The events over the last few days and even months have had a major impact on many companies worldwide, especially those in the US. From the Covid-19 lockdowns, unemployment, stock market collapse to the ongoing riots, companies are realizing that those proactively equipped to handle crisis are in a much better situation than those that are just reacting to the recent catastrophic events.
Companies that successfully manage crises have used risk management processes that contain four or five basic crisis management steps in order to prepare for a crisis. They include the following steps:
1. Identify the major areas of vulnerability the company faces.
2. Develop a plan for dealing with potential threats.
3. Form a crisis management team to deal with or handle threats.
4. Simulate crisis scenarios of potential threats to prepare the company.
5. Learn from the experience of managing the crisis.
Other companies have used a variety of processes or steps to handle crises, including:
Avoiding the crisis through proactive steps
Preparing for the crisis through preparation and planning
Properly reacting as soon as the crisis exists, and
Resolving the crisis
To help put everything into context, a company should realize that many crises, including international crises, occur in stages. The crisis management strategy should be prepared to deal with the stages as they unfold. Each stage requires certain responses from the company, and each stage has a certain impact upon a company. Typically, however, a company does not have a crisis management strategy in place, especially one that can handle the various stages of a crisis. Many times, a company is caught sleeping without a strategy and fails to adequately manage or resolve the crisis, which may severely impact the company. Usually, a poorly managed crisis follows a similar pattern:
-Early indications of a crisis starting—perhaps reports from the Service Department indicating product failure or serious defects.
-Warnings of the upcoming crisis are ignored by company management. Maybe the Service Department’s warnings go unheeded by management.
-The crisis explodes, overwhelming management as deaths or serious injuries are reported due to product failure or product defects.
-Management tries to resolve the crisis quickly but without success as it failed to consider the ramifications of the crisis and how to handle it.
-The company fails to take adequate measures to handle the crisis as the crisis continues to unfold as reported by the media.
-The company suffers the consequences of an outraged media, public, and even some or all stakeholders.
-The company’s existence and brand is severely threatened or put into jeopardy as its stock plummets and lawsuits are filed causing its reputation to be severely tarnished.
Though not all crisis unfold in the stages I describe above, all crisis require a strategy to deal with them. It’s best to work on crisis management strategies now instead of dealing with them during a crisis. Dealing with a crisis as it unfolds without a proactive strategy in place can be very costly and time consuming. And of course, a well thought out proactive strategy increases the chances of success.