Crisis Management Law & Legal Definition


Crisis management is the task for creating and implementing a business plan that can be implemented quickly in the face of a crisis. Events that would qualify as crises include a wide range of potential threats; natural disasters like hurricanes, earthquakes, tornadoes and floods; terrorist attacks; power blackouts; workplace violence; cyber crimes; product tampering; bomb threats, and the unexpected death or illness of key leaders to name but a few. The speed with which a company recovers after a crisis tomorrow depends upon the plans established today. "Though each situation is unique, any organization can be better prepared if it plans carefully, puts emergency procedures in place, and practices for emergencies of all kinds." This is how the U.S. Department of Homeland Security emphasizes the importance of crisis management planning in its Web site entitled "Preparing Makes Business Sense."

The first 5 years of the 21st century have provided a number of unsettling examples of crisis that have befallen large numbers of people, communities, and businesses. The terrorist attacks of 9/11, the anthrax scare of 2001, the Northeast blackout of 2003, and the devastating hurricanes that hit the Gulf Coast in the summer of 2005 each had wide impact. These events have focused the attention of leaders at all levels on the need to have a crisis management plan.

One commentator, writing for PR News in 2005, shortly after Hurricane Katrina slammed into the Gulf Coast, discussed the way in which this catastrophic incident caused public relations professionals to reassess their crisis management responsibilities. "For PR pros, dealing with the day-to-day challenge of trying to rehabilitate a company after a fit of corporate chicanery in the C-suite or of assuaging consumer concerns after launching what turns out to be a faulty product simply can't compare with dealing with the aftermath of what looks to be the worst natural disaster in U.S. history." The events of this decade so far have refocused the national attention on the need for robust crisis management in organizations of all sizes.

CREATING AND IMPLEMENTING A CRISIS MANAGEMENT PLAN

An effective crisis management plan incorporates emergency response, disaster recovery, contingency communications, business continuity, and a clear delineation of key personnel and their spheres of responsibility.

Assess the Threats

Risk assessment is a sophisticated area of expertise that can range from self-assessment to an extensive engineering study. The specific industry, size, and scope of a particular business will determine the organization's risk assessment needs. The first step is determining what kinds of emergencies might affect a particular company both internally and externally. Find out which natural disasters are most common in the region or regions of operations. Ideally a list of threats is produced so that they may be categorized. Overall emergency plans will likely be useful in a number of different sorts of scenarios with only slight modification.

It is important to find out what community-level emergency procedures are in place for different sorts of incidents. Knowing the existing public safety protocols is key in coordinating rescue activities and evacuation plans. Local authorities are also a useful source of information about what actions to take and not take in the case of a biological, chemical, explosive, nuclear or radiological attack. Tenants in a commercial building or office/industrial complex may also wish to coordinate with the owners and/or managers of the facility so that company procedures work in tandem with the procedures in place for the larger entity.

Emergency Procedures

In any crisis that has the potential to take life, the physical well being and safety of all personnel is, of course, the first priority. One of the first questions in a crisis is whether to shelter in place or to evacuate. Guidelines should be established in advance to help make this decision quickly. For example, a fire is one situation in which there is no decision needed about whether to shelter in place or evacuate. Fires are the most common of all business disasters. A fire plan should be in place and practices with evacuation drills should be held periodically.

On the other hand, a tornado siren signals an emergency plan of another kind, in this case, again, no decision about whether to shelter in place or evacuate is necessary. Clearly, sheltering in place is the right decision when under threat of a tornado and provisions for a safe place in which to seek protection from such a storm should be in place and known to all employees.

Instructions for assisting disabled personnel, visitors, customers, and vendors in any emergency procedure should be a part of the crisis management plan. With the exception of disabled co-workers, for whom plans should be in place, these visitors will not know company procedures. Arrangements should be spelled out for assisting outsiders in the case of emergency.

Emergency Supplies

When preparing for emergency situations, it is usually best to think first about the basics of survival: fresh water, food, clean air, and warmth. For small businesses it is a good idea to talk with everyone about what emergency supplies the company can feasibly provide, if any, and which ones individuals should consider keeping on hand. Encouraging everyone to have a basic emergency kit is wise. Such a kit need not contain more than bottled water and anything else the individual may need, like essential medications. A can of tuna fish and a candy bar would not be out of place in such a kit either.

At the company level, the following list of suggested items is provided by the U.S. Homeland Security Department Web site mentioned above:

  • Water, amounts for portable kits will vary. Individuals should determine what amount they are able to both store comfortably and to transport to other locations
  • Food, at least a three-day supply of non-perishable food
  • Battery-powered radio and extra batteries
  • Flashlight and extra batteries
  • First Aid kit
  • Whistle to signal for help
  • Dust or filter masks, readily available in hardware stores, which are rated based on how small a particle they filter
  • Moist towelettes for sanitation
  • Wrench or pliers to turn off utilities
  • Can opener for food (if kit contains canned food)
  • Plastic sheeting and duct tape to "seal the room"
  • Garbage bags and plastic ties for personal sanitation

Back-ups of Essential Information

A company's essential documents and information should be backed up as a part of the normal business practice. Crisis management plans should include periodic inspection of these back-up procedures and verification that all essential information is being included in the normal back-up routine. Electronic data back-ups are a norm in today's business environment but any and all important paper documents too should be safeguarded in such a way that they could be recreated if necessary. The back-ups themselves need to be stored off-site.

Communications

The key in any crisis is communications. A contingency plan for working around the failure of communications infrastructure is important. Initially, it is important to have access phone numbers or e-mail addresses for all personnel. Preparing for several alternative methods for communicating with emergency personnel, co-workers, and the families of employees is recommended. In the post-crisis period it may be necessary to have similar information in a mobile format on insurance agents, vendors, suppliers, and bankers.

The Department of Homeland Security recommends providing all employees with a wallet-size card detailing instructions on how to get company information in an emergency situation. This is preemptive action that can prove very helpful. Such a card should include telephone numbers, Internet addresses and passwords, as well as a special out-of-town phone number that can be used to leave "I'm Okay" messages in case of a region-wide catastrophe. Ensure that established staff members know that they are responsible for communicating regularly with employees throughout the crisis.

In the case of severe dislocations, the continuity of a company may rest on its ability to effectively communicate with employees, suppliers, and customers during a relocation period.

Continuity Planning

Securing property and planning for business continuation is another responsibility of those in charge of crisis planning. In the case of machinery, equipment, and other physical property, a crisis management plan of action will depend on the type of threat anticipated. In the case of a hurricane, for example, some warning is available and therefore a crisis management plan should provide guidelines for what needs to be moved and to where, as well as what should be secured and how that is to be done. In situations where a threat can be anticipated, most insurance policies will require that an entity take some actions to try and mitigate the likely damage. Many property and business interruption insurance policies specifically state that the insured has an obligation to mitigate damage. Writing in Business Insurance, Judy Greenwald interviewed an insurance company vice president about how he advises clients who call in a panic after a loss. He starts with the stark advice; forget you have insurance. "The best approach, in terms of ultimately submitting a successful business interruption policy claim, is to go ahead and make the best decisions possible to keep the business going."

In crisis situations for which no warning is available—an earthquake, a chemical explosion nearby—rapid implementation of a well-designed crisis management plan is the first step. Thereafter, most of the business continuity efforts are the same whether there was or was not warning about the original cause of the crisis.

A crisis management plan that does not include planning for business continuity is incomplete. Once the initial crisis has been met the plan should lay out a path to bringing the company back to full operations. Having thought through in advance what will be necessary if a company must relocate makes a difficult process easier. The uncertainly surrounding post-crisis periods can be greatly diminished by having a detailed plan to follow.

In preparing the business continuity portion of a crisis management plan, it may be useful to use the following 7-point checklist to be sure that each broad area has been addressed.

  1. Carefully assess how your company functions, both internally and externally, to determine which staff, materials, procedures, and equipment are absolutely necessary to keep the business operating.
  2. Identify your suppliers, shippers, resources, and other businesses you must interact with on a daily basis. Develop relationships with more than one company to use in case your primary contractor cannot service your needs or supply essential materials. A disaster that shuts down a key supplier can be devastating to your business. Create a contact list for existing critical business contractors and others you plan to use in an emergency. Keep this list with other important documents.
  3. Plan what you will do if your building, plant, or store is not accessible. This type of planning is often referred to as a continuity of operations plan, or COOP, and includes all facets of your business.
  4. Plan for payroll continuity.
  5. Specify exactly who will be responsible for each area of the business.
  6. Coordinate with others by meeting with businesses in your building or industrial complex. Talk with first responders, emergency managers, community organizations, and utility providers. Plan with your suppliers, shippers, and others you regularly do business with. Share your plans and encourage other businesses to set in motion their own continuity planning and offer to help others.
  7. Review and update your crisis management plan annually.

PUBLIC RELATIONS CRISIS

Threats to a company's public relations (PR) are a different sort of crisis. They may occur in conjunction with a broader crisis or may be the result of some non-life threatening incident, like a boycott or accusations of the mismanagement of funds. In either case, planning for how best to manage the PR side of a crisis is an important part of the overall crisis management plan. Small businesses that are faced with public relations crises are far more likely to escape relatively unscathed if they can bring two weapons to bear: 1) a solid record as a good citizen, and 2) an already established crisis management strategy.

The most important factor in managing and resolving the public relations side of a crisis is communications. When a crisis does erupt, prompt and proactive communication should be a cornerstone of any business's crisis containment strategy. A single individual should be designated as the official spokesperson during a crisis if at all possible. By controlling the information that is released, a company can assure both a greater degree of accuracy and a consistent message. "Pick someone who is cool under pressure, credible, good on camera, and adept at presenting a positive image for your business," wrote Kim Gordon in an article for Entrepreneur. It may be helpful for this person to attend media training in order to practice interview techniques … Small businesses should prepare positive messages about their operations that can be disseminated to media contacts in the event of a crisis. These messages may include any points you want the public to keep in mind during the negative publicity, such as an impressive safety or environmental record.

In order to ensure that your company's perspective is heard, it is vital that you do all you can to make sure that your message is accurately presented to any media providing coverage of the crisis. The media establish the perception of most companies and organizations and whether accurate or not, they must be dealt with. So, dealing with the media in an organized, aggressive, and timely fashion is essential if one is to at least help mold the overall perception.

Effective communication with media, then, is an essential element of any crisis management plan. But consultants offer other tips as well. Following are a list of other actions that small businesses should take when confronted with a crisis management situation:

  1. Be open and honest with media and customers alike—Such a stance may well garner sympathy with customers and consumers, particularly if the crisis is one over which the company has little control, such as malicious product tampering.
  2. React quickly—A company's actions in the early stages of a crisis will often determine how the media coverage portrays the company.
  3. Utilize only one spokesperson—Consultants can cite countless instances in which companies faced with a business crisis compounded their problems by using multiple spokespeople who gave conflicting statements. A single, clear, and accurate story is best served up by a single spokesperson.
  4. Arm yourself with the facts—Companies can hurt themselves terribly when they make public statements based on incomplete knowledge of events.
  5. Stay on message—Engaging in speculation and/or rambling discourses does not help your company's cause. Spokespeople should be candid without being unduly negative.
  6. Do not lie or mislead the media, the public, or investigating agencies—This may seem obvious but history shows that it is worth noting. The discovery of one single lie casts every statement that your company makes into doubt.
  7. Establish and maintain contact with other important groups—Depending on the nature of the crisis, communication with employee, industry, and community groups can be a valuable part of a crisis response plan. Is the crisis likely to have an impact on the company's labor union or general work force? If so, arrange a meeting with representatives so that they can be kept informed and ask questions, and so that you can get your message across. Are your company's production processes arousing the ire of local civic or environmental groups (and the growing interest of local media)? Arranging a meeting in which they could register their concerns might relieve the situation somewhat (again, provided that your company shows a genuine interest in hearing them out and responding to legitimate concerns).

Advanced planning is important for all aspects of managing a business. But sometimes, things will occur that can simply not be reasonably anticipated. In these situations, the best public relations advice is to manage the situation ethically, with good grace, humility, and if at all possible, some humor.

Establishing a flexible and fine-tuned crisis management plan is important for any organization. If nothing else, it will enable the leaders of such organizations to lead more easily during the most difficult of times. The anxiety and fear that arise during a crisis can best be combated by clarity, calm, and a plan of action.

SEE ALSO Business Insurance; Disaster Planning; Public Relations

BIBLIOGRAPHY

Coccia, Regis. "Proven Crisis Management Needs Testing in Advance." Business Insurance. 17 October 2005.

"Crisis Management In A Post Katrina World." PR News. 14 September 2005.

Crisis Management: Master the Skills to Prevent Disaster. Harvard Business School Press, September 2004.

Gordon, Kim. "Under Fire: Will a Crisis Take Your Company Down? Here's How Deft Handling Can Turn Public Opinion Around." Entrepreneur. April 2001.

Greenwald, Judy. "When Losses Can't be Prevented, Produce Records to Back Up Claims." Business Insurance. 21 March 2005.

Keating, Lauren. "Proactive Approach Minimizes Damage to Image." Atlanta Business Chronicle. November 10, 2000.

Lagadec, Patrick, and Erwann Michel-Kerjan. "A New Era Calls for a New Model: Crisis Management." International Herald Tribune. 2 November 2005.

Lockwood, Nancy R. "Crisis Management in Today's Business Environment: HR's Strategic Role." HRMagazine. December 2005.

Meisinger, Susan. "Crisis Management and HR's Role." HRMagazine. February 2006.

Simms, Jane. "Controlling a Crisis." Marketing. 9 November 2000.

                                   Magee, ECDI