Handling a crisis- are you in fantasy land?

July 12, 2013
Childrens'Grand Park, Seoul

Children's Grand Park, Seoul

One of the most important areas that should be covered by a Legal Risk Management ( LRM) Program is that of Crisis Management. Crisis Management itself is a fitting topic for a book or blog- but should be addressed here as well. Without effective management of a corporate crisis, a company's future is in doubt.  Nonetheless, many companies live in fantasy land (like the amusement park above) and think a major crisis will not happen to them.

However, the events of the past decade or so have shown that a mega crisis can happen to any company, any industry and anywhere. We have seen Enron, the devastation of a tsunami, the financial collapse of 2008, etc. But more importantly, we have seen numerous examples of a crisis brought about by industrial accidents, cyber attacks, theft of IP, strikes and work place violence which have negatively effected a company's brand or reputation, harmed its financial well being, or in more severe cases led to the collapse of the company.

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A major crisis can pose a serious threat to a company and has to be managed. A  company should therefore ask itself a series of questions:

  1. What major crisis can happen?
  2. What are the potential effects of such a crisis?
  3. What processes should be in place to contain the potential crisis?

In many situations, a company has 24 hours or less to implement a proper crisis management strategy to handle a major crisis that has occurred. Without such a plan, many companies will not recover from a major crisis. In other words, a company can develop a crisis management plan as part of its LRM Program, or it can live in fantasy land and take its chances. Does your company have a Crisis Management Plan in place to contain a potential crisis?

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In part 2 of this blog post I will talk about international crises, issues involved in intenational crisis managenment and recommendations for mitigating the effects of such crisis.

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