What Is Crisis Management? (With How To Create A Plan)

Updated 15 October 2022

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A business may encounter obstacles to its productivity and success, including crises relating to its financial situation, personnel or infrastructure. Mitigating the effects of crises involves careful planning and strategy implementation before, during and after their occurrences. Understanding the procedures to manage a crisis can allow you to help a business resume its operations efficiently. In this article, we explain what crisis management is, review the stages of a crisis, discover the components of crisis regulation and explain how to create an effective implementation plan.

What Is Crisis Management?

Crisis management is the process of preparing for and dealing with any unforeseen emergencies that disrupt a company's normal operations. This process involves handling emergencies that may affect a business' revenue, customers, employees, infrastructure, operations, investors and other interested parties. Crisis regulation can help a company improve productivity during and after an emergency, enhance the well-being and safety of everyone who interacts with a company and improve the company's reputation.

What Are The Stages Of A Crisis?

Knowing the stages of an emergency can help you better understand how to create a management plan. Here are the stages of a crisis:

Warning: Although it is not always possible to predict when or if a crisis may occur, you can be mindful of warning signs. Potential indicators of an impending emergency include company finances, weather trends or patterns in employees' behaviour.
Risk assessment: This stage of a crisis begins as soon as the emergency starts to become apparent. Key business leaders use this stage to determine the potential impact that the circumstances may have on the company's customers, employees and operations.
Response: Once a company understands the potential risks, it can enter the response stage. The crisis regulation team can decide which plan it wants to implement, and it can notify affected parties of the situation.
Management: This stage requires the involvement of everyone who is a part of the crisis resolution plan. Designated teams work to mitigate the effects that develop as a result of the emergency.
Resolution: The resolution stage occurs when all relevant team members have completed their expected duties. The effects of the emergency are no longer immediately threatening to the business.
Recovery: The recovery stage begins when the company begins to resume its operations normally. The company may choose to analyse the results of the recovery phase so that it can determine how to best manage similar situations if they occur in the future.

What Are The Components Of Crisis Regulation?

Here are the components of crisis regulation:

Pre-crisis

The first component of crisis regulation is the pre-crisis component. This element involves creating a management plan and hiring and training the appropriate response teams. You may also lead practise exercises so that various teams can gain experience with handling situations in a controlled environment. Another key aspect of the pre-crisis component is drafting messages to send out to various groups during an emergency. Writing these messages in advance can save time and help a business focus on more vital elements when an emergency occurs.

Emergency management and response

This component is the point at which a response team begins to deal with an emergency. It involves the implementation of plans that the company's leadership has created in advance. A company may release the messages it has created to inform interested parties of the situation. It may also strive to prioritise the safety and well-being of all affected parties even more strongly than it might normally.

Post-crisis

Post-crisis is the component of crisis regulation that involves the aftermath of an emergency. A company engages in active communication with its employees, customers and partners to relay important information about how it can continue its operations. It sends regular updates and ensures that the appropriate personnel can answer any questions and address any concerns of affected parties.

How To Create A Plan For Managing Crises

Here is a list of steps on how to create a plan for managing crises:

1. Identify all potential types of crises

The first step to creating an emergency management plan is to identify all potential types of crises. Each business has unique elements that may cause it to encounter different emergencies, so it is important to consider the distinct factors that can influence the company for which you work. For example, a business can experience a financial crisis if its main product offering experiences a decrease in consumer demand. A business may also encounter different types of natural crises depending on where they operate.

It is also essential to consider organisational crises. These crises may relate to the actions of employees and how they affect the company's relationship with its customers. Organisational crises may also address what to do if issues with technological systems or software prevent a business from meeting its productivity goals.

2. Consider the impact that each crisis may have on the business

Once you identify the crises that may affect a business, it is important to consider the impact that each crisis may have on the business. Examples of potential impacts include decreased customer loyalty, an increase in expenses to fix the arising issues and a loss in sales. Try to quantify these impacts when possible. For example, you may quantify decreased customer loyalty by measuring differences in repeat purchases from past customers. Quantifying the potential impacts of emergencies can help a company understand a crisis' severity and take appropriate action.

3. Determine what actions a company needs to take to address each crisis

The next step to developing an effective plan is to determine what actions a company needs to take to address each crisis. Three different methods you may consider include responsive management, proactive management and recovery management. Responsive management involves the implementation of a previously prepared plan. Proactive management involves the preparation of a plan as a business begins to notice signs of a crisis. Recovery management involves a business preparing for a crisis that arises unexpectedly when it does not have a pre-established plan.

4. Develop resolution strategies for each type of crisis

Use the information from the previous three steps to develop resolution strategies for each type of crisis. Consider who you want to assign to each resolution plan. You may want to enlist the help of personnel from the company's human resources or public relations departments so that they can support employees and manage the business' reputation. You may also decide on which personnel, including managers and employees, you want to execute the final plans. It is also important to consider what resources the company can provide to help during the emergency and how long it may take to resolve.

5. Offer training to all involved personnel

Organise training resources to ensure that all involved personnel understand what their roles are during specific types of emergencies. You may suggest presentations and meetings that can explain and review the responsibilities of involved personnel. You may also have employees undergo training scenarios that can help them learn how to respond to a situation in a controlled setting. You can also consider inviting an emergency management expert to talk to employees about how to manage their responsibilities during a disaster.

6. Update the plan as necessary

Once you finalise your plans for a company's emergency management process, it is important to update them as necessary. You may reevaluate potential risks or add personnel to specific protocols to improve the plans' effectiveness. A company can benefit from reevaluating its crisis resolution plans after it experiences an emergency so that it can deal with a similar situation more easily in the future.