A combination of rising interest rates, burning inflation and a mixed outlook on the state of the global economy is prompting the multi-trillion-dollar question: are regional and global economies on track for – or already in – a recession?

The International Monetary Fund (IMF) released a report – entitled “Gloomy and More Uncertain,” no less – which lowered its world economic forecast as slowdowns are anticipated in the U.S., China and Europe – the world’s three biggest economies. The U.S. Commerce Department reported that U.S. gross domestic product (GDP) constricted for the second quarter in a row. The Bank of England implemented its biggest interest rate rise in 27 years. COVID-19 lockdowns in China are stymying progress, while energy and food-related challenges in Europe are causing a ripple effect felt around the world.

In addition, Nancy Pelosi’s visit to Taiwan and the subsequent implication of a potential political fallout is exacerbating recession anticipation in Asia. Add the prolonged war in Ukraine and tighter global monetary policies, it’s understandable to anticipate that a recession is nigh.

Although the possibility of a recession poses challenges to many industries, it uniquely affects the financial services industry. Financial services institutions are the gateway to economic lifeblood for individuals, large businesses, small businesses, corporations, non-profits and foundations, among others. When interest rates rise and lending constricts, the cost of tapping credit and doing business in general increases exponentially. For some, it directly affects the ability to pay employees, secure a mortgage, or put food on the table.

Because financial services firms are the conduit and proverbial gatekeeper, they face specific reputational risk and pressure – ranging from misinformation about the role they play in the economy to direct blame for perceived economic woes – that they must manage as part of doing business.

When looking across the industry, there is a clear delineation between financial services firms that successfully use communications to safeguard reputation and those that don’t. Financial services firms who actively listen to target audiences and stakeholders – and then proactively communicate to engage and share their POV on matters such as the state of the business or economic headwinds ahead – will more likely build and maintain trust.

The CEO is an especially powerful voice, not only to instill confidence but provide rationale regarding business decisions in an effort to alleviate concerns or angst. Firms that hold back or hesitate to actively communicate traditionally don’t fare as well – they are seen as hiding information or being a culprit in the economic turmoil. Authenticity and transparency are essential tools during economic turbulence. It’s at moments like recessions when the trust built over time pays dividends.

FleishmanHillard’s Global Financial and Professional Services (FPS) team opined on best practices regarding how financial services firms are responding and communicating in their respective regions:

• Know your audience: Knowing who you’re talking to is half the battle in any communication. Consumers, investors, employees, regulators, shareholders, analysts – the list goes on – all have their own needs, wants and concerns. Communicating directly to them – and messaging with them in mind – makes all the difference in terms of engagement. In addition, meeting them via the channel they are using, whether it be email, video, internal platforms, social media, etc., increases the likelihood that not only will you reach them, but they’ll “listen,” as well.

• Safeguard your narrative to build trust: All financial services firms have a narrative, one that is built on culture, experience and people. Commanding an authentic narrative is the first step in building trust with audiences as well as ensuring that communication with audiences is clear and direct. Consumers, investors, employees and professionals alike look to financial services firms to see how they respond to shifting economic trends, especially when their own welfare is concerned. If they feel like the company is being transparent and sincere, then they will be willing to give senior management grace when times get tough. If they don’t, then they start telling your story for you, which breaks down trust and confidence internally and externally, not to mention damages reputation. Examples are ripe of when financial services firms delay correcting misinformation directly related to their business, involvement in market-influencing activities or internal ethics issues only to then default into crisis mode when that misinformation leads to loss of business.

• Use data to illustrate your story: Financial services firms have a treasure trove of data that provides unique insight into trends, habits and preferences. And although the numbers don’t lie, they don’t tell the whole story either. Whether it’s quarterly earnings, a report on performance or a corporate Town Hall, telling a data-powered narrative instills confidence but also gives your audiences the transparency and context they need to base their own decisions.

• Recognize employees wear two hats: Financial services employees and partners find themselves at a unique crossroads – as both the employee as well as the consumer and/or investor. If communicating with an internal workforce, the message may land in various ways, regardless of rationale. In some cases, how the message is communicated makes all the difference. For example, it may be best to host smaller, more intimate meetings with senior management where questions can be asked and messaging tailored to the target audience. Regardless, being cognizant that employees represent multiple audiences is helpful when determining proper engagement.

• Take a compliance-friendly, multi-channel approach: As communications channels have evolved and changed the competitive landscape, compliance teams have also adapted to allow more channels to be used in engaging audiences. Whatever tools compliance is comfortable with – use them all. This will ensure that not only will your message reach your audience, but it’s said that people need to hear something seven times before they remember, so repetition can help your message stick.

As financial services firms continue to weather the economic storms internally and externally, what is said and how it’s said matter. As reputational risk continues to be a factor with the shifting recessionary winds, proactively commanding your narrative to engage audiences will make all the difference.