You wake up to the sound of your phone buzzing with urgent messages. You reach over to check it, and as you scroll through the notifications, your heart sinks. There has been a cyber-attack on your company’s website. The hackers stole all your customer’s personal information. Your phone continues to buzz with calls from angry customers and concerned employees.
You get dressed and rush to your office, feeling a pit in your stomach. You realize that you don’t know where to begin. There’s no plan in place for a crisis like this. It didn’t cross your mind that a cyber-attack could happen to your business.
You spend the morning trying to contain the damage, but it’s too late. The data leaked. Your reputation is in tatters, and your customers are leaving in droves.
As the day goes on, the situation only becomes worse. Your employees are panicking, and you are getting calls from lawyers and the media. You feel like you are in over your head, and you have no idea what to do. You try to come up with a plan, but every idea you have seems inadequate.
The next few days are a blur of activity as you attempt to mitigate the damage. You are working around the clock, but it seems like you are always one step behind. Your sales are plummeting, and your employees are starting to look for new jobs. You are at a loss, and you can’t shake the feeling of guilt and regret.
As the dust starts to settle, you take a step back and evaluate what has happened. You realize that you should have been better prepared for this crisis. Now you’re paying the price. You should have had a plan in place for a cyber-attack. And you should have been more proactive in protecting your customer’s information. You vow to never let this happen again. And you start to put in place new security measures to protect your business from future attacks.
You wake up to the sound of your phone buzzing with urgent messages. You reach over to check it, and as you scroll through the notifications, your heart sinks. There has been a flash flood in the area, causing damage to your company’s main facility. Your phone continues to buzz with calls from concerned employees and worried customers.
But instead of panicking, you take a deep breath and remind yourself that you have a plan. You get dressed and rush to your office. Your crisis management team is already assembled and working on a plan of action. They have trained and drilled on how to respond to this kind of emergency. They can assess the situation and start the recovery process.
You execute the plan, to get operations back up and running. Your team works on the damage assessment. You communicate with your customers and employees. It’s a big part of your plan to keep them informed. They receive regular updates on what is happening and what you do to address the crisis.
Thanks to your preparation, you can reduce the damage and get your business back on track. You have pre-arranged secure temporary facilities for your employees. Production will be back on-line shortly. Your customers appreciate your transparency and proactive approach. And you can keep them informed and satisfied throughout the crisis.
As the dust starts to settle, you take a step back and review what has happened. You are proud of how your team has handled the crisis, and you are grateful for the plan you had in place. Preparation and planning have been crucial in dealing with this crisis.
What is a crisis?
The definition of crisis
Looking into Merriam-Webster dictionary, we can see the following.
1 a : the turning point for better or worse in an acute disease or fever
b : a paroxysmal attack of pain, distress, or disordered function
c : an emotionally significant event or radical change of status in a person’s life
// a midlife crisis
2 : the decisive moment (as in a literary plot)
// The crisis of the play occurs in Act 3.
3 a : an unstable or crucial time or state of affairs in which a decisive change is impending
especially : one with the distinct possibility of a highly undesirable outcome
// a financial crisis
// the nation’s energy crisis
b : a situation that has reached a critical phase
// the environmental crisis
// the unemployment crisis
ISO Standard definition
ISO 22301 defines crisis as an unprecedented or extraordinary event or situation that threatens an organization and requires a strategic, adaptive, and timely response to preserve its viability and integrity. The event might include a high degree of uncertainty. The event might exceed the response capacity or capability of the organization.
As you can see, there are three key elements in this definition of crisis:
So, it is an event that is so sudden, unexpected, and dramatic that it throws an organization off balance. What’s worse, the full implications and nature of said event might be unclear at the time.
The Three Stages of a Crisis
There’s no such thing as a “normal” crisis, but there are three stages that every crisis follows. It is important to know what these three stages are so that you can realize that there’s always something you can do.
At the risk of stating the obvious, there are three stages:
- Before (pre-crisis)
- During (in-crisis)
- After (post-crisis)
I will break this down further later in this article, by placing appropriate activities in each stage.
I am aware that there are many ways to split the crisis into stages; however, I opt for simplicity.
Types of Crises
It is critical to understand that crises do not exist in a void. This means, among other things, that every crisis has its source. It’s not always possible to identify a single source, and crises can occur in numerous ways. They can be a result of a disaster, misconduct (employee or management), hostile actions, changes in the business environment or legal system, and many more. You can read more in this article.
What crisis management is
Imagine waking up to a world in chaos. Natural disasters ravage communities, financial crises cripple economies, and PR disasters ruin reputations. In the face of crisis, it’s easy to feel helpless and unsure of what to do. But crisis management can make all the difference in navigating these tumultuous times.
Definition of Crisis Management
For the definition of crisis management, let’s revert to the ISO 22301 standard. The definition seems elementary: it is the development and application of the process, systems, and organizational capability to deal with crises.
So, crisis management is the process of identifying, assessing, and addressing crises before they escalate. It involves having a plan in place and being prepared to act quickly and decisively in the face of danger. Without it, crises can spiral out of control, leading to irreparable damage to individuals, organizations, and society as a whole.
Take, for example, the 2010 Deepwater Horizon oil spill. BP was slow to respond and didn’t have a plan in place to handle the disaster, leading to devastating consequences for the environment and the company’s reputation. On the other hand, when Hurricane Katrina hit New Orleans in 2005, crisis management efforts by organizations like the Red Cross and FEMA were able to save countless lives and minimize damage.
Even if it may seem differently, crisis management is often not about choosing the best solution. It is about picking the “least bad” solution in that particular situation that will give you the best response and recovery options for your organization. The management part in this case involves making numerous decisions without having the full picture of the situation. But I’m getting a bit ahead of myself.
Effective crisis management is essential for protecting lives, preserving reputations, and minimizing damage. It’s not a matter of if crises will occur, but when. That’s why it’s so important to be prepared and have a plan in place. Don’t wait until disaster strikes to start thinking about what to do with it. Take the time now to develop a plan and be ready to act when it hits. The future of your business, and perhaps even your community, may depend on it.
The Phases of Crisis Management
Let’s review the stages and identify the corresponding phases of crisis management. Building on the stages, we have the following structure.
- Identify – identify the key elements of a business or an organization and identify the threats to these key elements
- Plan – prepare plans for response, and recovery
- Avoid – perform any activities necessary to avoid the crisis altogether
- Exercise – build the organizational “muscle memory” by practicing the plan without the stress of a real-life critical event
- Activate – who and how activates the plan, the team, the communications
- Assess – build the situational awareness, assess the impact
- Respond – perform the response activities tailored to the situation at hand
- Recover – return to business
- Review – execute the lessons learned process, analyze what went wrong and what went well, document everything
- Improve – build upon the crisis, make the organization more resilient by reviewing threats, updating plans, training people, etc.
This should give you a basic idea of what happens at each stage of a crisis. It is critical to understand that avoiding crises should be the primary focus of any company. The same goes for planning and exercises. So, the processes happening in the “before” stage are critical for success.
Please keep in mind that there are many types of crises as well as different ways that crises emerge. This should impact all phases of crisis management that you do. Having this knowledge allows you to be better prepared.
The Importance of Crisis Management
I could literally go on for hours to explain that crisis management is important. But that’s beyond the scope of this article. So, below is a list of the 10 reasons why crisis management is important for small and medium businesses:
- Protects the company’s business
- Helps to minimize financial and reputation losses
- Enables the company to quickly respond to a crisis
- Helps to maintain customer trust and loyalty
- Ensures compliance with legal and regulatory requirements
- Facilitates effective communication with stakeholders
- Helps to maintain continuity of operations
- Improves the company’s ability to recover from a crisis
- Enhances the company’s ability to prepare for future crises
- Increases the overall resilience and stability of the company.
Crisis management plays a critical role in minimizing the negative impact of a crisis on the business, protecting the business’s stakeholders, and ensuring the long-term survival and success of the business. By reducing the impact of a crisis on the business’s reputation and brand image, the business can maintain customer trust and loyalty, which is crucial for long-term success. In addition, by allowing the business to quickly and effectively respond to unexpected events, the business can protect its employees, customers, and assets. This is essential for maintaining the continuity of operations and minimizing financial losses.
Conclusion – Yes, It Is Important
You should know now what a crisis is and how to define crisis management. If you don’t know it by now, believe me when I say this, but it is important for your business. Crisis management is underrated, by far.
Crisis management is a critical aspect of running a business, regardless of its size. Unfortunately, many small and medium businesses overlook the importance of crisis management, leaving them vulnerable to the potentially devastating consequences of a crisis.
Creating a plan is the first step in being prepared for any potential crises that may arise. A comprehensive plan should include procedures for identifying and assessing potential threats, as well as strategies for addressing them. It should also outline roles and responsibilities for key personnel, as well as procedures for communicating with stakeholders and the media.
Developing a crisis management plan can seem daunting, but there are many resources available to help. The Small Business Administration (SBA) offers a guide for small businesses on how to create a crisis management plan, and the Federal Emergency Management Agency (FEMA) provides templates and training for businesses of all sizes.
Additionally, many experts, consulting firms and insurance companies offer crisis management services and advice. And they will all underline the importance of crisis management. But not because it’s how they make money, but because it really is. Just give it a thought.
In today’s fast-paced and uncertain business environment, it’s more important than ever to be prepared for potential crises. By creating a plan, small and medium businesses can protect themselves. I urge you to prioritize crisis management and act by developing a plan for your business today.
Please don’t hesitate to schedule your free consultation using the contact page if you would like to discuss the importance of crisis management or want me to help you.