What is Crisis Management and why is it important?

Any business crisis can bring with it uncertainty and worry. For this reason, it’s necessary for businesses to have a crisis management plan which provides guidance and a structure on how to respond in these situations. This guide examines crisis management, why it's essential, and how to plan for it.

published: November 15, 2022
updated: August 10, 2023

What is crisis management?

Oxford University Press defines crisis management as

“the process by which a business or other organization deals with a sudden emergency situation.”

The potential impact of a potentially damaging event can be mitigated by getting a firm grip on the narrative and then taking appropriate action to reduce the risk of eliminating it.

Every threat is unique, so there’s no silver bullet in dealing with a disaster, but there are some simple, tried, and tested steps to follow. These are listed below in the section named ‘the steps in the planning process.’

Managing a crisis involves repositioning your organization after an event and taking steps to prevent similar events from happening in the future.

Let's take a closer look at what a crisis is.

What is a crisis?

It is anything that has the potential to destabilize an organization to any degree. There are many examples, but here we’ll focus on a few key common ones.

1

Financial

If an organization loses a large amount of money or need to let a large number of employees go, then this can present a significant threat. Similarly, so can inflation and rising prices. A global financial crises affect industries; the 2008 global financial crisis is a strong example.

2

Legal

If a company faces litigation or breaches data security, for example, getting hacked and then data stolen or breaching GDPR, intentionally or unintentionally, think Vodafone here.

Turn the tides with PR

Learn how our PR expertise can mitigate your crisis situations

Seek guidance today
3

Natural disasters

While natural disasters are not under any company's control, they can cause issues with a brand's perceived ability to serve customers and stakeholders. Many insurance companies have faced a lot of bad press due to natural disasters and their handling of them.

4

Human resources

This can include senior-level managers leaving, illegal or unethical behavior of employees, or even possible child labor exploitation. A good example of this could be SHEIN, the fast fashion outlet. Or even NIKE in the past.

5

Product fault

If a product fails to do what it's designed for or has a fault, this can permanently damage your reputation if not managed properly. Think VW emission gate..

6

Communication

Getting your message wrong or miscommunicating on social media is entirely possible in today’s age. Doing so can cause a backlash and present you with a crisis. Check Burger King’s “Women belong in the kitchen” advert.

7

Political

This is a situation that arises suddenly and places the government of a country and the institutions it affects in an adverse position. it could impact business operations and staff safety.

Crisis management vs. crisis communication

Crisis management guides you on the action to take during any crisis. Its role is to protect an organization's reputational and financial well-being. It allows managers to devise strategies to help prevent it from happening again and, if it does, prepare individuals for unexpected and negative events so they can handle them confidently and competently. It’s also there to reassure stakeholders that you are handling the problem and taking the right steps to mitigate damage.

Crisis management and crisis communication are interrelated. Crisis management refers to the overall strategy relating to a crisis - preparing for, responding to, and recovering from an incident.

Crisis communication is one element of crisis management. It is part of the wider plan and supports it. It focuses on disseminating information to the public and other stakeholders (investors, employees, the local community, etc) during a critical time.

One helpful way to think about them both is that crisis management deals with the reality of the crisis, whereas crisis communication deals with the perception of it.

Learn more about crisis communication

Navigate crises with expert PR

Develop PR strategies for your business to weather any storm

Get help now

The steps in the planning process

Have you ever heard the phrase, ‘Proper preparation prevents poor performance?’ Well, this certainly applies to crisis management.

Below are some suggestions on what to include in a plan. You can create a comprehensive crisis management plan tailored to your business needs through these steps.

If you don’t yet have any plans at all, don’t panic. Start with a small FAQ section on the company intranet for your employees, then read this guide for more.

1

Risk analysis

The first step is to list all risks and assess their likelihood and potential impact. List each likely risk along with an estimated probability, using a high, medium, and low rating; it helps to prioritize how much time to spend on each scenario. For example, a fire at your factory is a low-probability event, but a cyber attack is a high-probability event? This document, once completed, is very sensitive, so make sure only trusted people can see this internal risk assessment document.

2

Prepare crisis management scenarios

Based on the predicted risks listed above, create a table detailing how to respond to each risk. List the who, what, where, why, why, and how. For example, if there is a fire in your factory. Who should you reach out to first? The families of affected workers or the insurance company? When should the announcement be made to the board? Where should the ground staff be placed? How should the narrative unfold in the media?

3

Identify the cause of the crisis

It's critical that no sides hold back any information and that everyone is truthful. Having as much information as possible is crucial to respond correctly and proportionately. The internet is full of people giving frenzied and emotional responses. Wait to communicate until you can assess what's going on. Try to get to the original source of the information and avoid secondhand information.

4

Agreeing to the narrative

A unified narrative shows everyone is on the same page. Mixed messaging confuses. Agreeing on a narrative can prevent ad-hoc statements or contradictory information from being released to the public. It also means unnecessary or sensitive information, which could exacerbate the situation, is less likely to be shared.

5

Prepare internal comms

Telling your staff what happened is just as important as telling the media. Figure out how to keep staff motivated and on board with the changes. For example,”yesterday we were hacked, we are working hard to fix it but would ask for your perseverance whilst we work through our security measures”. Please change your passwords and lock all devices at all times. Reassure our customers that we are doing all we can to pinpoint and rectify the fault.

6

Acknowledge the problem

Now, in your table, add a column called acknowledgment comms. This is important as how you phrase the disaster will define how you are perceived. An example would be,

“Our company values your business and respects the privacy of your information, which is why we are notifying you about a possible data security incident that may involve your information.”

Here you reassure them of your priority in the first sentence.

Part of a good crisis management plan is to get ahead of the story. The news will almost certainly come out on the social channels. How you manage the flow of information is critical. In this situation, acting immediately and preparing an official press release could be an idea. This lets you better manage the crisis, come across in a more empathetic light, and prepare for any backlash you may face.

7

Take appropriate measures

Appropriate measures could be simply releasing a statement (cybersecurity threat) or recalling or fixing a product (product defect). In your plan, think about every possible fault of every product and what it would take to fix it. For example, if there was a customer data breach, you could reiterate that you are keeping up with regulations, have a dedicated team, and are currently going through an audit to see what went wrong. State you will look to increase security frameworks to ensure infrastructure is safe and not vulnerable to malicious access. Another example of action to take is to have 'reactive q&a's' for difficult questions you may get and to put these on your website.

8

Who has the responsibility?

Include an organizational diagram clearly showing who has what responsibility and in which situation. A chain of command goes a long way to supporting consistency and helps those in your organization know where to turn. If it is a product fault, then the head of product should be leading the comms.

9

Post-crisis comms

It's important to reflect, do another analysis of media positioning and make a new plan to address this weak spot. After the dust has settled, a response might be, “If our losses were $100K, we now need to set new Q2 targets.” Also, to prevent it from occurring again, an outcome of a crisis could be evaluating step 1 in this plan, assessing risk.

Master crisis with strategic PR

Discover how to turn a crisis into an opportunity for you

Reach out

Checklist

Communication methods

To facilitate a continuous flow of information to stakeholders before, during, and after crises, leaders must identify multiple methods of communication. Decide on the tech you’ll use to communicate and to who. The speediness of information sharing can positively impact managing a crisis.

Statements

Have pre-prepared statements to cover situations. You don’t want to use the same one repeatedly (and with any luck, you won’t need to), but these could save you time and reassure people.

Identify and train your team

Create a crisis management team. Provide guidelines on what to say to the press and on social media. Train people on how to handle media inquiries and how to answer tough questions. Your team are your first line of defense in a crisis.

Having a response drill

Ensure that relevant parties are in constant communication. Test this beforehand. It is important to remember that a well-prepared response is more likely to be effective and viewed positively by the public.

Business impact

The potential impact on the business is a ‘must know.’ When planning scenarios, this will determine the resources and time spent planning to avoid or mitigate it happening.

Resources

Does the team have company mobiles? What about media monitoring tools or cameras? How will the teams travel to places to meet insurance companies, media, and other staleholders? What happens? Is there a budget for things like this?

How to stay focussed during a crisis

A crisis can prove a stressful situation. Here are some useful tips to help see it through until it passes.

1

Business as usual (BAU)

During an emergency, business continuity is important. Business processes that are mission-critical to the company must be maintained, or revenue will be lost. In the wake of a crisis, try to keep employees focused on the organization’s wider goals. This also helps stave away any fear or uncertainty they may have.

2

What to communicate and when

Your response should be firm yet measured. Only make statements that can be verified and are are very unlikely to be reversed. Otherwise, decisions that are changed at a future time could cause more bad publicity. Use social media to highlight positive feedback you are receiving as a result of your cm

3

Reprioritize

As priorities shift, you may need to put some projects on hold. Its important to keep the end goal in sight. A poor reputation could damage a brand beyond repair, but putting your expansion plans on hold for 6 months will only hurt profit in the short term.

4

Managing stress

When experiencing a crisis, it is important to remain calm and to keep in mind that it is not a sprint, it is a marathon. Be realistic about the situation, pace yourself, stay updated, and communicate with each other.

Rebuild trust with crisis comms

Learn how our PR tactics can strengthen reputation post-crisis

Start now

Conclusion

Even a well-managed business can experience a crisis. Crisis management can help anticipate problems and how to deal with them effectively. We’ve seen how a crisis may unfold, including financial problems, staff issues, or legal breaches. These guidelines need to be tweaked per situation. A crisis, it's often unexpected, so having a rough playbook can help.

Handling a crisis involves having a firm hand on various areas at once and on the pulse of public opinion. It's important to gauge the impact of an incident and people’s perceptions of it. You have one chance to get this right. For these reasons, you should consider talking to professional crisis handlers who can guide you, bring you peace of mind, and ensure your business’s survival in any worst scenario.

November 15, 2022
Back to top
Logo of PRLab, an international tech PR firm
We've helped +100 clients achieve their business goals with the power of Strategic PR across key markets. All our PR strategies are custom-made to fit your needs and meet you at the stage of growth you're at. Tell us about yourself and how we can help you.
Grow your brand
Amsterdam
Herengracht 252, 1016 BV, Amsterdam, Netherlands
+31 202 443 748
Austin
10900 Research Blvd Ste 160C, Austin, TX 78759, USA
+1 (831) 603-5485
Stockholm
Torsgatan 2, 111 75 Stockholm, Sweden
+46 8 446 830 00
Munich
Franz-Joseph-Str. 11, 80801 Munich, Bavaria, Germany
+49 800 0001393
Logo of PRLab, a global technology PR firm
Mon - Fri:  09:00 - 17:00
Contact us
PRLab | PR Agency - PR Firm
Photo of Matias Rodsevich, international PR expert
PR for growth
We help you grow with PR. Find out how.
crosschevron-right-circle linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram