What Is Crisis Management and Why Is It Important?
The world is full of uncertainties, and it is wise for companies to always stay prepared for the inevitability of crises.
Crises can be anything from a weather disturbance to a hacking attack. If there is no crisis management plan in place, the business operations may be disrupted, and it could cause significant damage, or worse the business may close down entirely.
What is the definition of a crisis?
A crisis is an event which results in the disruption of business operations. It affects not only the company’s employees, but all the stakeholders and customers related to the enterprise. Since many companies today operate on a global scale, there are risks and threats that each company needs to prepare for, which firms like A2 Global Risk Management specialize in, such as:
- Terrorist attacks or political unrest
- Natural disasters like floods, hurricanes, earthquakes, and typhoons.
- Contagious disease outbreak
- Violence in the workplace like shooting incidents
- Widespread hacking and other internet related threats
The examples provided above are severe conditions every company needs to prepare for. Nonetheless, a crisis management plan should be in place even for less severe scenarios such as computer network breakdown or power interruptions.
How does crisis management work?
An essential aspect of crisis management is communication. Having a crisis management plan in place means that there is a step-by-step process to handle a crisis which involves every person in the company starting from the top all the way to the bottom. The primary goal is to ensure that the business remains viable while the company finds a solution to the crisis.
During a crisis, communication between managers and employees is crucial. In addition to this, the company also needs to inform all stakeholders involved including the customers. Involving key personnel in the process while at the same time releasing updates to the public helps in maintaining the company’s credibility, and ultimately leads to a smoother resolution.
Considerations in a crisis management plan
In creating a crisis management plan for any enterprise, the following are some of the considerations:
- Be able to define what constitutes a crisis. Defining what a crisis is can be on a case to case basis because not all interruptions to business operations can fall under this category.
- There needs to be a crisis management team who will act as decision makers.
- There needs to be a checklist of what information the company will share with customers and stakeholders during a crisis.
- Identify specific stakeholders who need to receive communication and updates regarding the crisis.
- Identify a spokesperson who will get in touch with the media and the public regarding the crisis.
- Keep the legal department informed about the crisis management plan and involve them in the decision-making process.
- Have a complete list of contact details for people to contact and get updates on the crisis.
The bottom line is, any crisis can ruin the company’s reputation and lead to a host of other problems in the long run. A sound crisis management plan needs to be put in place not only to prepare but also to safeguard the company against the possible adverse effects of such events.