What is Crisis Management and Why Do We Need A Plan?

Learn what crisis management is, why you need a plan, and the key ingredients that will help you survive.

Crisis management planning is like this hand blocking more dominoes from toppling

Crisis management is defined as the process undertaken by any organization to prevent, prepare for, and respond to events that threaten to harm people or property, seriously interrupt operations, damage reputation, or impact the bottom line. Crises cost you money, hurt productivity, and can easily threaten the long-term health of your business, especially if you aren’t ready.

All good crisis management efforts go through three core stages — Pre-Crisis (preparedness and prevention), Crisis Response (actually managing the crisis), and Post-Crisis (recovery and analysis, integrating lessons learned).

Pre-Crisis: Engaging in active crisis prevention and being truly prepared to react are the absolute best ways to reduce the impact any given negative situation can have on your organization. This is the stage where you’ll choose your core crisis team, create a formal crisis management plan, train your people, and start to put crisis-related policies into place in your day-to-day operations. Thorough crisis management plans should include specific crisis communications instructions, and in many cases risk assessment, business continuity, and emergency management planning as well. The piece most often missed in this step is training. Sometimes, and for a variety of reasons, organizations will complete full crisis plans but never engage in training on crisis team roles or actual use of the plan. Unfortunately this means that your execution of the plan in a real-life scenario is bound to be lackluster, and a lack of training often does major harm to what otherwise would be a strong crisis response structure.

Crisis Response: You experience an event that triggers the response protocol in your crisis management plans and the ball starts rolling. The crisis team is activated, and training/preparedness measures are put to the ultimate test — functioning in the real world. There are two branches to crisis response – the reputation/communications side and the operations/business continuity side. While messaging is going out to appropriate parties keeping them informed and confident you’re handling things well, swatting down emerging rumors and managing the media, experts in operations are figuring out how to keep the business going – steps like finding new supply lines, shifting production to non-impacted plants, or configuring systems to allow employees to work remotely.

Post-Crisis: While the thought of finding the nearest beach and ignoring anything to do with work for about a week is tempting to most at this point, it’s important to keep your head in the game post-crisis. I’ve never seen a crisis that didn’t have a few loose ends to tie up, and there are always additional crisis communications pieces that need to go out to groups like upset customers, business partners, or local regulators (not to mention your own staff) assuring them that the cause of the crisis is fixed, you’ve learned valuable lessons from it, and that there are specific measures in place to ensure it doesn’t happen again. A big part of post-crisis work is analysis of your response and plan. At Bernstein Crisis Management our post-crisis reviews are based on a SWOT analysis, though you can use any method that ensures you’re able to clearly and honestly identify what worked, what didn’t, any unexpected issues that emerged, and in the end provide a clear list of things to change or improve.

Why do we need a crisis management plan?

Crisis management plans are like this umbrella protecting someone from a storm

Short answer – because being prepared saves money, saves time, saves reputation, and can even save lives. Now here’s the long answer! The consequences of mishandling a crisis can range from the relatively minor (think needing to reply to an obnoxious number of negative reviews), to the utterly devastating (imagine a manufacturing plant going up in flames with no plan for response) but nearly every crisis situation shares a few risks in common. These include risk of litigation, operational disruptions, harm to reputation, and in the extreme cases injury, death, or financial damage so immense there is no longer any ability to continue operations. Most crises have another thing in common – the damage could have been prevented or significantly reduced by having a plan that’s incorporated into daily business.

Here are a few more dangers of failing to plan for crisis management:

  • Without a plan you’re more likely to be viewed as incompetent, liars, or outright ‘bad guys’. People expect information incredibly quickly these days, and if you can’t get strong messaging to the right audiences because you’re scrambling internally you’re making the crisis worse.
  • Without a plan you’re guaranteed to lose more money than you needed to. These losses come both as outright expenses and from less tangible sources like lost market share and productivity.
  • Without a plan you’re going to make more mistakes. Nobody performs at 100% under pressure, and in the middle of a crisis is the last place you want to be seen making mistakes that harm your credibility or throw a wrench in effective response.

Now that we’ve told you the dangers, how about some benefits of having a working crisis management plan in place?

  • Planning means less opportunity for negative situations to ever become true crises. With crisis-specific planning and protocols in place you have the tools to handle sudden negative issues in a way that will at least reduce, and sometimes completely avoid, their impact.
  • Planning protects your most important asset – your reputation. If you’re having a hard time picturing the value of reputation, how about this – a recent Weber Shandwick study confirmed that global executives, on average, attribute 63 percent of their company’s market value to that company’s overall reputation. How much could serious harm to your good name cost?
  • Planning helps keep the doors open. The question of a major crisis happening for any given organization is not if, but when. Having plans in place to deal with worst-case scenarios is critical to making sure there is ever a “business as usual” to return to after the fact. Protecting business continuity, maintaining that reputation, and engaging with employees, business partners, community members, and regulators during a ugly or tragic situation is the key to keeping your brand afloat long enough to begin the recovery process.

As you can see, while planning does involve an upfront cost, the benefits and savings are clearly favor of properly preparing to handle crisis management.

What’s in a good plan?

So you’ve decided it’s time to create a plan – great! Now what goes in a plan that makes certain it works in the real world, both now and into the future? There are a few key components that should be included in every crisis management plan:

  • Crisis response procedures. Step-by-step procedures for crisis response for any category of situation for which an organization wishes to be prepared.
  • Crisis management-related policies. For example, who is an authorized spokesperson? What is required in terms of information security? What are employees allowed to share on social media?
  • Notification and response protocols for the Crisis Response Team. Who does what in a crisis, and when should they be informed/brought in?
  • Emergency notification procedures. How will we talk to our stakeholders, both internal and external, during a crisis?
  • Spokesperson resources. What should spokespeople be doing from minute one of a crisis event?
  • Key messaging for internal and external audiences. A framework and fill-in-the-blank messaging to allow almost-instant response to breaking issues.
  • Company-specific scenario planning. Special considerations for your business – i.e. Bell-Carter having operations that are split by city-owned roads presents unique challenges others may not face.
  • Additional crisis-response support tools. Helpful checklists and other time-saving resources that are built to help in the midst of the panic that often arises when crises emerge.

Who actually manages the crisis?

In order to survive crisis situations you need a specific team that is responsible for not only keeping the organization running, but also communicating with important audiences such as employees, customers, shareholders, and the press in order to mitigate the potential for reputation damage that comes with any disruption. This is why you have a Crisis Management Team (CMT). The CMT is typically composed of a crisis manager (most often an outside consultant though some large corporations do maintain in-house experts), high-level representatives from departments such as operations, legal, human resources, and public relations, along with key executives who have the power to make major decisions and the ability to act as spokespersons if needed. In addition, ad-hoc members are often brought in to provide support for specific issues. Some of the most common ad-hoc members might be IT specialists, finance experts, security pros, or scientific advisors like epidemiologists.

The core crisis management team is responsible for:

  • Ensuring their organization has proper planning and training in place.
  • Monitoring for potential crises before they create lasting damage.
  • Overall organization and execution of crisis response.
  • Protecting the safety of all employees.
  • Protecting the reputation of the company and its leadership.
  • Assisting legal counsel in litigation prevention measures.

Connecting the dots

Image of man thinking - time to cover crisis management lessons learned and connect the dots

According to a Deloitte study, corporate leaders see threats looming, but still aren’t ready for crisis management. When surveyed, senior board members revealed several telling stats:

  • 63% say they’re vulnerable to terrorism or man made disasters yet only 18% have a plan
  • 73% feel vulnerable to corporate reputation issues yet only 39% have a plan
  • 68% are very concerned about the spread of false rumors, yet only 26% have a plan
  • 70% feel vulnerable to cyber-crime, yet only 48% have a plan
  • 66% report feeling vulnerable to regulatory action, yet only 40% have a plan. These same numbers apply to natural disasters as well.

While these stats may seem surprising, one of the main hurdles to proper crisis management planning and preparedness has always been the disconnect between being fully aware a negative issue is likely to impact your organization and the willingness to be ready for it in advance. In a world where everyone is fighting for a piece of the budget crisis management efforts can feel like an easily cut extra, especially when things are calm, and expecting that a long run of luck will continue forever has been the downfall of more than one business whose doors have closed for good.

The upside is you’re here now, and it’s not too late. Know your vulnerabilities, plan for the worst while hoping for the best, and make sure your people are ready to respond the right way, fast. If you can connect those dots, making risk reduction and quick reactions part of everyday life at your organization, you’ll set the stage for crisis management success

For more information and free crisis management resources, visit www.bernsteincrisismanagement.com.