Dealing with a crisis

Dealing with a crisis Definition of a Crises

A crisis is defined as an unexpected event that threatens the wellbeing of a company Or a significant disruption to the company and its normal operations which impacts on its customers, employees, investors and other publics Crises can be categorised as
Fairly predictable and quantifiable crises, or Totally unexpected crises

Dealing with a crisis_v1

Dr. Harald Fien

Dealing with a crisis Types of crises (1)

Natural disaster (so called acts of God)
Physical destruction due to natural disaster e.g. flood Environmental disaster

Industrial accident.
Construction collapse Fire Toxic release

Product or service failure

Product recall Communications failure Systems failure Machine failure causes massive reduction in capacity Faulty or dangerous goods Health scare related to the product of industry

Dealing with a crisis_v1

Dr. Harald Fien

Dealing with a crisis Types of crises (2)

Public relations
Pressure group or unwelcome media attention. Adverse publicity in the media. Removal/loss of CEO or other key management

Business and management

Hostile takeover. Sudden strike by workforce or that of a key supplier. Major customer withdraws its support Competitor launches new product Sudden shortfall in demand

Legal
Product liability Health scare Employee or other fraud

Dealing with a crisis_v1

Dr. Harald Fien

Dealing with a crisis Examples of crises

Asian tsunami - crisis for the countries concerned and for the tourist industry Three Mile Island - US nuclear industry crisis in the 1980s Sudan 1 dyestuff in processed food Coca Colas Dansani purified water contained a carcenogen and as a result the European launch was abandoned Hurricane Katrina

Dealing with a crisis_v1

Dr. Harald Fien

Dealing with a crisis Key terms

Risk management
The identification and acceptance or offsetting of the risks threatening the profitability, or even the existence, of an organisation

Contingency planning
A plan for back up procedures, emergency response and post disaster recovery

Crisis management
The process of responding to an event that might threaten the operations, staff, customers, reputation or the legal and financial status of an organisation. The aim is to minimise the damage

Dealing with a crisis_v1

Dr. Harald Fien

Dealing with a crisis Risk management involves

The identification of where and how things can and might go wrong Appreciating the extent of any downside if things go wrong Devising plans to cope with the threats Putting in place strategies to deal with the risks either before or after their occurrence

Dealing with a crisis_v1

Dr. Harald Fien

Dealing with a crisis Probability-impact matrix

High probability of occurrence

Low probability of occurrence Serious concern -adapt strategy -limit likely consequences

High likely impact

High priority -contingency plans -avoid or reduce risk

Low likely impact

Little concern -can be ignored

Some concern -reduce, limit or defect risk

Dealing with a crisis_v1

Dr. Harald Fien

Dealing with a crisis Contingency planning

Organisations prepare contingency plans in recognition of the fact that things do go wrong from time to time Contingency planning involves:
Preparing for predictable and quantifiable crises Preparing for unexpected and unwelcome events

The aim is to minimise the impact of a foreseeable event and to plan for how the organisation will resume normal operations after the crisis

Dealing with a crisis_v1

Dr. Harald Fien

Dealing with a crisis Crisis management involves

Identifying a crisis Planning a response Responding to a sudden event that poses a significant threat to the firm Limiting the damage Selecting an individual and team to deal with the crisis. Resolving a crisis

Dealing with a crisis_v1

Dr. Harald Fien

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Dealing with a crisis Stages of a crisis

Pre-crisis
Prior to the event

Warning
Indications that there is or may be or could be an event liable to cause a significant impact on the organisation

Crisis point
When the event begins to cause significant impact on the organisation

Recovery
The acute stage of crisis has passed and the organisation is able to focus on a return to normal operations

Post crisis
Evaluation of the effects Repair to the organisation

Dealing with a crisis_v1

Dr. Harald Fien

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Dealing with a crisis Advice on handling a crisis

Appoint a crisis manager Recognise that the crisis manager is likely to adopt a more authoritarian style than is normal Do an objective assessment of the cause (s) of the crisis Determine whether the cause (s) will have a long term effect or whether it will be a short term phenomenon Project the most likely cause of events Focus on activities that will mitigate or eliminate the problem

Dealing with a crisis_v1

Dr. Harald Fien

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Dealing with a crisis Lessons Learned

How is a crisis defined? What are types of crises? Explain the key terms:
Risk management Contingency planning Crisis management

What are stages of a crisis? How to handle a crisis?

Dealing with a crisis_v1

Dr. Harald Fien

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