Crisis management involves the processes an organisation establishes to handle sudden emergencies or negative events. These events threaten its finances, operations, safety, or reputation. Having a crisis management plan is crucial for organisations of all sizes to handle unexpected incidents effectively. This introductory guide will give an overview of some key aspects of crisis management.
Table of Contents
- What is a crisis?
- The need for crisis management
- Elements of a crisis management plan
- Four phases of crisis management
- Crisis management team roles and responsibilities
- FAQs
- Conclusion and next steps
What is a crisis?
Before delving into crisis management, it’s important to understand what defines a crisis. A crisis is typically defined as an unpredictable event. It deviates from normal operations. It carries a significant level of threat, risk, or opportunity to the organisation or its stakeholders. Crises can take many forms, including:
- Public relations crises can be many. A scandal might involve a high-profile executive. Alternatively, a negative social media campaign can tarnish the organisation’s reputation.
- Financial crises, like a significant economic downturn or an abrupt reduction in funding, can occur.
- Operational crises can prevent the organisation from delivering its products or services. These crises include a major system failure or a supply chain disruption.
- Legal crises, like a lawsuit or regulatory investigation, pose a significant risk to the organisation’s finances or operations.
- Environmental crises, like an oil spill or a natural disaster, can cause damage to an organization’s facilities or operations.
These examples show the wide range of crises that organisations face. They highlight the importance of having a comprehensive crisis management plan in place.
The common thread is that crises introduce volatility, uncertainty, complexity, and ambiguity (VUCA), which stress an organisation’s ability to cope.
The need for crisis management
Why do organisations need crisis management plans? Unfortunately, crises are inevitable for almost every company at some point. Even with the most rigorous preparations, it’s impossible to predict every potential crisis or remove every risk. Shrewd organisations recognise the inevitable occurrence of crises. Proper crisis management reduces chaos and enables leaders to protect both human and financial capital. Without a crisis management plan, organisations react poorly, often making rash decisions that exacerbate rather than contain the situation. Structured crisis management provides a clear framework for action, even amid chaos and confusion.
Elements of a crisis management plan
An effective crisis management plan outlines the necessary procedures, protocols, and roles and responsibilities needed to handle emergency situations.
Having a crisis management plan provides several key benefits for organisations:
- Improved response time: With a plan in place, organisations can quickly mobilise their crisis management team. They can allow communication protocols. They are also capable of implementing business continuity plans. This enables a faster response to the crisis, which can help contain the damage and prevent further escalation.
- Minimised chaos and confusion: Without a plan, organisations often react poorly to crises. They make rash decisions that can exacerbate the situation. A crisis management plan provides a clear framework for action. It reduces chaos and confusion. It enables leaders to make more informed decisions.
- Protection of human and financial capital: A crisis can significantly affect an organisation’s finances and operations. A crisis management plan helps leaders protect human and financial capital. It provides guidelines for managing the crisis. It also minimises the potential negative consequences.
- Enhanced reputation management: A well-executed crisis management plan includes communication protocols. These protocols allow organisations to effectively communicate with stakeholders. This includes employees, customers, regulators, and the media. This helps to manage the organisation’s reputation during and after the crisis. By highlighting these benefits, organisations can better understand the value of investing in a crisis management plan.
Crisis management team
A crisis management team (CMT) spearheads response efforts. The CMT is a cross-functional group of senior leaders that convenes to tackle the crisis. Each member has designated responsibilities based on their skill. For example, the head of PR handles media communications. Legal counsel provides guidance on liability issues. Operation heads manage business continuity planning.
Emergency communications
A crisis management plan details communication protocols to rapidly inform necessary stakeholders like employees, customers, regulators, and the media. This includes crisis notification systems like mass text alerts, phone trees, and emergency hotlines. For public communications, it designates official spokespeople. It also outlines policies for interacting with the media. These policies include communication through social channels during emergencies.
Business continuity plans
Business continuity and contingency plans allow critical operations to continue functioning during upheaval. This requires identifying essential services and staff. It also involves securing backup infrastructure. Additionally, formalising contingency procedures is necessary to shift operations or resources as needed in response to disruptions.
Response procedures
Documented response procedures guide decision-making for specific crisis scenarios like cyber-attacks, product recalls, or leadership scandals. They rely on preparedness exercises and risk assessments. Response strategies include evacuation protocols, failover systems, legal and regulatory compliance, securing digital assets, recovering sensitive documents, etc.
Four phases of crisis management
Crisis management encompasses actions across four distinct yet interrelated phases:
1. Pre-crisis: prevention and preparation
The pre-crisis phase aims to prevent or mitigate crises before they occur. Efforts include risk audits, preparedness assessments, monitoring early warning signs, infrastructure enhancements, training exercises, and community building. Robust preparation enables faster reaction times and more options when responding to events.
2. Acute crisis: response
The acute crisis phase springs into action immediately during and after disaster strikes. The CMT starts communications systems. It mobilises stakeholders and implements business continuity plans. The team rapidly responds per established crisis protocols to contain damage. Quick, decisive leadership is imperative.
3. Chronic crisis: management
During extended crises, the chronic crisis phase manages ongoing troubles. These troubles disrupt operations for long periods of time. This disruption will last several weeks or months. Issues like supply chain problems, cyber attacks, and economic instability can linger. Leadership scandals can also have lasting effects. These issues need sustained attention and adaptable solutions.
4. Crisis resolution: recovery
In the crisis resolution phase, the organisation transitions back to normal operations but also learns from breakdowns. Teams conduct forensic analysis of the event. They find root causes and create new prevention controls. Lessons are incorporated into updated response plans to strengthen resiliency for future events. The cycle then continues back into the preparation phase.
Crisis management team roles and responsibilities
As introduced earlier, an interdisciplinary CMT forms the backbone of crisis response efforts. While compositions vary across organisations, common roles include:
Crisis manager
The crisis manager heads the CMT, providing strategic direction and centralised decision-making during emergency situations. They start response protocols, declare crisis conditions, and ease cross-functional coordination.
As well as providing strategic direction and central decision-making, the crisis manager has other responsibilities. They often coordinate with external stakeholders, like government agencies or industry associations. The aim is to gather the information and resources needed to manage the crisis effectively.
Public relations lead
The PR lead communicates vital updates to the public and media as an official spokesperson. They share statements, handle press enquiries, coordinate social media, and manage perceptions and reputational issues.
As well as communicating with the public and media, the PR lead will watch social media channels. They recognise and respond to any false information or unfavourable opinions surrounding the crisis.
Legal counsel
Legal counsel identifies liabilities and interprets regulations. They handle disclosures. Counsel also manages contract disputes and insurance claims. They oversee forensic investigations. Additionally, they guide on compliance issues.
Legal counsel identifies liabilities and handles legal disputes. They also review and approve any public statements or communications. This ensures these communications do not pose extra legal risks to the organisation.
IT/security lead
IT/security leads investigate technical issues. They watch networks for malicious activity. They restore disabled systems. They start backups or redundancy mechanisms. They implement cyber crisis response plans as relevant.
The IT/security lead investigates technical issues and implements cyber crisis response plans. They also coordinate with external cybersecurity experts. They also work with law enforcement agencies to mitigate the impact of a cyber attack.
Operations lead
Operations leads focus on stabilising business operations and managing continuity plans. They assess damage, coordinate resources, check progress on response objectives, and help develop contingencies.
Besides stabilising business operations and managing continuity plans, the operations lead will coordinate with suppliers or vendors. They secure backup sources of materials or services if there is a supply chain disruption.
HR lead
The HR lead cares for employee wellbeing during turmoil by organising trauma counseling. They also keep staff updated on health and safety issues. Additionally, the HR lead modifies policies around leave, worksite closures, and job expectations.
Finance lead
The finance lead gauges economic impacts and liquidity concerns. They evaluate insurance liabilities. They also help operations and HR heads model different scenarios and funding requirements.
FAQs
Q1. What are some early crisis warning signs organisations should watch?
Early warning signs of potential crises include sudden changes in key performance metrics. They also involve regulatory scrutiny or legal investigations. Other signs are supply chain disruptions and leadership scandals. Be aware of employee turnover spikes and social media backlash. Cybersecurity threats like hacking attempts are also critical.
Q2. How often should organisations test crisis preparedness through simulations?
Preparedness simulations and crisis management training should occur at least annually. High-risk organisations like nuclear facilities or dams need to conduct more frequent emergency drills. These can be monthly or quarterly tests.
Q3. What makes an effective organisational apology during crises?
Effective crisis apologies express empathy, acceptance of responsibility, specific corrective actions, and commitment to learning rather than excuses. They focus on victims rather than the organisation’s own concerns. Legal teams typically approve messages to avoid admissions that exacerbate liability.
Q4. How vital are the first 24 hours of crisis response?
The first 24 hours are extremely critical, setting the trajectory of the entire crisis. Quick mobilisation and decisive leadership curtail escalation. Even an extra few hours of delay can dramatically worsen impacts as events spiral.
Q5. How should crisis managers handle misinformation on social media?
Crisis managers recognise the top concerns trending on social media to counter misinformation. They rapidly spread helpful and honest information. This information addresses those specific issues on official channels. They track false claims in real-time and issue corrections as needed while avoiding patronising or confusing messages.
Conclusion and next steps
Crisis management remains vital for organisational resilience when the next storm hits. Still, crisis management is not a foolproof solution that can completely prevent all harm. While preparation can’t guarantee a smooth journey, it can aid in navigating through challenging times. An organisation with dedicated resources can navigate challenges. Cross-functional buy-in is necessary. Practice using the principles outlined in this introductory guide will equip them well. Management should continuously re-evaluate risks. They should refine protocols. Additionally, they must invest in leadership development to promote vigilance, responsiveness, and growth for the future.
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