November 15, 2022 |

6 minutes

What is Crisis Management and why is it important?

What is crisis management? Well, it’s pivotal in public relations. Every organization will face an external issue that could cause reputational harm, which is why crisis management planning is necessary. This guide looks at crisis management, why it's essential, and when it may be needed.

What is crisis management?

Crisis management helps to manage potential threats that could interrupt or damage your business. Crisis management is the process of preparing for when things don’t go according to plan. Part of this involves working to reposition the company after the crisis passes and ensuring it doesn't happen again or that you'll be in a better post-crisis than it does.

A crisis management team can handle a crisis more easily if prepared. The organization's assets, customers, and employees are protected, and business operations can continue until the issue has passed.

Crisis management definition

We turn to external definitions to clarify and give a crisis management meaning.

A helpful definition comes from Wikipedia: "...the process by which an organization deals with a disruptive and unexpected event that threatens to harm the organization or its stakeholders”.

TechTarget offers a similar definition: “Crisis management is the application of strategies designed to help an organization deal with a sudden and significant negative event.”

What is a crisis?

The definition of a crisis is any unexpected event that could negatively impact an organization. Depending on the nature of the business, it could affect finances, reputation, staff, and internal and external stakeholders. There is a range of threats, including:

Financial threats can occur if an organization loses or stands to lose a large amount of money, for instance, due to losing major clients or their market share. Inflation and rising prices also pose significant threats, as does pay large sums of money after losing a legal battle.

Security threats

Physical threats to employees, customer-held data, company security policies, and other information come under this category. Today's massive emphasis on data security is due to the sheer volume of data companies keep. Breaches of this nature would be a big crisis for most organizations.

HR issues

Employees leaving, especially at a senior level, can potentially cause a crisis, notably if the executive played a significant role in the organization's success and was strongly associated with the company. A situation can also occur if someone in the organization participates in illegal or unethical behavior, which may impact reputation.

Product recall

If a defect is discovered, it could harm a consumer or hinder product performance. It could then hinder your reputation.

Environmental issue

The financial impact of fire or flood can be substantial. Depending on where you are in the world, natural disasters may pose a threat to employee safety, the physical facility, and business continuity.

Who needs crisis management?

The short answer to this is everyone. A crisis can impact organizations big and small. Regardless of how well organizations try to prevent unforeseen events, some problems cannot be helped. It is necessary to be prepared for and have a plan.

By having a crisis management plan, managers can recognize the early warning signs and devise a course of action for such a scenario. Having a plan prepares individuals on how to respond accordingly. It also ensures they adjust to any sudden changes and understand their causes.

Why is crisis management important for business?

Acknowledging and responding to any problem as soon as possible is essential. By doing so, you’re better at controlling the narrative and messaging you want to put out. This is where crisis management comes in. Having a plan in place ensures a better and faster response. Also, it won’t always be possible to fix it immediately, so a #crisis management plan is vital here.
One thing is for sure, ignoring it and hoping it goes away won’t work. This may create more bad publicity than the actual problem and show your unpreparedness. As part of a crisis plan, employees should also be given guidelines for responding. You need a unified message and action plan. A well-planned and unplanned response can mean the difference between weathering the storm, severe long-term damage, or even business failure.

What is the objective of crisis management?

Identify the problem

​​The first objective of crisis management is to investigate what went wrong. Without it, you won't know what caused the crisis. It's therefore 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.

Acknowledge the problem

Now you fully understand the events that have led to this. It's time to acknowledge it officially. Don't try to cover it up. It will only make things worse. Instead, take full responsibility for it (even if you are not entirely to blame).

The first external communication after a crisis should be well-thought-out. Acknowledge people's concerns and answer questions honestly, then apologize. This can go some way to calming people and restoring faith in you.

Manage the problem

An objective of a crisis management plan is to get ahead of the story. The news will almost certainly come out in the age of social media. How you manage the flow of information is critical. Always be ready for worst-case scenarios if the crisis impacts the general public. In this situation, it's always best to act immediately and prepare an official press release or organize a press conference to reassure all relevant stakeholders. This lets you better manage the crisis, sound more empathetic, and prepare for any backlash you may face. Let your public know what's being done to rectify the situation while you still have the opportunity. Always be transparent.

Part of this step also involves:

  • Analyze your current procedures.
  • Recognize when operational improvements are needed. Assisting in developing future strategies should the plans have proved insufficient.

Crisis management vs. crisis communication

So what is crisis communication in public relations? It is essential to distinguish between crisis management and crisis communication. Crisis communication is the process of communicating in response to a reputational threat. In short, Crisis communication is part of crisis management.

Crisis Management encompasses many different components, from investigating the nature of the crisis and what led to it to the steps of communication, future prevention, and preparation.

Conclusion

External or internal events can cause even well-managed businesses to experience a crisis. Crisis management can help anticipate problems and plan how to deal with them effectively. We have looked at what constitutes a crisis, the role of crisis management, and its purpose. Prepare for negative press or an emergency before, not after, it occurs. If or when a crisis hits, you have one chance to handle it right, and that's it. If you get this wrong, it could adversely affect you for years to come, or, even worse, it could be the end of your business.

For these reasons, take it seriously. Talk to professional crisis handlers who can guide you, bring peace of mind, and ensure business survival.

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