Crisis management and contingency planning

Introduction

A crisis is a situation of instability which results in major problems for a business
A crisis can have numerous effects such as threatening the survival of a business
All businesses face the risk of experiencing a crisis
Some examples of crisis include damaging media publicity, computer hacking and natural disasters
Crisis management refers to the response of an organization to a crisis situation

Crisis planning versus contingency planning

Crisis planning refers to being reactive to events and changes, which may cause serious damage to a business. Extreme crises can lead to the closure of a business
It is extremely difficult for businesses to plan for such unquantifiable and unpredictable risks
Crisis plans need thoughtful processes in order to anticipate the impact of their operations
Crisis management is essential in order to minimize the impact of the crisis
Radical measures as well as an autocratic leadership style are likely to take place
Crisis planning involves forecasting potential crises whereas contingency planning focuses on how to deal with the crises in order to ensure that the business will continue
Contingency planning is based on being proactive to changes in the business environment, involving developing a plan before an unwanted and unlikely event occurs.
It involves using ‘what if’ questions in order to identify all likely threats

Advantages of contingency planning include:

Careful planning can help reduce risks since most eventualities have been accounted for
It can reduce the impact of crisis on the organization due to the well thought out plan.
It can help reassure staff and therefore satisfy the needs of employees
Contingency planning needs effective communication between management and employees, helping to enhance motivation as well as productivity

Disadvantages of contingency planning include

Contingency planning requires valuable management time as well as resources, increasing costs
Crises may never happen which means that time and money exerted into ...

Advantages of contingency planning include:

Careful planning can help reduce risks since most eventualities have been accounted for
It can reduce the impact of crisis on the organization due to the well thought out plan.
It can help reassure staff and therefore satisfy the needs of employees
Contingency planning needs effective communication between management and employees, helping to enhance motivation as well as productivity

Disadvantages of contingency planning include

Contingency planning requires valuable management time as well as resources, increasing costs
Crises may never happen which means that time and money exerted into contingency planning could have been used better elsewhere
If plans are not based on updated or accurate data, inappropriate action may be take if/when a crisis occurs
Planning cannot occur prevent the totally unexpected, such as a tsunami.

Crisis management

Crisis management refers to the management of operations before, during and after the event of a crisis
Crisis management is sometimes referred to as disaster recovery
Effective crisis management is carried out if managers and directors are able to detect and deal with potential crisis’s in a swift manner before they develop into a real problem
This avoids the deterioration of the overall company image
Crisis management entails the use of business continuity plans to minimize the disruptions as well as the damages caused by a catastrophe. These plans will consist of six stages

Select a team of staff who are trained to deal with crises
The team analyses and assesses potential threats
The team then develops and implements alternative tactics
Information and decisions are systematically communicated to whose who are involved and/or affected
Resume normal business operations once the crisis has been dealt with
Reflect on the experiences in order to better deal with crises in the future by updating the business continuity plan

The fact that some risks are unquantifiable makes crisis contingency planning more challenging
Most experts believe being open and honest during a time of crisis is beneficial to all parties involved
Crisis management often focuses on public relations
Examples of benefits of open crisis management includes, corporate social responsible, minimizing negative reaction, reducing personal liability, handling stuff concerns and anxieties and minimizing financial losses

Crisis management, contingency planning and business strategy

Crises management is based on dealing with threats and disasters for a business by taking into consideration the potential for crises and establishing contingency plans to deal with them.
Planned prevention and proactive response minimize the impacts of crises
The crisis coordinator works with colleagues and external agencies to develop a crisis management system
The crisis management team will have to investigate the root of the crisis. Different tools can be used for this such as Isikawas cause-and-effect model
How much time and money should be spent on crisis management is questionable
Managers are better served to deal with change with some crisis and contingency planning