Crisis Management is one of the most consuming issues of the 21st Century.  Crisis can threaten the very continuity of businesses today.  Even an abundance of resources and archives of experiences cannot ensure a company's security and rapid recovery in the event of a crisis.   It is crisis management training, planned prevention, and immediate response that reduces losses to keep a company operational and productive.

In the normal course of events, most corporate management groups are ill prepared or more likely, totally unprepared to effectively deal with most crisis situations including; fire, bomb threats, natural disasters, kidnapping or wilful acts of destruction. 

Nor are the majority of companies equipped to deal with the problems these events can cause - disruptions to business, extraneous expenses, even personal danger.  The alternative of course, is to be prepared with procedures in place to allow immediate and positive action to be taken in response to crises such as these. 

But how does a company establish such procedures?  How does it prepare for an eventuality that may never happen?  What about the cost and the time involved?  What crises should a formal plan be prepared for? 

What, Who and How 

In broad terms, Crisis Management is a matter of facing up to the threat - recognizing the potential for a crisis and working to forestall it: reacting quickly and effectively to any crisis once it occurs. 

There are several principal elements in facing up to the threat... starting with a clear understanding of what Crisis Management is and does.

CRISIS MANAGEMENT is a systematic response to unexpected events that threaten the people, property and operating continuity of the organization. 

Its basis is a team of selected management, professionals, technicians and general staff who are trained before the fact in:      

      a) the analysis and assessment of threats,

      b) the development and implementation of alternative responses,

      c) the orderly communication of information and decisions to those involved and

      d) coordinating the return to normal operations once the threat or crisis has concluded. 

Its method is to employ skills, rather than emotional or intuitive reactions, in situations that demand fast and often momentous decisions to be made under strain or duress. 

For understanding, a further definition of Crisis Management may be of value. 

CRISIS MANAGEMENT is a formal response to any event that threatens the financial and operational stability of an organization. 

There is probably no set of standard operating procedures required more than those in support of an organizations formal response in a crisis situation.  Yet today, it is estimated that less than 30% of all organizations in North America possess contingency and recovery plans that would actually work. 

The most commonly asked questions by company directors and management are: 

            - What is Crisis Management?

            - What can hurt our organization?  How probable is it?

            - What is a Crisis Management program comprised of?

            - Why should we have crisis response programs?

            - What will having crisis response programs do for our organization?

            - What should we do to address the issue? 
 

Possessing a Crisis Response Capability is; 
 

• Having a Crisis Management Team prepared to respond to and manage any disaster or crisis situation.
• Having pre-established and trained contingency and recovery teams to act decisively at the outset of a disaster.
• Immediately quelling the concerns of employees and their families, shareholders, suppliers and customers.
• Managing the chaotic and stressful first 72 hours of a crisis.
• Having a co-ordinated response to the imagination of the news media.
• Activating pre-planned contingency procedures to maintain service stability.
• Implementing technology based recovery plans to restore critical information and communications systems.
• Ensuring management and employees are focused on what must be done to restore the organization to normal operations.

 
Why a Crisis Response is Required 

1. Reduce Personal Liability 
It is generally known and accepted that Directors and Officers of a company are personally at risk for the action or inaction of the corporation they serve.  It is not as well known that senior managers, agents and sometimes employees can also be at risk. When there is a catastrophic loss because of a disaster, it is likely that individuals, other than Directors and Officers, can be held personally liable for the loss if there are actions that should have been taken but were not.

Persons who act for organizations are in a position of trust with that organization.  They manage and protect it in the best interests of the shareholders, who are owners of the organization.  If the responsible persons breach the duty of trust, they may be liable to the shareholders of the organization. 
 

2. Minimize Negative Reaction 
As history has proven, when an organization experiences a major crisis or physical disaster, the sudden reactions by external parties can cause more immediate and permanent harm than the incident itself. 

A fire, bombing or natural disaster has an obvious and abrupt impact on an organization’s ability to perform.  The reaction of shareholders and customers is concern for their investment and source of supply and they will act in a manner that best protects themselves, without consideration for the affected organization. 
These actions could prevent any organization from effectively recovering from their disaster, either for a long time or permanently. 
 

3. Safeguard Company Assets 
At the outset of a crisis, most, if not all, company assets could be at risk.  Product, facilities, equipment and people can all be threatened by a disaster situation. 
Without implemented and rehearsed emergency response programs, the chaotic atmosphere and stressful conditions will prevent an organized and immediate response.  The losses that could be suffered will increase substantially with every passing hour. 

Only the immediate actions of the organization can minimize the loss or inaccessibility of corporate assets. 
 

4. Minimize Financial Losses 
Only a small portion of possible financial losses can be protected through insurance.  The loss of immediate sales, temporary loss of production capacity, inability to provide services or the disruption of a distribution capability may all be minor when compared to the permanent loss of market share through lost customers and weakened product/service allegiance. 
Insurance may cover the short term impact of a disaster but unless the organization has formal Crisis Management and Crisis Response programs implemented, the problem will not require a short-term solution. 
There are many other reasons why formal crisis response programs are required within every organization.  Suffice it to say that actual survival may be at risk.