Why Create A Crisis Management Plan?

[Purvi Dalvi]

Managing the crisis is an essential function within organisations. At some point, most businesses are facing a crisis and, if they fail to respond properly, it can harm business outcomes, stakeholders, and the public image of the company.

What is crisis management? 
A crisis is described as any significant threat to operations that, if not handled properly, could have negative consequences. The potential harm that a crisis can cause to the organisation, its stakeholders and their reputation gets considered as a threat.

Three associated threats can result in a crisis:

• Public safety
• Financial losses
• Damage to reputation

Serious crises, such as industrial accidents, can lead to injuries and even the deaths. Disasters often result in financial losses, diminished buying intentions, interruptions in operations such as closing a factory while investigating an accident and prospective lawsuits or payments. All incidents pose a challenge to the credibility of an organisation.

These three threats must get addressed through an effective crisis management plan. Public safety should be the primary concern because failure to address this intensifies the harm caused by the crisis. Only after addressing public safety concerns should reputation and financial losses be taken into account.

What is a crisis management plan? 
A crisis management plan is a document that outlines the procedures a company will use to respond to a critical situation that may adversely affect its competitiveness, credibility, or organisational capacity. Business continuity, emergency management, crisis management and damage evaluation teams use the crisis management plan to prevent or mitigate harm and provide direction for personnel, resources, and communications.

For limiting damage to an organisation, its stakeholders and the public, a crisis requires quick decisions. Preparedness planning helps an organisation to respond effectively in the case of a major crisis by having a well-documented plan of responses to potential emergencies.

Potential crisis such as:

• Natural calamities like hurricanes, earthquakes, tsunamis and volcanoes.
• Other serious climatic incidents such as floods, snowstorms, and droughts.
• Biological threats, including foodborne illnesses and pandemics.
• Accidental happenings caused by humans, such as fires, explosions, cave in of buildings or structures and hazardous material spills.
• Premeditated human-caused events such as robberies, violent acts, and fires; and
• Technological incidents, such as disruptions and cyber-attacks.

Communication is essential to overcome crisis since it keeps the necessary people informed, from local action in a single office to global response. The company will update its communications as the crisis progresses and develops. It is a part of an effective crisis management plan.