Crisis Management

Giving the right response in case of a significant business disruption. Explanation of Crisis Management.

Obviously, any corporation hopes not to face "situations causing a significant business disruption which stimulates extensive media coverage" (crisis). The public scrutiny that is a result from this media coverage often affects the normal operations of the company and can have a (negative) financial, political, legal and governmental impact. Substantial value destruction is to be feared of, especially when the crisis is not handled well in the perception of the media / public opinion. Crisis management deals with giving the right crisis response (precautionary, structural and ad-hoc).

Some generic help and hints on crisis management

Prepare contingency plans in advance (crisis management team and members can be formed at very short notice, rehearsing of crises of various kinds)
Immediately and clearly announce internally that the only persons to speak about the crisis to the outside world are the crisis team members)
Move quickly (the first hours after the crisis first breaks are extremely important, because the media often build upon the information in the first hours)
Use crisis management consultants (advice by objectivity of PR consultants is important, use the corporate image expertise of specialists)
Give accurate and correct information (remember that trying to manipulate information will seriously backfire if it is discovered, also internally!)
When deciding upon actions, consider not only the short-term losses, but focus also on the long term effects.

Executives at all levels of the organization are employed to manage crises and often do so on a daily basis. Their skills are really tested when they have to manage significant crises that have the potential to disrupt the organization's value creation process, income sources, operating expenses, stock price, competitive position and ongoing business. Compare: Charismatic Leadership.
The most effective crisis management occurs when potential crises are detected and dealt with quickly - before they can impact the organization's business. In those instances they never come to the attention of the organization's key stakeholders or the general public via the news media.

Creating a Business Continuity Plan

In instances where the crisis already has erupted, or it is inevitable the crisis will impact the organization's key stakeholders, a business continuity plan is helpful to minimize the disruption and damage. Developing such a plan can seem like a daunting task, but in actuality it is a common-sense document. It involves identifying those functions and processes that are critical to the business, then designing the operational and communications contingency plans to deal with the potential failure of one or more of them and how key stakeholders will react when they find out. An important element that is sometimes overlooked is to test the Business Continuity Plan. Also companies should consider Business Interruption Insurance against the loss of income after events (disasters) that temporarily interrupt business operations.
Corporations with business continuity plans will be in a better position to minimize the business impact and financial damage. On top of that, executives may find that the process of developing these plans also has an indirect benefit. Their organizations are more sensitive to possible crisis situations that could disrupt the business and affect its operating expenses, profits and overall growth. As a result their managers respond more rapidly and effectively to head them off.

Book: Laurence Barton - Crisis in Organizations II -

Book: Steven Fink - Crisis Management: Planning for the Inevitable -

Crisis Management Forum (23)

What Managerial Competencies are Required to Tackle an Organizational Crisis?
"In normal circumstances, various competencies are needed for top management to be successful. Besides (!) these regular competencies, certain specific skills and knowledge are crucial to recover from a crisis. The following special crisis management skills are of particular importance:
1. A crisis manager should have a well developed business sense combined with confrontational and professional capabilities. A crisis managers should well understand the circumstances and be able to perform under abnormal situations
2. Business experience is important. Also, a crisis manager should have a lot of experience with rehabilitation projects for all kinds of decision making.
3. Negotiations/communication skills and experience on a local and international level is important, particularly in extraordinary situations.
4. Knowledge needed to employ in the judgement of employees’ and other interest groups’ responses; a crisis manager shoud be able to estimate the results after the recovery process.
5. A crisis manager should be ready to expect a function as moderator/mediator.
In view of the complexity of the management of a company undergoing serious difficulties, crisis management is denoted as a "composite” discipline", because a multi-disciplinary approach to problem solving is required in order to achieve the objectives of managing a company undergoing a crisis.
Source: Dubrovski, D. “Additional Knowledge Needed in Crisis Management”, at International Conference Management, Knowledge and Learning, 2011"

Contingency Plan Training
"I am preparing a training for managers and looking for consistant material to deliver a systematic course for a session of about 3 hours. Somebody can help?"

Crisisology as a Discipline
"I am seeking information regarding activity in the area of crisisology in Europe. Can someone bring me up-to-date as to what is being practiced and published there? There isn't much of anything going on in this area in the United States. I am the only person (as far as I know) who has called for crisisology to become a discipline. Please let me know as soon as possible. Thank you."

Crisis Management Software
"Hi members, I am looking for a crisis management software package with a mobile facility, should anyone have any experience in the same just please communicate it back. Regards."

Online Crisis Management
"Philip Young and I have been asked to write the third edition of of the best selling text book Online Public Relations (Kogan Page) in which we have a chapter on crisis management. We would welcome contributions and insights from both practitioners and academics..."

GIS Emergency Management
"I am researching on how Graphical Information Systems (GIS) can influence emergency management for principal response agencies GDSs. Are there any case studies of same or a framework / model in this respect?"

How to Deal with Crises Situations in an Organisation
"What are the right steps to be taken in dealing with crises in an organisation in order to prevent it from escalating beyond control?"

International Association of Emergency Managers
"For those professionals engaged in crisis and emergency management I would recommend you look at iaem.com
The International Association of Emergency Managers (IAEM) now has 7 global councils and over 5000 members. It has moved on considerably from being US dominated and has a place for anyone in the profession.
The mission of the IAEM is to advance the profession by promoting the principles of emergency management; to serve our members by providing information, networking and professional development opportunities; and to advance the emergency management profession."

Contigency Plan: Natural Disaster in South Africa
"Does South Africa have a contingency plan in place to handle the devastation caused by natural disasters with special focus on it's supply chain?
Please take into cognisance the natural disaster in Haiti.
Would South Africa be placed in a similar situation?"

Accurate and Correct Information
"This must be strictly adhered to by managements and staff of organisations in order to know how to solve the organisation's crisis."

Developing an Emergency Plan
"To avoid loss of lives during an accident, it is good practice to exercise the emergency response plan. My question is how to develop an exercise plan? (brake down events list for the exercise)"

Definition of Economic Crisis
"What precisely is the definition of an Economic crisis?"

Understanding Scenarios and Consequences
"A failure in most planning is that it's analytical versus strategic in nature. In systems thinking, an important attribute is to understand consequences. Managing consequences is more than just mitigating risks -- which is analytical. Consequences are neutral -- its how you handle them. Understanding scenarios, consequences, are strategic precursors to contingency planning."

Strategy for Product Quality Crisis
"What are the possible strategies one should take to overcome a crisis regarding the quality of your products (especially in the food sector)?"

Paid Placement for Company Statements and Stories
"Part of making sure the world hears your side of the story is placing it in the online news media. Newsforce Network places "storytelling media" in ad space across hundreds of premium newspaper and news sites online, so you can control the message and tell your side of the story unabated. Yes, it's advertising, but our studies show that the source of information is less important to readers than the relevance of the information to their lives, and the immediacy/freshness of the announcement. We recently posted a blog entry about our opinions and observations: blog.onlinemarketingconnect.com/author/vince/"

Preparing Execution of Contingency Plan
"Contingency Planning is very important. Before actually executing the contingency plan, certain critical actions have to be taken such as:
1. Quickly gather, analyze and interpret factual data and information that led to the crisis.
2. Identify a symbolic head that will serve as the point person for the crisis.
3. Finetune or modify the plan based on the above.
4. Determine the threshold time, meaning the time to do something or execute, beyond which could probably lead to failure. Executing earlier may deprive you of vital information and other activities needed.
Now the plan can be implemented or executed based on the above."

Why nobody prepared for the current crisis?
"The article above explains that it's important to prepare contingency plans in advance, before an actual crisis occurs.
Isn't it remarkable that neither governments, nor financial regulators, nor financial instituations seem to have created any contingency plan for the current global crisis?
Surely they all should have seen it coming...""

How to deal with the Media in a Crisis?
"Sometimes, it's hard for the company to deal with the media. If the case is 100 % black propaganda (such as libels or slanders) from others, is not too hard to gather all the fact for the press. But, if the cause arose within our own company, it's really hard to build the company image again through the media. So how can we deal with the media when the crisis is coming from inside our company?"

Execution in Crisis Management
"It is not only to forecast/ plan for the contigencies but also the execution in case of actual crisis. There have been several instances in my career of around 17 years now that this concept has been implemented."

Strategy versus Risk and Crisis Management
"Elaboration is much more required on Crisis Management since this is new arena in the field of finance and the literatures are not easily available. How do strategic management, risk management and crisis management differs from each other. The above mentioned comments are highly appreciated."

Statistics on Business Continuity
"Here are some facts that show the importance of Crisis Management / Business Continuity Planning: There were 930 companies operating from the World Trade Centre towers when the September 11 attacks took place. 18 months later, 550 of them had gone out of Business. Post the WTC attacks, they were not able to deliver on their commitments to their stakeholders. In fact, approximately 40% of all businesses that experience a disaster never re–open; and almost 30% of those that do re-open end up closing within 2 years. 43% of companies that have suffered a significant disaster typically take about 2 months or longer to recover fully from the event."

Win the race to disclosure
"In a short article about crisis management in the media William Essex also stresses how important it is to win the race to disclosure. And he also gives some rules: 1. Be first to issue information on the crisis. 2. Regularly, frequently, issue updated information on the crisis and on the status of the company’s crisis-management operation. 3. All available information should be disclosed; the presumption should be in favour of disclosure. 4. Ignorance should be disclosed. “As yet we have no information on … ” is an acceptable formulation in this context, subject to later provision of the lacking information. 5. Accuracy is an absolute priority, even though comprehensiveness is not."

Types of Crises: Sudden / Smoldering
"In a recent paper, Erika Hayes James and Lynn Perry Wooten distinguish between:
1. SUDDEN CRISES (Natural disasters, Terrorist attack, Plan explosion, Workplace violence, Product tampering, Sabotage, Hostile Takeover, Excutive kidnapping, Environmental spill, Technology dusruption) and
2. SMOLDERING CRISES (Product defects, Rumors/scandals, workplace safety, Bribery, Sexual harassment, Consumer activism, Mismanagement, Whistle blowing, Class action lawsuits and Labor disputes)."

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