There are three things that really good (and successful) leaders do when it comes to bad news:
1. They work on the way they personally react to bad news and make a conscious effort to react positively.
2.They create an environment where bad news are welcome. Where people are expected to rise issues as soon as they appear, rather than hiding them. They often create an environment where the consequences for not telling bad news far outweigh the potential consequences of telling bad news.
3. They make sure to celebrate turnaround stories: where people have come up and told the bad news, and were the right actions were taken straight away to contain or eliminate the problem. Sharing these stories will help to create the right environment and will send out the signals that it is not only important to share bad news, but that the reactions and consequences are positive.