Today, the diversification of media sources, particularly the heightened importance of social media, means that news of a crisis can go viral faster than ever, especially for established brands. Yet, crises don’t only happen to global brands. The rationale for building your crisis management practice is that crises can hit any company, at any moment.
By the numbers, corporate crises are actually more likely to pose an existential threat to small businesses – though the COVID-19 crisis has levelled historic brands. According to the U.S. Federal Emergency Management Agency (FEMA), anywhere between 40 to 60 percent of small businesses in the U.S. close following a natural disaster, an ever-more-common kind of corporate crisis.
However, small businesses are not alone in being unprepared for crisis. It seems most organisations, irrespective of size, don’t take adequate crisis management preparedness measures, specifically testing their crisis management plans, before it’s too late.
Even though crisis is a fact of corporate life, organisations often think they are immune and fail to prepare adequately. That’s despite the clear risks associated with crises, e.g., harm to stakeholders, losses for an organisation, or even extinction. Why do businesses take the risk?
One explanation might be that organisations conflate crises with critical events. Critical events are often defined as consistent slow-burn issues that affect an organisation. Critical events can (and often do) turn into crises when not properly handled.
Another culprit: companies are prone to view crises solely in their most dramatic forms; think: the once-in-a-generation pathogen, the category-five storm, or the unprecedented data breach that dominates the news cycle.
Episodic and of more significant magnitude, crises are neither critical events nor so abnormal as to be considered impossible. In their simplest form, crises are unanticipated events or issues that disrupt the day-to-day operations of an organisation.
Crises have the potential to create significant financial, safety, security, or reputational harm, depending on the nature and severity of the event. Decision-makers who believe a crisis can’t happen to their organisation fail to understand the sheer variety of potential crises. Those include:
To be considered fully prepared for all of the above, companies must have regularly exercised crisis management plans in place. That’s the role of crisis management: preparing for, managing, and recovering from crisis. Crisis management consists of the processes designed to prevent or minimise the damage crises can inflict on an organisation.
It’s hard not to argue that organisations can go a long way towards mitigating the damage associated with crises if only they treated crisis management as a critical business function. But first, those businesses must know that besides being numerous in kind, crises are also complex in nature. Hence why crisis management itself tends to be comprised of three phases:
This tri-partite framework of crisis management has a couple advantages:
Critics, however, have argued that the framework itself might be too limiting. Instead, when building or enhancing crisis management capabilities, organisations should take intelligence gathering and constant monitoring as the default mode. In simpler terms, that means approaching crisis management as a lifecycle.
This more cyclical mode of crisis management tends to be more strategy- than tactics-oriented. Here is an example of a crisis management lifecycle framework:
Source: Gwyneth Veronica James Howell, Queensland University of Technology: Description of the Relationship between the Crisis Life Cycle and Mass Media.
The crisis management lifecycle is an important framework for understanding and preparing for crises. But organisations will need a proactive crisis management plan to address all stages within the lifecycle. Effective crisis management preparation should involve all of the following best practices:
Finally, if crises had the regularity of a calendar event, businesses wouldn’t have to plan for them. That’s not the world we live in.
Even if there are warning signs, crises are by nature wildly unpredictable, taking many different forms. But just because organisations can’t always predict when and how crises will hit, it doesn’t mean they can’t plan to manage the effects. That’s the role of crisis management.
A crucial business function, crisis management minimises the time, money, and effort it takes to recover from a crisis. Undertaken successfully, crisis management can even allow the resilient organisation to emerge from the disaster stronger than ever.
Not sure what crisis management resources you should invest in to ensure resilience coming out of the COVID-19 crisis? Download our crisis management software buyer’s guide to find out what capabilities you need for full crisis lifecycle management and business as usual activities.
Published May 19, 2021