Crisis management is the process by which an organization deals with a disruptive and unexpected event that threatens to harm the organization or its stakeholders. The study of crisis management originated with large-scale industrial and environmental disasters in the 1980s.ASIS International, "Organizational Resilience: Security, Preparedness, and Continuity Management Systems-Requirements with Guidance for Use, ASIS SPC.1-2009, American National Standard", 2009 It is considered to be the most important process in public relations.
Three elements are common to a crisis: (a) a threat to the organization, (b) the element of surprise, and (c) a short decision time. Venette argues that "crisis is a process of transformation where the old system can no longer be maintained".Venette, S. J. (2003). Risk communication in a High Reliability Organization: APHIS PPQ's inclusion of risk in decision making. Ann Arbor, MI: UMI Proquest Information and Learning. Therefore, the fourth defining quality is the need for change. If change is not needed, the event could more accurately be described as a failure or incident.
In contrast to risk management, which involves assessing potential threats and finding the best ways to avoid those threats, crisis management involves dealing with threats before, during, and after they have occurred. It is a discipline within the broader context of management consisting of skills and techniques required to identify, assess, understand, and cope with a serious situation, especially from the moment it first occurs to the point that recovery procedures start.
Introduction Crisis management is a situation-based management system that includes clear roles and responsibilities and processes related organizational requirements company-wide. The response shall include action in the following areas: crisis prevention, crisis assessment, crisis handling, and crisis termination. The aim of crisis management is to be well prepared for crisis, ensure a rapid and adequate response to the crisis, maintaining clear lines of reporting and communication in the event of crisis and agreeing rules for crisis termination.
The techniques of crisis management include a number of consequent steps from the understanding of the influence of the crisis on the corporation to preventing, alleviating, and overcoming the different types of crisis. Crisis management consists of different aspects including: Methods used to respond to both the reality and perception of crisis. Establishing metrics to define what scenarios constitute a crisis and should consequently trigger the necessary response mechanisms. Communication that occurs within the response phase of emergency-management scenarios.
Crisis-management methods of a business or an organization are called a crisis-management plan. A British Standard BS11200:2014 provides a useful foundation for understanding terminology and frameworks relating to crisis, in this document the focus is on the corporate exposure to risks in particular to the black swan events that result in significant strategic threats to organizations. Currently there is work on-going to develop an International standard.
Crisis management is occasionally referred to as incident management, although several industry specialists such as Peter Power argue that the term "crisis management" is more accurate.
A crises mindset requires the ability to think of the worst-case scenario while simultaneously suggesting numerous solutions. Trial and error is an accepted discipline, as the first line of defense might not work. It is necessary to maintain a list of contingency plans and to be always on alert. Organizations and individuals should always be prepared with a rapid response plan to emergencies which would require analysis, drills and exercises.Alan B. Bernstein and Cindy Rakowitz (2012). Emergency Public Relations: Crisis Management in a 3.0 World. p. 5.
The credibility and reputation of organizations is heavily influenced by the perception of their responses during crisis situations. The organization and communication involved in responding to a crisis in a timely fashion makes for a challenge in businesses. There must be open and consistent communication throughout the hierarchy to contribute to a successful crisis-communication process.
The related terms emergency management and business continuity management focus respectively on the prompt but short lived "first aid" type of response (e.g. putting the fire out) and the longer-term recovery and restoration phases (e.g. moving operations to another site). Crisis is also a facet of risk management, although it is probably untrue to say that crisis management represents a failure of risk management, since it will never be possible to totally mitigate the chances of catastrophes' occurring.
An organizational crisis is described as a rare, high-impact event that jeopardizes the organization's survival. It is marked by uncertainty regarding the cause, effects, and solutions, along with the need for rapid decision-making.
Types of crisis During the crisis management process, it is important to identify types of crises in that different crises necessitate the use of different crisis management strategies. Potential crises are enormous, but crises can be clustered.
Lerbinger categorized eight types of crises Natural disaster Technological crisis Confrontation Malevolence Organizational Misdeeds Workplace Violence Rumours Terrorist attacks/man-made disasters
Natural disaster Natural disaster related crises, typically natural disasters, are such environmental phenomena as earthquakes, volcanic eruptions, tornadoes and hurricanes, floods, landslides, tsunamis, storms, and droughts that threaten life, property, and the environment itself. Example: 2004 Indian Ocean earthquake (Tsunami)
Technological crisis Technological crises are caused by human application of science and technology. Technological accidents inevitably occur when technology becomes complex and coupled and something goes wrong in the system as a whole (Technological breakdowns). Some technological crises occur when human error causes disruptions (Human breakdowns). People tend to assign blame for a technological disaster because technology is subject to human manipulation. That said, a decent amount of research demonstrates that the remedy or response strategy after a technological crisis (such as a data breach) can contribute significantly to an organization's overall reputation. There is also a cross-sectional difference among firms – firms with higher reputations tend to be less impacted by the blame on the technological crisis. In contrast, people do not hold anyone responsible for natural disaster. When an accident creates significant environmental damage, the crisis is categorized as megadamage. Samples include software failures, industrial accidents, and oil spills.
Examples: Chernobyl disaster, Exxon Valdez oil spill, Heartbleed security bug
Confrontation crisis Confrontation crisis occur when discontented individuals and/or groups fight businesses, government, and various interest groups to win acceptance of their demands and expectations. The common type of confrontation crisis is boycotts, and other types are picketing, sit-ins, ultimatums to those in authority, blockade or occupation of buildings, and resisting or disobeying police.
Example: Rainbow/PUSH's (People United to Serve Humanity) boycott of Nike
Crisis of malevolence An organization faces a crisis of malevolence when opponents or miscreant individuals use criminal means or other extreme tactics for the purpose of expressing hostility or anger toward, or seeking gain from, a company, country, or economic system, perhaps with the aim of destabilizing or destroying it. Sample crises include product tampering, kidnapping, malicious rumors, terrorism, cybercrime and espionage.
Example: Chicago Tylenol murders
Crisis of organizational misdeeds Crises occur when management takes actions it knows will harm or place stakeholders at risk for harm without adequate precautions. Lerbinger specified three different types of crises of organizational misdeeds: crises of skewed management values, crises of deception, and crises of management misconduct.
Crisis of skewed management values Crises stemming from skewed management values occur when leaders prioritize short-term financial gains while disregarding broader social responsibilities and key stakeholders beyond investors. This imbalance often originates from the traditional business mindset that prioritizes shareholder interests at the expense of customers, employees, and the community. A structured framework for corporate recovery following ethical failures involves four key actions: Replace, Restructure, Redevelop, Rebrand. These steps help organizations restore integrity, rebuild trust, and realign their values with ethical and sustainable business practices.
Example: Volkswagen emissions scandal
Crisis of deception Crisis of deception occur when management conceals or misrepresents information about itself and its products in its dealing with consumers and others.
Example: Dow Corning's silicone-gel breast implant
Crisis of management misconduct Some crises are caused not only by skewed values and deception but deliberate amorality and illegality.
Workplace violence Crises occur when an employee or former employee commits violence against other employees on organizational grounds.
Example: May 4, 2016 at Knight Transportation in Katy, Texas
Rumors False information about an organization or its products creates crisis hurting the organization's reputation. Sample is linking the organization to radical groups or stories that their products are contaminated.
Example: Procter & Gamble logo myth
Terrorist attacks/man-made disasters These occur when the crisis was triggered by people, for example global financial crises, transportation accidents, massive destruction.
Crisis leadership
Alan Hilburg, a pioneer in crisis management, defines organizational crises as categorized as either acute crises or chronic crises. Hilburg also created the concept of the Crisis Arc. Erika Hayes James, an organizational psychologist at the University of Virginia's Darden Graduate School of Business, identifies two primary types of organizational crisis. James defines organizational crisis as "any emotionally charged situation that, once it becomes public, invites negative stakeholder reaction and thereby has the potential to threaten the financial well-being, reputation, or survival of the firm or some portion thereof".
Sudden crisis Smoldering crises
Sudden crisis Sudden crises are circumstances that occur without warning and beyond an institution's control. Consequently, sudden crises are most often situations for which the institution and its leadership are not blamed.
Smoldering crisis Smoldering crises differ from sudden crises in that they begin as minor internal issues that, due to manager's negligence, develop to crisis status. These are situations when leaders are blamed for the crisis and its subsequent effect on the institution in question.
James categorises five phases of crisis that require specific crisis leadership competencies. Each phase contains an obstacle that a leader must overcome to improve the structure and operations of an organization. James's case study on crisis in the financial services sector, for example, explores why crisis events erode public trust in leadership. James's research demonstrates how leadership competencies of integrity, positive intent, capability, mutual respect, and transparency impact the trust-building process.
Signal detection Preparation and prevention Containment and damage control Business recovery Learning
Signal detection