69% of leaders have experienced at least one corporate crisis from 2014 to 2019, with many experiencing as many as three. But despite that, only 62% of companies have crisis plans, with many of those that do have them failing to update regularly.
The reality is, going through the lengthy and seemingly complicated process of developing a crisis management plan is a hassle many leaders don’t find time for. After all, a crisis might not even occur, and there always seems to be something more urgent that needs immediate attention.
However, when you are in business long enough, the next crisis becomes a matter of “when” and not “if.” And because of that, the only way to minimize the damage and ensure your company is protected is to have a proven process you can rely on to deal with any challenge.
But what is a crisis plan, anyway? And what are the steps in creating one? Let’s go through everything you need to know below.
What is a Crisis and Why You Should Plan for One?
A crisis is a period or event that causes an unstable and dangerous situation for a business. And in volatile times such as these, businesses face various types of crises that could occur at any time.
Whether it’s an economic downturn or an organizational issue, companies of all sizes can suddenly be facing steep challenges that can seem impossible to overcome.
But while the crises themselves are impossible to prevent completely (although it’s possible to reduce the risks), the way the company reacts when something does go wrong can make a big difference in how much damage is actually done.
That’s the primary reason why it makes so much sense to actively look for potential risks and map out the process of dealing with them. And that’s exactly what a crisis management plan can offer.
It’s a set of steps that your business would take in case a specific crisis arises, describing in detail the roles people would assume, the actions that would need to be taken, and the priorities that would be the basis of the most critical decisions.
Having such plan prepared in advance will help significantly reduce the time it takes to react, allowing the company to protect its reputation, employees, finances, and the safety and well-being of its customers.
In the How We Solve Podcast ep. 38, Charles Gaudet shares his insights on how to pivot your business in the right direction during uncertain times and overcome adversity. Asking the right questions and analysing your options are just two of the steps that are discussed in depth.
The way that a company responds to a crisis can often have even bigger implications than the crisis itself. For one thing, a good response can minimize the damage. But at the same time, it can act as reassurance in the eyes of the customers and stakeholders, who know that even when something goes wrong, the business they trust comes through and deals with the issue promptly and effectively.
Crisis Stages
There are many ways to look at the stages of a crisis. Some identify four stages, while others define as many as six steps that each company goes through. But in essence, there are only three stages that are truly distinct:
- Pre-crisis
- Response (or Crisis)
- And Post-Crisis
During the pre-crisis stage, the event hasn’t happened yet, but it’s either on the horizon or is identified as a plausible risk. This is when companies can still stay ahead of the looming problem and develop a crisis management plan that will help minimize the damage.
The response or crisis stage is when the actual crisis occurs. The event or situation develops and reaches its peak, which is when the company has no choice but to respond or react in some way.
When there’s no plan, the response is usually hectic and unfocused; the company sends out mixed messages and keeps scrambling to find the right solution. But when there’s a plan for managing the crisis, the response can be organized, calm, and efficient, informing everyone of the steps that the company plans to take and taking responsibility where necessary.
Finally, in the post-crisis stage, the dust starts to settle, and the crisis itself comes to an end. But the impact that the crisis had on the company and its reputation can have an effect that lasts for years or even ends up being the cause of the organization’s demise.
However, if an effective crisis management strategy is implemented, the company might come out of the crisis stronger and even better prepared for the challenges it may have to face in the future.
How to Create a Crisis Management Plan
Designing a process for responding to a crisis can seem like a daunting task. There are so many things to consider that it may seem impossible to truly prepare for the various scenarios that could occur.
But if you break down the process into steps, you can quickly start going through the most critical aspects and develop a plan that’s relevant to your company and the most likely risks you could face.
Let’s look at these steps below.
Build Your Crisis Management Team
An effective crisis management plan has to be based on the people that execute it. Without the right team members, executing even the best strategy will be impossible unless you have capable, willing, and trained people who can deal with the situation.
That’s why before moving on with any of the following steps, you should take some time to identify the best-suited people within the organization for dealing with various parts of the crisis. Whether it’s coordinating actions, dealing with the press, or communicating with customers or stakeholders, having clearly defined roles can be indispensable in the process.
What’s more, by assembling a team for preparing a crisis plan, you will have more people who can share their input and help make the response plan as good and as thorough as it can be.
Identify Risks
Each business is different. And so, it’s natural that the risks they are likely to face depend on the industry, the business size, and many other factors. That’s why it’s hard to use threats other companies face and apply them to your business, as they might not always carry over.
Instead, you’ll need to clearly define what the biggest crises would be for your company, going through various event scenarios and looking at how they might impact your finances, reputation, and other vital aspects.
Whether it’s singular incidents that set off a chain reaction, emergencies that could have an impact on your employees or customers, or even natural disasters that can disrupt how the company operates, you need to go through the scenarios and look at how likely they are to occur, the damage they could cause, and the possible steps you could take to mitigate the risks, as well as respond if it does happen.
In the How We Solve Podcast ep. 76, Jeremy Goldman shares his approach to becoming a better futurist and learning to predict future trends and outcomes, which can be incredibly valuable when looking at potential risks you should look out for.
Calculate the Business Impact
Not all crises are created equal. There are thousands of things that could go wrong, but since it’s impossible to prepare a plan for all of them, you need to measure the potential business impact and prioritize which crisis scenarios require the most immediate attention.
Look at the potential impact of each crisis scenario in terms of finances, reputation, legal issues, and other relevant aspects. Also, make sure to evaluate both the short-term impact and the long-term outcomes that might result from the crisis taking place.
Then, look at how you could minimize the damage through various steps. Depending on the success of your response, you should be able to predict how much you could reduce the negative outcomes from the crisis and shorten the time the situation takes to resolve.
Conduct Contingency Planning
At this point, you’re ready to map out the specific contingencies that could help you respond to each threat and reduce its damage. Crisis management involves multiple steps, and each one can depend on your ability to execute the previous one.
That means that each team member must be capable of carrying out their role and have the right resources for getting through their tasks quickly.
You’ll also need to prepare any materials, such as statements or at least statement guidelines, to help you formulate a more consistent response and communicate how you are dealing with the issue more effectively.
At the same time, you’ll need a process for fixing the issue as soon as possible. For instance, in case of an IT issue with your website, you need to have experts who can step in, identify the specific problem, and quickly develop a plan for dealing with it.
Document the Plan
At this point, you are ready to put the entire plan into a coordinated strategy that the entire organization can fall back on and use as a guide. This process should include most of the key people who would be responding to the crisis, as that will help ensure that they’re familiar with the process and agree with the plan of action that is put forth.
At the same time, make sure that you get input from your legal department, as staying compliant and within the law when dealing with a crisis is one of the top priorities that can also be very easy to overlook.
Communicate the Plan
For a crisis management plan to be effective, it needs to be understood by your employees. When a crisis does happen, you need people in your organization to at least be aware of what the response will be like, even if they won’t necessarily have to play a key role in the process.
This will ensure that your employees don’t panic when a crisis hits and know that the company has a plan for dealing with it. They will also understand what mistakes to avoid and what type of message to communicate to stakeholders, customers, and the press.
To make the process of communicating the plan more effective, consider using digital documentation tools or even an app, which can help keep everyone updated and ensure that employees always have the most recent and up-to-date version of the crisis management plans.
Review the Plan Regularly
Preparing for a crisis isn’t a one-and-done solution. Even if you create a thorough and effective plan today, the changing landscape of your industry or the threats you’re protecting against will make the strategy less effective (or even obsolete) over time.
That’s why it’s crucial to have a process for continually reviewing and updating crisis management plans that you develop. That way, they can stay relevant and effective against evolving threats, taking into account the changing landscape in the industry and becoming even more effective over time.
And as you incorporate crisis management into your business planning, you and your team will get better at recognizing new threats and accurately evaluating their severity. You will also develop proven processes for quickly developing plans and allocating responsibilities. And that’s a sign of an organization that’s prepared to withstand any challenges it might face.
Crisis Management Tips
At this point, you should have a solid understanding of how to prepare a crisis management plan for your organization. But before we wrap up, let’s look at a few helpful crisis management tips that will help you stay on the right track:
- Prepare for the worst. When it comes to crisis management, wishful thinking is not an option. You need to look at the worst scenarios and consider how to prepare for them instead of hoping things will turn out okay.
- Reaction time is crucial. One of the most critical parts of a good crisis management plan is being able to respond quickly. When developing the plan, make sure that it can be implemented as soon as possible.
- Prepare for dealing with publicity. Most crises involve a public element. Whether it’s the press, customers, or stakeholders, you need to have a designated person for communicating a unified message that instills confidence.
Bottom Line
No one wants to go through a crisis. But in business, they are an unavoidable reality. The good news is that, with preparation, you can anticipate and manage even the most severe crises, moving through established steps and minimizing the damage in the process.
With the steps listed above, you should be able to start developing a crisis management plan that suits your organization, industry, and the global crises that are the most prevalent right now.
