Crisis Management in Business And Industry

Meaning of crisis:
Crisis refers to sudden unplanned events which
causes major disturbances in the organization.

According to BARTON : “A crisis is any event that can
seriously harm the people, reputation or financial
condition of an organization”.
Nature of Crisis
Sudden event
 Short notice
 Triggers fear
 Serious consequences
 Lack of information
 Quick response needed
 Unpredictable

TYPES OF CRISIS

Physical Damage Crisis :- A crisis which is characterized by the
physical damage of the individual, organization or the society.

Causes of Physical damage:-

Natural crisis :- Every business is vulnerable to natural disasters.
These
includes things such as, floods & earthquakes. Although
disasters are
and control.
mostly unpredictable, beyond our responsibility

Earthquake :- Earthquake is a sudden release of energy in the
earth crust, that creates a waves.
Such as, volcanic
activity, landslides, mining, nuclear test.

Drought :- Drought is a period were abnormal low rainfall,
leading to a shortage of water supply.

Floods :- An overflow of a large amount of water beyond its
normal limits.
Non Physical Damage :- Non physical damage crisis means
crisis reflected by no physical damage of the individual,
organisation or society.

Product Issues Crisis :- This type of crisis is a potential crisis
for the company, because the product may fail in-spite of
appropriate research and development techniques are
followed.

Economic Crisis :- This type of crisis occurs when an
organisation experiences a cash problem.

Human Resources Crisis :- It usually involves lower-level
workers. It take a variety of form. Such as, strikes, sexual
harassment, discrimination and workplace violence.

Crisis of Organisational Miss-deeds:
Crisis of Deception :- Organization face crisis of deception,
because management make fake promises and wrong
commitment to the customer.

Crisis of Management Misconduct :- Organization face
crisis of miss-conduct, when management indulges in
illegal activity.
Stages of Crisis :

Pre – crisis stage

The Acute - crisis stage

The Post crisis stage
PRE-CRISIS STAGE
 It
is stage which has a opportunity to turn
negative situation into a positive one.
 Here someone are discovers a critical situation
and bring it to the attention of their superior
officer.
 Solutions:
When superior officers known that condition
they don’t want to show outside of organization.
THE ACUTE – CRISIS STAGE

A crisis becomes visible out sides of the organization.
Solution:
 Take charge of the situation quickly.
 Take necessary action to fix the problem.
THE POST - CRISIS STAGE

This is the stage which is process about the recoup their
losses or evaluating the organization changes made in
organization.

Solution: Recoup any losses evaluate the organization
performance during the crisis.
CONSEQUENCES OF CRISIS
•
Poor capital
•
Loss of assets
•
Infrastructure destruction
•
Threatened stakeholders
•
Damaged reputation
•
Lack of cash flow
•
others
FINANCIAL CRISIS
Meaning
The term financial crisis is applied broadly to a
variety of situation in which some financial assets suddenly
lose a large part o their nominal value.
CONSEQUENCES OF FINANCIAL CRISIS







Complementarities in financial markets
Leverage
Asset-liability mismatch
Uncertainty and herd behavior
Regulatory failures
Contagion
Recessionary effects
WHAT IS CRISIS MANAGEMENT??
Meaning – It is a process by which an organisation deals with a
major event that threatens to harm the organisation, its stakeholders, or
the general public.

The study of crisis management originated with the large scale
industrial and environmental disasters in the 1980s

Purpose crisis management
•
Prevention
•
Survival
•
Successful outcome
OBJECTIVE OF CRISIS MANAGEMENT

To identify the potential crisis

To be well prepared for crisis

To determine the risk

To understand the consequences of crisis

To minimize the potential impact of crisis

To analyse the probability of crisis
ELEMENTS OF CRISIS MANAGEMENT

Understanding

Crisis Management Planning

Contingency Planning

Business Continuity Planning

Inequality

Social Media

Role of Apologies

Structural Functional Systems
CRISIS COMMUNICATION
The effort taken by a company to communicate with the
public and stockholders when an unexpected event occurs
that could have a negative impact on the company's
reputation.
Crisis communication team involves,
 CEO
 Head public relations
 Vice presidents, Managers of key departments
 Safety or Security officer
 Company lawyers
STEPS IN CRISIS COMMUNICATION

Anticipate crisis

Identify crisis communications team

Identify and train spokesperson

Spokesperson training

Establish systems

Identify stakeholders

Develop holding statement

Assess the crisis situation

Finalize and adapt key messages

Post crisis analysis
STRATEGIES FOR MANAGING CRISIS

Determine the crisis

See the big picture

Gather relevant team

Set timeline

Develop procedural manual

Seek external experts

Speak to media

Fine tune of communication

Protect reputation