CORPORATE CRISIS: ANTHRAX AND THE U.S. POSTAL SERVICE John Nolan Former Deputy Postmaster General October 18, 2006

Anthrax and the USPS USPS was experienced in dealing with disasters What’s the same? What’s different?

Situation: September, 2001 USPS Business Model in Jeopardy (GAO) Internet/Recession/Competition/Negative Legislation Volume/Revenue Dropping 9/11 Impact on Ops/Service

Pre-October, 2001 Scientific Community Determination: Anthrax will not escape sealed envelope Little or no risk to employees No contamination to other mail

Anthrax Attack in the Mail LEAD NEWS STORY FOR ONE (1) MONTH PERIODICALLY FOR TWO (2) MORE MONTHS Four (4) Letters Ten (10) postal workers with anthrax and two (2) die Eight (8) others with anthrax and two (2) die Canadian scientists’ video changes everything 284 facilities tested; 23 test positive; 2 closed for almost 3 years 17,400 employees on antibiotics Since attacks, 25,000+ incidents requiring facility closures for short periods... no anthrax found in any Advertising Mail volume initially plummets

Key Actions PR firm utilization Task Force implementation... with unions Reaching out to industry CEO’s / experts Testing DC plant (despite assurances) Media and internal communications strategies Maintained control of crisis command center Determination of exact size and scope of exposure Closure of 2 centers (but not others!) Meeting with Canadian terrorism experts No amount of planning will ever replace dumb luck RELIANCE ON OUR CRISIS MANAGEMENT PROCESS!

J&J Tylenol / USPS Similarities: J&J Plan for worst Early admission Take responsibility Empathy, responsibility, action Message from top Deny blame Create picture Make sacrifices USPS Plan for worst Early notification Reliance on experts Empathy, responsibility, action Message from top Control team; deny blame Create picture Make sacrifices

Crisis Communications Strategy, Timing, Control of Story Seek to understand and be understood Build trust and bank it Media, public, customers, investors “Could USPS be the first major business casualty of the war on terrorism?” Washington Post “Anthrax assurance as threat to public trust – officials insisted mail was safe but now wonder.” L.A.Times “Amid Anthrax, businesses sour on U.S. Mail and seek alternatives.” WSJ “Polls find Americans not panicking over anthrax” Gallup/USAToday “72% Happy With Government Handling Of Problem” CBS News/NY Times

Anthrax Aftermath Employee health Employee morale Management-Labor relations Health of the business Organizational credibility Government Media Industry Future crisis readiness Biohazard detection capability

The Board’s Role: Before, During, After Ensured sound process and plans in place Culture of timely and open communication Corporate Governance rules still applied Offered experience and support Let management manage (While assessing performance) Listened: Were “consumers”/ investors Evaluated: sought to improve readiness