Crisis Management

Cite this article as:"Crisis Management," in The Business Professor, updated April 23, 2020, last accessed August 7, 2020, https://thebusinessprofessor.com/lesson/crisis-management/.

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What is Crisis Management?

Crisis management, a facet or risk management, is a process-based approach to addressing highly unfavorable situations arising within an organization. It involves developing a strategy and plan for addressing the cause and consequences of an unfavorable situation. It generally involves establishing new processes defined by clear roles and responsibilities. The processes must be acknowledged and understood across the company.

  • Note: Sub-processes within crisis management include:
    • Emergency Management – This is the process of stopping or alleviating the immediate negative impact of a crisis scenario. It can be understood as stemming from the severity of the effects of the crisis situation to allow for long-term management of the negative consequences.
    • Business Continuity Management – Undertaking the steps necessary to allow for the continuation of business operations in the midst of or in response to a crisis.

The objectives of crisis management include:

  • Prevention – Preventing the occurrence of a negative situation.
  • Avoidance – Avoiding the negative consequences associated with a potential crisis.
  • Assessment – Understanding the effect or impact of an unfortunate situation or circumstance.
  • Management – Organizing organizational resources through process and procedure to contain and mitigate the effects of an unfavorable situation.
  • Conclusion – Bringing about an end to the negative situation giving rise to the organizational crisis.

Components of a crisis management plan include:

  • Processes, procedures, and roles in addressing the reality or perception of a crisis.
  • Defining what constitutes a crisis through recording information and establishing metrics for a response.
  • Establishing lines of communication with internal and external stakeholders.

What are the most common categories of crises:

  • Natural disaster
  • Technological crisis
  • Confrontation
  • Malevolence
  • Organizational Misdeeds
  • Workplace Violence
  • Rumors
  • Terrorist attacks/man-made disasters

What is Crisis Management Strategy?

Crisis management strategy, a facet of management strategy, is a strategic plan with missions, goals, and objectives related to avoiding, preventing, identifying, managing, and ending crisis situations. This includes identifying impending situations that can result in a crisis. Developing a strategic plan for responding to the situation through new processes and activities. Then implementing a process for maintaining and monitoring the effects of the situation. Types of Strategic plans include:

  • Crisis Management Plan – These deals with planning the organization’s response to the crisis situation.
  • Contingency Planning – This involves developing plans for potential scenarios that could lead to a crisis. It is a form of preemptive planning that ensures the organization is prepared for these situations.
  • Business Continuity Planning – This is a plan for restoring or maintaining business operations that are harmed or negatively affected as a result of the crisis.

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