Strategic Crisis Management:

Reducing the exposure to risks and crises

Part (1)

Dr. Adel Rayan

Dean, FIBH
Stages of Crisis Management
• Reducing the exposure to risks and crises
(prevention)
• Research and development to anticipate
and manage the crisis (anticipation)
• Develop appropriate plans to deal with
crises (Dealing with the Crisis)
• Creating strong relationships with the
surrounding community
• Creating a crisis management team
Reducing the exposure to risks and
crises (prevention)

Early warning systems

Risk analysis and assessment
Organization culture and crisis
management
Early warning systems
Topics

Introduction
Early Warning System
Importance of Early Warning Systems
Sources of Detecting Warning Signals
How it works?
Environmental Scanning
Supporting the early warning systems
Early warning systems : Introduction

Each crisis sends some warning signals but few

persons who can detect these signals
example :The disaster of floods in Upper Egypt in Assiut
(1994)- Academy of Scientific Research and Technology (ASRT),
Egyptian Survey and Geology and Faculty of Science (Ain Shams
University) prepared a report on areas of floods in Egypt. The
report asked for taking precautionary procedures and plans to
avoid this disaster. Another report prepared by Industrial
Security and Safety Director (1992) in Assiut to The Petroleum
Cooperative Assembly warned of dangers of fire and thunder.
No one listen to these signals.
Early Warning System
The early warning system is a system based
on a period reading of the available data and
information and provide a set of warning
indicators and assessing the risks before the
crisis occurs.
It includes both physical systems (fire
warning systems) and non-physical systems
(measuring employees morale)
Importance of Early Warning
Systems

Clarifying events or negative signals which may

prevent crises if avoided.
Providing a way or method for setting priorities
while dealing with crises
Heling in assessing the activities at risk ( such as
the deterioration of market activity resulting from
failure to solve customers problems)
Estimating the time available to make right
decision to deal with the events detected by the
system.
Sources of detecting warning signals

Management by exception
Staff notes and remarks
Customers feedback
Government actions : decisions/
legislations
Reviewing what media releases about
the organization
How the early warning system
works?
Setting standards that help distinguishing
between ordinary problems and crisis warning
signals
Discovering and detecting warning signals
Assessing warning signals for providing
warning indicators before the occurrence of
the crisis
Assessing risks
Setting Standards

Standards should be set to be able to detect

the warning signals.
Careful study of each type of crises helps in
identifying what indicates the possibility of
having a crisis : example HRM crises may include
strikes , deliberate damage of the organization’s
assets- here the standards may include the
repartition of employees complains to the union ,
unusual gathering of the workers around their
leaders or the union representatives.
Setting standards
It is important to distinguish between
ordinary problems and standards.
See the following silde
Early warning Matrix

Reality
Crisis No Crisis

(1)Compatibility (2)False warning

Crisis
The Decision

(3)Failure (4) Correct rejection

No Crisis
Early warning matrix
Commutability : managers succeeded in
detecting warning signals
Managers failed in detecting warning signals
False warning: managers believed that the
crisis will occur which is not true in reality
Correct rejection: managers believed that
there is no crisis and they are correct.
Standards will help to have correct expectations
Discovering and detecting warning signals

This means detecting , recording and analyzing

signals that give indicators of having a crisis
To be able to distinguish between ordinary problems
and warning signals, managers should :
- Assess the main weakness that make the
organization prone to crisis
- Diagnose the situation using specific standards
- Control the situation
- Plan to avoid the occurrence of the crisis/make it an
opportunity / reduce the risk
- Remove the risk totally.
Reasons of failure in detecting
warning signals

Misunderstanding of received signals

Late communication of signals
Bad response to received signals
Weak communication systems in organization
Failure in interpreting the content and
meaning of received signals
Bad beliefs (dysfunctional behaviors)
Assessing warning signals
After detecting warning signals , experts and
crisis managers should be able to assess the
warning signals using the standards to
provide the correct indicators of crisis
occurrence
The assessment process will be based on:
- Careful reading of signals and data
- Considering the organization’s current status
- Considering similar cases (if any)
Risk assessment
Detecting signals and providing correct indicators of
crisis occurrence lead to assessing risks associated
with these signals and indicators.
The worst scenario should be prepared:
- What is the worst thing that could happen to the
organization in the future?
- What is the probability of having this to happen?
- Does it happen before to others?
Discussing these seniors will help in risk assessment
Environmental scanning
An informatics process used in decision making in
crisis management.
Before scanning the environment, organizations
should:
- organizations’ need of information
- Aspects need to be scanned
• Environmental scanning include:
- Technological scanning - Competitive scanning
- Commercial scanning - Social scanning
Supporting the early warning systems

Offering methods of diagnoses and

assessment of warning signals
(formal/informal)
Organization structure and technology which
support the early warning systems
Top management support
Supportive organization culture
Effective communication network
Exercise
Environmental scanning is a good tool
for detecting warning signals… explain
this statement and list the aspects of
environmental scanning in clothing
industry in Egypt.
Your homework
Go to the internet and select one crises
in Egypt . Describe and evaluate how
the warning signals of this crisis had
been detected or not? And the
consequences of the crisis managers in
detecting /not detecting these signals?