If anything can go wrong it will. That’s Murphy’s Law. Even when you’ve got all your ducks in a row, one accident or incident, a rogue employee, misleading advertisement, shareholder or employee lawsuit, safety issue, product recall, or regulatory fines and an investigation can call for a crisis management plan to be triggered to avert a company’s reputation from being severely damaged. The negative effects on your organization from a crisis badly handled can be detrimental.
Table of Contents
The Definition of a Crisis
A crisis within a company is defined as an event that has the potential to harm the company’s employees, finances, or reputation. Internal factors (such as employees making certain public statements or failing to do their jobs properly) or external factors can cause a crisis (such as natural disasters like hurricanes and tornadoes and other potential threats from Mother Nature).
One of the most common issues in the aftermath of a crisis, unfortunately, is that entrepreneurs, CEOs, directors, and managers frequently believe that such events will never occur to them. As a result, many businesses don’t have a crisis management plan, business continuity plan, or team in place to effectively handle the crisis.
What Is a Crisis Management Plan?
A crisis management plan outlines how your business will respond in the event of a crisis — whether it’s a result of a natural disaster, intentional human-caused events, or an accident such as hazardous material spills or foodborne illnesses (think Chipotle from a few years back). It also outlines who will be involved during the crisis response and provides crisis scenarios to illustrate the steps that need to be taken by all those involved — from key stakeholders to the crisis management team members, the customer service team, and others.
There are three stages to a crisis management plan: pre-crisis for prevention and planning; crisis response, and post-crisis to ensure that any improvements promised are fulfilled and to better prepare for future crises.
Identify Potential Types of Crises that Will Impact Your Organization
The first step in developing a crisis management plan is to identify potential types of crises and their consequences. Be sure you can tell the difference between what is and isn’t a crisis and the level of response it will require.
- Single occurrences that unfold in a short period of time
- Emergency situations, which could be more stressful but will not have a significant impact on the business’s finances or reputation
- Critical situations, which will have a significant impact on your business including a negatively affecting your organization’s reputation
There are numerous types of crises that can impact your company. Some may be more of a risk to your industry than others. For example, a restaurant has significant exposure to food safety issues while a tech company has greater exposure to cyber risks.
You should include multiple plans for your company in your general crisis management plan/business continuity plan to account for all possible crisis scenarios.
Common types of crises your company may encounter include:
- Natural disasters like flooding, hail, earthquakes, hurricanes, wildfires, and other severe weather-related issues
- Pandemic — COVID-19 impacted all business continuity plans and those that were ready with a crisis response plan were better able to go remote without any or few hiccups
- Human error and malpractice (hazardous material spills) or intentional human-caused events, such as sexual assault, violence, shootings
- Power outages that disrupt a business’s operations
- Cyberattacks, including data breaches, phishing, social engineering, and ransomware that can affect all types of businesses and industries and can wreak havoc on one’s operation and reputation if products can’t be delivered and customer personal information is compromised
- Financial crisis in the event a product or company experiences a sudden drop in demand
Social media has also instigated potential crises for companies. One controversial tweet or post by an employee, manager, or shareholder can produce a firestorm. Without a crisis management plan, you’ll be struggling to get control of a crisis situation.
Steps in Developing Crisis Management Planning
Choose your crisis management team members
- Select a team of leaders to collaborate with during the crisis management process before taking the first step in crisis management planning. It’s important to get management buy-in and participation when developing a crisis management plan.
- Choose people who will take action during a crisis. Create this team at the start of the crisis management planning to ensure that everyone understands the company’s crisis strategy.
- The crisis management team members may include a crisis management advisor, a PR specialist, the HR supervisor, legal and financial consultants, and a safety advisor along with company senior management. Clearly define their roles.
For example, who is in charge of contacting whom? Who is responsible for handling the media crisis response and taking care of public relations to deal with the potential fallout of any negative consequences depending on the type of crisis? Who is responsible for developing the talking points for the media? Who will contact employees, external stakeholders, and clients to apprise them of the situation? If you have a limited staff, select two or three individuals in senior executive roles to spearhead the planning.
Conduct a risk assessment and a gap analysis
Once you identify the types of crises you may encounter you need to conduct a risk assessment that outlines how you will respond in each case and who will take action in the time of a crisis.
In addition, perform a gap analysis to help you evaluate how your business would perform if a crisis occurred. Look at your current situation and identify where you need to make improvements so that your business responds effectively as a crisis develops, during a crisis and post-crisis.
For example, how well prepared are you to assess warning signs and act quickly? If a hurricane is heading your way, does your crisis management plan include an emergency response that accommodates getting employees and visitors to safety and properly protecting equipment and property? Do you have risk management strategies in place to help mitigate the damage? If not, you need to incorporate measures in the crisis management plan that addresses each gap.
Determine the impact of the crisis on your business
Once you’ve identified the high-probability risks that could affect your company, work with your crisis management team to conduct a business impact analysis of these risks. Because each risk can result in a different outcome, it is critical to examine each one separately. Loss of customers, property damage, a tarnished reputation, delayed sales, or financial loss are all possible business consequences.
Have a response ready for each type of crisis
For each risk you’ve identified, outline the actions your team would take to respond to the threat if it were to occur. For example, if you work at a tech company and your company suffers a cyberattack, you will need individuals to secure the network, notify your customers, perform the forensics required to determine how the breach occurred, restore operations, and develop key messaging for crisis communication to media outlets. You’ll also need an individual to speak with your insurer if you carry cyber insurance, which will help pay for many of the tasks that need to be undertaken. Most cyber policies, for example, provide coverage for client notification, forensics, network restoration, PR expenses, loss of income, etc.
If you’re building is located in a catastrophe-zone area in which severe weather is an issue, you need individuals to carry out your emergency management plan to ensure employee safety. You require an evacuation plan and a recovery plan that includes business continuity so that you can operate remotely while rebuilding takes place if necessary. (You also need to contact your insurer to get an adjuster out to your property if your building is damaged. You want someone responsible for taking care of this.)
A case in crisis unpreparedness:
Look at the reputational hit Amazon took, for example, when its warehouse in Illinois was hit by a tornado. The company was widely criticized for its lack of crisis management when its roof collapsed and several employees died. Its emergency response was questioned when not all employees made it to a safe shelter in time. Although Amazon stated it responded immediately to the tornado warning, posts like this on Facebook were detrimental to the company’s reputation and what was perceived as mishandling of an unexpected event:
“Everyone knows that all Amazon cares about is productivity,” wrote the sister of an Amazon employee who died at the warehouse hit by the tornado. [My brother] would not have died if the company “got them [the employees] to safety after the storm started to get bad and took it seriously…I want them to answer for this, I want this to be a starting point of places taking the lives of their employees seriously and treating them as more than a number.”
Solidify the crisis management plan
Solidify your crisis management plan once you’ve discussed the threats your company may face, the impact on your business, and how to respond. Work with each key stakeholder to ensure that everyone knows what to do and when.
Train your crisis management team
Ensure your crisis management plan includes training sessions for emergency response, life safety, damage assessment, disaster recovery plan, and crisis communication. Implementing training is fundamental to your crisis management plan. Consider testing the plan by simulating certain events to see how effective your crisis management response is and how individuals respond in real-life scenarios.
Examine and update the crisis management plan
Once your crisis management plan is finished, go over it again to make sure there are no gaps. Remember, this is a living document. Because potential risks change over time, you should revisit and update your crisis management plan at least once a year.
In addition, establish monitoring systems to ensure the plan is being executed properly.
Allocating resources
The safety of your employees and customers and the sustainability of your company along with your organization’s reputation is too important to forgo having a crisis management plan in place to prepare for and deal with crisis situations. Allocate the resources — both human and financial — to put together a crisis team to execute your plan to effectively manage events.
Take the time to develop a plan with all the components required to be effective — from your crisis management team to your risk assessment, crisis response per incident, emergency management plan, damage assessment, contingency plan, recovery plans, and crisis communications.
Final Words
Don’t let a PR crisis derail everything you’ve worked so hard to achieve.
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