By all indications, the threat of corporate crisis keeps growing. For one, fines for corporations across all industries have risen, signaling that further financial crisis could be in the offing. Also, crisis-related media headlines involving the Forbes 100 are up 80 percent over the last decade. All of this points to the fact that crisis has become the new normal across diverse industries and markets. So what’s going on?
The fact is crisis events are just becoming harder to avoid. Companies, even the smallest startup, have the potential to touch so many more people with their services. That’s a function of multiple, really big, social and economic factors: more integrated, globalized supply chains, the rapid rise of social media, greater organizational and product complexity, the list goes on.
- Economic crisis, involves external events, like labor strikes and shortages, market crashes or just major stock fluctuations, and finally accounting scandals. Examples of economic crisis include the Enron, WorldCom, and Tyco accounting scandals.
- Informational crisis, includes any loss of important information or organizational records, either public or confidential. Under this category, you can find data theft or leaking, or social engineering. Examples of informational crisis include the Equifax, DNC, and Uber data breaches.
- Physical crisis, comprises all major disruptions to physical equipment or even the loss of important suppliers, which impair operations. Examples of physical crisis include the Three Mile Island accident, the Chernobyl meltdown, and the Pike River Mine explosion.
- Human resources, hits a company’s personnel and can include the loss of a key employee, like a CEO, or even vandalism or violence in the workplace. Examples of HR crisis include CEO affairs at Boeing, Priceline, and Lockheed Martin.
- Reputational, involves rumors and gossip that once propagated can significantly harm a company’s reputation. An example of a reputational crisis includes the soda can tampering rumor at Pepsi.
- Psychopathic, enters the realm of the unthinkable, involving acts like terrorism, kidnapping, or even product tampering. Examples of psychopathic crisis include the Pulse Night Club shooting, the TWA 541 hijacking, and the Tylenol tampering scandal.
- Natural disasters, includes tornadoes, earthquakes, fires, flash foods, disease outbreaks, etc. Examples of national disasters include Japan earthquake and tsunami 2011, Hurricane Katrina, and the Northridge earthquake of the 1990s.