the hidden dangers lurking behind the shadow director label under the Companies Act 2006.

If you are a consultant, individual or business that believes you may have fallen into a shadow director relationship, please reach out to Arx Nova. We will be able to assist in resetting the governance and regulation of the relationship so that all parties are protected.

Who’s behind this post?

Chris Johnson

Director & Co-Founder

Read Chris’s full profile

The post The Dangers of Being Classed as a Shadow Director appeared first on Arx Nova.

Fortify Your Business in January: 8 No‑Nonsense Actions to Avoid a Crisis This Year

Simon Larkin — Tue, 06 Jan 2026 10:20:39 +0000

January isn’t just another month; for a mid-tier business, it’s a window of opportunity. In my experience advising UK companies in the £1m–£100m range (including plenty of private-equity backed firms), the seeds of a collapse are often sown in the year’s early weeks. Leadership teams charge in with optimism and plans, but under the surface, you often find the real crisis triggers: a drifting leadership, fragile operations, rosy financial assumptions, communication breakdowns, and entrenched silos.

The good news is these are fixable now, before they mushroom into disasters. No theory or platitudes here, just hard-earned steps to stabilise your organisation fast. Start the year by taking these eight actions, and you’ll greatly reduce your risk of a crisis (or be far better prepared to handle one) in the next 12 months.

Align the Leadership Team on Goals and Roles (Stop the Drift)

A business without unified leadership is a ship without a rudder. One subtle warning sign I’ve seen before a collapse is leadership drift, when capable people at the top each pull in different directions. It often starts innocently: conflicting agendas, unclear division of responsibilities, or a CEO assuming everyone is on the same page when they’re not. The result is slow, confused decision-making and “mission creep” that leaves the company aimless. In one turnaround case, we found executives each had different priorities for Q1, sales pushed growth at any cost, finance was quietly panicking about cash, and operations was firefighting yesterday’s issues. Little wonder the firm felt stuck.

Use the first weeks of January to slam the brakes on drift. Get your leadership in a room (literally or figuratively) and hash out the plan for the year. Agree on 3-5 non-negotiable priorities and make sure every director knows who is accountable for what. If there were disagreements or mixed messages lingering from last year, surface them now and resolve them decisively. This is also the time to ensure any new board members or PE investors are aligned with management on realistic goals. Unity at the top is not a “nice to have”, it’s the bedrock of swift, confident action. When a crisis brews, the last thing you need is your leaders second-guessing each other. Set a clear direction and chain of command now so that everyone, from the CEO to department heads are steering the company the same way. Clarity and alignment in January will prevent paralysis when pressure hits in June.

Challenge Your Financial Assumptions (No More Wishful Thinking)

Financial illusions are deadly. I can’t count how many businesses walked into a crisis blinded by their own optimistic forecasts or outdated assumptions. Unchallenged financial assumptions about sales growth, margins, funding, or costs lull leaders into complacency. Maybe your 2025 plan assumed a smooth supply chain, steady interest rates, or a big contract win that hasn’t materialised. By the time reality bites (a market downturn, a sudden cost spike), you’re on the back foot and scrambling to adjust with creditors or investors at your throat. We’ve seen a well-regarded £50m company nearly unravel by autumn because leadership “assumed” a COVID-era sales bump would continue and built costs around it, it didn’t, and the numbers went south fast.

January is the time for a financial reality check. Sit down with your finance team (and ideally an external pair of eyes) and pressure-test everything. Re-forecast your cash flow and revenues using hard-headed scenarios: What if sales drop 20%? What if that investor funding is delayed? What if inflation adds 5% to your costs? Identify the assumptions that, if wrong, could break your business. Then adjust plans accordingly. This might mean trimming a bloated budget, delaying a major spend, or lining up contingency financing before you need it. Yes, this exercise can be uncomfortable; it forces honesty over hope, but it’s far better to confront tough numbers now than to explain a surprise collapse later. For private equity-backed firms, be especially blunt: if the growth targets in the deal thesis look unrealistic, speak up and reset expectations now. Challenging your assumptions isn’t pessimism; it’s prudent leadership. It ensures your strategy for the year is built on rock, not sand.

Shore Up Your Cash Reserves and Liquidity

Cash is the oxygen of your business; if you run out, it doesn’t matter how promising everything else is. One common feature of companies in crisis is a cash crunch that catches leadership off guard. Maybe it’s a piling of unpaid invoices, an unexpected tax bill, or simply overextending in the first quarter. Mid-tier businesses, especially, can spiral quickly once cash gets tight because they lack the huge credit lines of a FTSE 100 firm. We saw this first-hand in a near-insolvency case: by the time we were called, the company was weeks from running out of money, directors were scrambling to negotiate with banks and HMRC, and overnight everything became a fight for survival. It all traced back to not monitoring and protecting cash early in the year when the warning signs began.

Don’t let that be you. Fortify your cash position now. Start with a robust 13-week cash flow forecast that you update continuously; this is your early warning system. If it shows trouble ahead, take action immediately. That could mean securing an overdraft or credit facility before you’re in dire straits, negotiating extended terms with suppliers, or accelerating client billing. Also, stress-test your balance sheet: do you have enough liquidity to withstand a dry patch or a late-paying major customer? If not, build a buffer. This might involve pausing non-essential investments or converting some assets to cash. And remember, profit and cash are very different beasts; a healthy profit on paper means nothing if cash is tied up in inventory or receivables. Pay extra attention if you’re PE-backed and burning cash for growth; make sure your investors are ready to support the plan if forecasts slip. Bottom line: treat cash preservation as a strategic objective for Q1. It’s much easier to pursue growth (or handle a crisis) with a safety net in the bank. Cash gives you options when conditions get bumpy, and options can be the difference between crisis and recovery.

Identify Your Operational Weak Spots (and Shore Them Up)

Every business has a fragility somewhere, a single point of failure that nobody notices until it fails. It could be an overworked operations manager who “always pulls through,” an ageing IT system held together by patches, or a sole supplier providing a critical component. In calm times, these operational fragilities hide in plain sight; under stress, they snap, and suddenly you’re facing a crisis that could have been prevented. I recall a manufacturing firm that nearly had to halt production because their one specialist engineer (the only person who understood a legacy machine) fell ill. It was entirely predictable and avoidable with foresight. Similarly, consider supply chains: we’ve all seen how one disruption can cascade. Even corporate giants struggle (remember how a ransomware attack at a household-name retailer took weeks to stabilise operations and cost them nearly £1bn in lost value). Mid-sized companies have even less room for error when something breaks unexpectedly.

This January, audit your operations ruthlessly. Walk through each department and project, and ask: “What would happen if X failed or didn’t show up?” Look for the brittle points, a key person with no backup, a critical supplier with no alternative, a process dependent on outdated technology or a single customer that you’re overly reliant on. Once you’ve mapped these, take action before they bite you. Cross-train employees so you’re not dependent on one guru. Line up a secondary supplier (or stockpile crucial materials) in case your primary one falters. Invest in that system upgrade or security patch you’ve been putting off; cyber and IT failures can cripple you overnight. If there’s a piece of equipment or a distribution channel that’s make-or-break, get it properly maintained or diversified. And don’t ignore “soft” operations like compliance and legal processes; an overlooked regulatory requirement can hit just as hard as a factory fire. The goal is to build resilience: your business should be able to absorb a hit in one area without the whole machine stalling. By hunting down and fixing these vulnerabilities now, you’re essentially vaccinating your organisation against future operational crises.

Break Down Organisational Silos

When companies fall apart under pressure, silos within the organisation are often a big part of the story. Departments that don’t talk to each other, teams guarding information, leaders solving problems in isolation, it’s a recipe for instability. In a crisis, silos are fatal: I’ve seen boards try to respond to a fast-moving disaster while legal, finance, operations, and PR each push conflicting plans. The result is chaos and delay while the problem snowballs. Even outside of a crisis, silos breed small internal crises every day: the left hand doesn’t know what the right hand is doing, and critical issues slip through the cracks. One client discovered too late that their IT team had been handling a serious data breach solo, never informing the rest of leadership, turning what could have been a manageable issue into a full-blown reputational scandal. Why did that happen? Because the culture was “everyone, mind your own turf.”

Make it clear from day one this year: we operate as one team. Actively break down the walls between departments and functions. This can start with simple steps, set up a weekly cross-functional risk meeting where each leader shares what’s keeping them up at night. Encourage your operations, finance, legal, and communications heads to actually collaborate on contingency plans, rather than each writing their own playbook. If you have a private equity board or external advisors, integrate them into these conversations too; external stakeholders shouldn’t be in a silo of their own. The message to instil across the company is that no department succeeds (or fails) in a vacuum. For any significant initiative or threat, bring all the relevant players to the table early. By doing so, you’ll catch interdependencies and conflicts sooner, whether it’s a new contract that sales is rushing (but legal sees risks) or a cost cut that finance loves (but operations knows will hurt service). In practice, busting silos may mean reorganising project teams or communication flows so that information travels horizontally, not just up and down. It may mean incentivising managers to solve overall business problems, not just their department’s KPIs. The payoff is huge: an organisation that can move in unison when pressure mounts. Remember, when a crisis hits, you can’t afford turf wars or Chinese whispers. Start fostering that “one firm, one fight” mentality now, and you’ll greatly improve your crisis immunity.

Make Open Communication Your Default

One of the fastest ways to breed a crisis is to stay quiet when it matters, or to let honest communication falter. In stressful times, people tend to hold information tightly; executives worry about spooking employees or investors, managers sugarcoat bad news for the boss, and front-line staff hesitate to speak up about problems. This is how small issues turn into big crises in the dark. A classic warning sign I warn leaders about is communication breakdown: important messages don’t get to the right ears, and a culture of silence or confusion takes hold. I’ve lived through a collapse where internal silence was a killer, employees knew something was wrong long before the leaders admitted it, and the lack of clear, truthful communication from the top bred panic and gossip. By the time leadership finally addressed the issues, trust was broken, and half the team had one foot out the door. We had a crisis inside the company before the external crisis even fully hit.

Don’t let miscommunication (or lack of communication) be your undoing. Make transparency and candour the norm from the get-go this year. As a leader, commit to regular, straightforward updates to your team about how the business is really doing, not just cheerleading, but the challenges too. If there’s uncertainty or a bump in the road, own it and communicate your plan to handle it. Employees don’t need perfection, but they do need honesty and to feel “in the know.” This not only prevents rumour mills, it actively builds trust and resilience; when people trust leadership to tell them the truth, they won’t panic at the first sign of trouble.

Internal communication should come first, but external communication can’t be an afterthought. Make sure you have a basic crisis communication plan prepared now, before you need it. That means deciding: Who will speak for the company if something goes wrong? How will we get accurate information out quickly to customers, regulators, or the public? Even a simple draft holding statement (“We’re aware of the issue and are responding actively…”) can save you precious hours in a crisis. The key is to avoid a communication vacuum; if you don’t fill it, someone else (or social media) will, and you won’t like the narrative they create. So set the tone of openness early. Encourage your managers and teams to flag problems upward without fear, and make it clear you’d rather hear bad news early than be surprised later. And conversely, push critical information downward and outward promptly when it’s needed. In a stable business environment, good communication keeps things running smoothly. In a volatile environment, it can literally keep your organisation alive. As one CEO client told me after we navigated a rough period: “We found out people will forgive a lot of things, but only if you communicate. If you go silent, they assume the worst.” Wise words, take them to heart.

Establish a One-Team Crisis Plan (Be Ready to Act Fast)

Hope for the best, plan for the worst. Even if you do everything right, crises can still hit; a sudden lawsuit, a market shock, a key client bankruptcy, you name it. The difference between a company that survives and one that doesn’t often comes down to preparedness and speed of response. A unified crisis plan is your insurance policy. I’ve seen companies without a plan improvise in all the wrong ways: they waste days figuring out who should do what, advisors pull them in ten directions, and decisions get stuck in endless debate just when time is of the essence. In contrast, the businesses that handle crises best are those that have pre-decided how they will respond when something goes wrong. No panic, just execution of a playbook.

So build your crisis response playbook now, when heads are cool. Identify a small crisis leadership team, ideally senior people from each critical domain (finance, legal, operations, HR, comms), who will mobilise immediately if trouble strikes. This echoes the “break down silos” point: your crisis team must function as one cohesive unit, not a committee of silos. Assign clear roles: who assesses the legal implications? Who runs point on operations if, say, your IT systems go down? Who communicates to stakeholders (and coordinates messaging so there’s one version of the truth)? Also decide the chain of command: in a crisis, is it the CEO or Chair calling the shots, or a designated crisis lead? Everyone on that team should know the answer and be ready to step in.

Next, sketch out response checklists for your top 2-3 nightmare scenarios. For example, if your biggest supplier suddenly fails, what’s step 1, 2, 3 in the first 24 hours? If a serious fraud or compliance breach emerges, who needs to be alerted, and what immediate actions will you take to investigate and contain it? This doesn’t need to be a 50-page manual; in fact, shorter is better. The plan should be concise, actionable and known to those who need to execute it. I often advise clients to run a tabletop simulation in January: gather the crisis team and walk through a hypothetical crisis just to see if your plan holds up. It’s a safe way to spot gaps. For instance, you might discover that two executives both assumed they’d lead the response, better to clarify that now than have a power struggle later. Or you might find you have no quick way to reach all employees after hours, so you set up an emergency text alert system or phone tree.

The overarching principle is speed and unity. When a real crisis hits, there’s no time to debate fundamental responsibilities. Having a one-team plan means that when the fire starts, everyone knows their job, critical decisions can be made in minutes, and the left hand and right hand stay coordinated. This integrated approach is exactly what we stand for at Arx Nova because we learned the hard way: a fragmented response is a failed response. Don’t rely on luck. Take a little time this month to ensure that if the worst happens, your team can swing into action like a well-practised unit. It could be the difference between a contained incident and a company-ending fiasco.

Take the Pulse of Your People and Culture

Finally, remember that a business’s stability isn’t just about plans and processes; it’s about its people. In every corporate crisis I’ve observed, there’s a human undercurrent that often decides the outcome. If your employees are engaged, trusting and focused, you can weather almost anything. If they’re demoralised, in the dark, or divided, even a small issue can set off a chain reaction. That’s why I tell leaders: don’t wait for an emergency to find out how your team really feels. Use the start of the year to take an honest pulse of your organisation’s health.

What does that mean in practice? First, get out of the ivory tower. Talk to employees at different levels, not in a perfunctory way, but genuinely ask what’s working and what isn’t. You might be surprised by what you learn. Front-line staff and middle managers often know exactly where the next crisis will come from in the business. It might be a dysfunctional new software rollout that’s frustrating clients, a brewing conflict between departments, or a policy that everyone grumbles about quietly. Create safe channels for people to voice concerns and surface red flags. This could be informal chats, an anonymous survey, or town-hall Q&As, whatever fits your culture, so long as it invites candour. And when you hear about issues or see patterns (e.g. multiple people citing the same pain point or risk), do not ignore them. Those “little” problems can be harbingers of bigger trouble. If staff morale took a hit after last year’s layoffs or a tough quarter, acknowledge it and outline how you’re going to support the team going forward. If there’s anxiety about something (say, a potential acquisition or a new strategy), address it head-on with facts and empathy.

Also, take a hard look at whether your company culture encourages collaboration or inadvertently rewards selfish behaviour. Crises have a way of exposing culture, good and bad. A culture that promotes accountability, teamwork and speaking up will contain a crisis; one that’s rife with blame, fear, or apathy will combust. As a leader, set the tone in January. Reinforce positive values (for example, recognise a team that solved a problem collaboratively) and stamp out toxic dynamics before they fester. One practical step is revisiting incentives and KPIs: make sure they’re not pushing managers to hide problems or hoard resources. Align rewards with overall business success and resilience, not just siloed achievements.

By actively taking the pulse of your people, you accomplish two things. One, you might catch early warning signs of instability, essentially giving you a head start on fixing them before they explode. And two, you build goodwill and trust. Employees who feel heard and valued are far more likely to rally in a crisis rather than cut and run. I’ve had teams go the extra mile to save a company because they believed in leadership and felt part of the mission. That loyalty is earned in the quiet times, through everyday gestures of listening and fairness. So start the year by investing a bit of time in your people. It could pay the highest dividend of all: a unified organisation that stands strong when tested.

You can’t predict every crisis that 2026 will throw at your business. But you can stack the odds in your favour by acting early and decisively on the fundamentals. The eight actions above are not complicated, expensive, or theoretical; they’re straight from the trenches of crisis management and business turnarounds. Taken together, they fortify the very areas where companies are most vulnerable: leadership, finances, operations, communication, and culture. By tackling these in January, you’re effectively building your “new fortress”, a business that’s clear-eyed, resilient and agile. Whether this year brings smooth sailing, a few storms, or a full-force crisis, you’ll be ready. And being ready means you won’t just survive challenges, you’ll have the clarity and control to capitalise on opportunities as well.

After all, businesses rarely fail for lack of market potential or talent; they fail because they run out of clarity, alignment, and time. So give your organisation the clarity, alignment and time it needs now. Your future self and your stakeholders will thank you when it matters most.

Who’s behind this post?

Simon Larkin

Director & Co-Founder

Read Simon’s full profile

The post Fortify Your Business in January: 8 No‑Nonsense Actions to Avoid a Crisis This Year appeared first on Arx Nova.

What to Say, And Not Say, in the First 24 Hours of a Crisis

Simon Larkin — Tue, 16 Dec 2025 11:56:57 +0000

In a crisis, every word counts. For over 20 years, I’ve advised boards through financial collapses, regulatory investigations, equality law breaches, and major restructurings. From the 79th Group collapse to FCA inquiries, I’ve learned that the first 24 hours can set the narrative for the entire crisis response. In that window, you either earn trust or cede control of the story. Controlling the narrative on that critical first day is not a luxury. It is an operational necessity.

The reality is that the media, customers and even competitors are already reacting within hours. If your organisation stays silent, it often reads as confusion, denial, or incompetence. Conversely, a rapid, factual acknowledgement signals control and begins to stabilise perceptions.

Employees feel this too. In the 79th Group collapse, a company I was part of, internal fear grew long before leadership spoke. Staff are looking for three things: control, honesty, and unity. We learned the hard way that once internal trust fractures, the crisis becomes twice as hard to contain externally. People don’t expect perfection; they expect leaders to stop pretending everything is fine and to communicate clearly.

In practice, the board and executive team must agree one clear message and a course of action immediately. The board’s role in the first 24 hours is singular and critical: to set a clear course of action and ensure it is executed without delay or contradiction. In short, the CEO or designated spokesperson should address staff and stakeholders first with calm honesty, and then go to regulators or the media. Mixed messages are deadly. When legal counsel wants silence but PR wants a statement, fragmentation risks creating a vacuum that others will fill. The result is confusion, both internally and externally.

Do: Deliver Prompt, Unified Messages

The minute a crisis breaks, tell the truth you know so far. Start with something like:

“We are aware of an incident, and our priority is to assess it fully. We will keep you updated as we have facts.”

Own it. Say what you know, what you don’t, and what steps are underway. This reassures all constituencies.

In practice, companies that control the narrative in the first day do five things consistently:

Acknowledge the issue immediately, even if not all details are in. Delay only fuels speculation.
Assign one spokesperson, usually the CEO or a senior leader, to speak for the company. This avoids contradictory leaks.
Stick to confirmed facts and your core message. Every statement should be based on what is known today, to avoid later retractions.
Unify all advice into one plan. Legal, operational and PR teams should agree on wording and timing.
Engage employees and key stakeholders first. Share an honest update internally before the media. Employees often hear rumours and want leaders to stop pretending everything is fine and take control. They need facts, reassurance and a sense of direction.

Use a calm, values-led tone. Even under pressure, concise empathy works. Acknowledge impact or concern, apologise where appropriate, then outline action.

After an equality law breach at a client, we issued a values-driven apology that protected brand integrity. Similarly, when an FCA or regulatory inquiry hits, a swift, cooperative statement is vital. A timely acknowledgement that the organisation is aware of the inquiry and cooperating fully can stop damaging rumours.

In every case, whether the media are involved or it’s an internal operational failure, repeating the same key points is crucial. Deliver them consistently to staff, customers, media, regulators and social channels.

Don’t: Delay, Deny or Drift

Silence or evasiveness is dangerous in the early hours. Don’t think you can wait for a perfect plan; regulators and the press won’t wait. A deferral such as “no comment” may come off as hiding something.

Never blame prematurely. In a crisis, the goal is stabilisation, not finger-pointing.

Above all, don’t send mixed messages. If the PR lead, CFO and head of operations all speak separately, your response will fracture and create a vacuum others will fill. Do not let the board juggle advice from siloed legal, finance and communications teams.

Internal vs External Communication

Think of this in two parts.

Internally

Honesty and reassurance are key. Employees want clarity that leadership is in charge. During a recent redundancy programme, I worked closely with HR and leadership to craft clear, empathetic messages that reduced anxiety and speculation.

Externally

lead with facts and a commitment to resolution. In some cases, a brief press statement or social post acknowledging concern and outlining next steps is enough.

The exact wording varies by situation. A financial services client facing regulatory scrutiny focused on stability and compliance, while a retailer dealing with a data breach focused on customer security. The principles remain the same.

Don’t lie or exaggerate. Regulators do fact-check. And don’t evade the media. Transparent engagement can often protect reputation rather than damage it.

Brand Reputation Is Being Shaped in Real Time

You are not just managing the immediate issue. You are protecting the long-term brand.

In a crisis, reactive storytelling can become your identity. I’ve seen companies collapse not because the triggering event was fatal, but because they failed to control the story.

Be mindful of tone. Avoid defensiveness or false reassurance at all costs. Reinforce values instead. When stakeholders hear a single, coherent message that balances facts, action and intent, trust is preserved.

Dos: What to Say

Be prompt and factual
Show unity
Express empathy or concern
Commit to updates
Protect values
Communicate to all audiences, not just the media

Don’ts: What Not to Say

“No comment” or stonewalling
Speculation or unverified claims
Mixed or conflicting messages
Legalistic deflection
Self-promotion
Minimising the problem

Always remember this

Above all, remember this: integrated, senior-led action is key. Crisis communication must be aligned with legal, financial and operational reality. Every announcement must be backed by real action.

The bottom line is simple. In a crisis, the clock is ticking. Acting with clarity, speed and consistency will stabilise the situation. What you say, and what you don’t say, in those early hours can be the difference between containing a setback and suffering a brand catastrophe.

Who’s behind this post?

Simon Larkin

Director & Co-Founder

Read Simon’s full profile

The post What to Say, And Not Say, in the First 24 Hours of a Crisis appeared first on Arx Nova.