is defined by the dictionary as a 'critical moment or turning point.' A business book, on the other hand, might define a crisis as a substantial, unforeseen circumstance that can potentially jeopardize acompany's employees, customers, products, services, fiscal situation, or reputation. Both definitionscontain an element of urgency that requires immediate decisions and actions from people involved.
is the process of preparing for and responding to an unpredictable negative event toprevent it from escalating into an even bigger problem, or worse, exploding into a full-blown, widespread,life-threatening disaster. Crisis management involves the execution of well-coordinated actions to controlthe damage and preserve or restore public confidence in the system under crisis. In the context of corporate governance, excellent crisis management is a'must'whenever a crisis occursbecause of the crisis' enormous potential impact on the company's reputation and financial standing. Poor handling of a crisis situation can ruin the confidence of the customers or the public in a company and jeopardize its survival, a situation that normally takes a long time to correct, if it still is reparable at all. Suchis the importance of public perception of a company's handling of a crisis situation thatmedia coveragemanagementhas become an important ingredient of crisis management. In fact, the definition given by the American Institute for Crisis Management (ICM) for the word 'crisis'underscores the association of a crisis with media coverage by default. ICM defines 'crisis' as
"asignificant business disruption which stimulates extensive news media coverage. The resulting public scrutiny will affect the organization's normal operations and also could have a political, legal, financial, and governmental impact on its business."
Crisis management doesn't start only when a crisis arises and ends when 'the last fire has been put out'.Crisis management requires actions before a crisis happens, while the crisis is unfolding, and after thecrisis has ended. In fact, crisis management is divided into these three stages: 1)pre-incident stage, whichinvolves identification of potential crisis situations and developing contingency plans for responding to eachof them; 2)incident stage, which involves management of an ongoing actual crisis situation itself; and 3)post-incident stage, which includes corrective and preventive actions to preclude the recurrence of thesame crisis situation and business recovery actions to restore public confidence in the brand or thecompany.There are many different ideas or theorieson how to best manage a crisis situation. These differing ideas,nonetheless, have somecommon elements: 1) the need to anticipate potential crisis situations andprepare for them; 2) the need to provide accurate information during a crisis; 3) the need to react asquickly as possible to the situation; 4) the need for a response that comes from the top; and 5) the need for long-term solutions.Anticipating potential crisis situations that a company may encounter and formulating and documentingcontingency action plansfor them are a basic requirement of any crisis management program. Theseplans should also be well-rehearsed by all employees, so the conduct of regular drillsis also needed. Anycompany must be prepared to deal with fires, bomb threats, personnel violence, and natural disasters suchas earthquakes and tornadoes. In the semiconductor industry, the discovery of a life-threatening devicereliability issue, process gas leaks, hazardous chemical spills, and even the sudden loss of a major supplier are examples of crisis situations.One of the hardest things to contend with during a crisis is thecravingof customers or the public for aconstant supply of information. Accurate information pertaining to a crisis are often not readily available atonce, and are too bitter to announce to the public once they become available. If the crisis does notconcern the public, then a company may get away with staying quiet about it.Otherwise, the press will usually be all over the place within hours. In such a case, there is no choice -most experts agree that it is better toprovide accurate information, no matter how painful they sound, thanto manipulate the situation by giving false information to the public, which often backfires with tremendousrepercussions. Thus, a company that has developed a culture of internal secrecy and manipulation is of great disadvantage in this respect, because they would find it difficult to provide honest information andsubsequently resort to the thing they usually do: hide the truth. PR work for high-profile crises is somethingthat any management team must be well-trained for.