Planning is critical in business and can make all the difference when it comes to generating revenue, building a reputation, reducing insurance exposures and satisfying customers. However, while proper planning can help you grow your business, the fact is that—even if you take every reasonable precaution—a crisis can occur without warning and lead to significant disruptions and business impacts.

What Is a Crisis?

Simply put, a crisis is any situation that falls outside normal business and emergency response plans. A crisis may be an event your business could have avoided if the proper protocols were in place (e.g., a social media crisis or organizational errors and omissions) or a situation that’s completely out of your control (e.g., natural disasters or a pandemic).

When a crisis occurs, it may significantly:

  • Threaten the safety or well-being of a company’s people.
  • Impair a company’s ability to operate effectively.
  • Harm a company’s public reputation or image.
  • Impact a company’s bottom line.
  • Increase a company’s insurance exposures.

The truth is that every business—regardless of the industry it operates in, or the products or services it offers—will likely face a crisis at some point during its existence. These crises can threaten an organization’s standing in the public and even affect clients, donors and other third parties.

When such an event occurs, it’s critical that you’re prepared to respond effectively with a crisis management plan. This guide provides a general overview of crisis management plans and how to create one of your own, enhancing any business continuity and loss control procedures your organization already has in place. Please note, this guide is designed to be informative in nature and is not meant to substitute advice provided by legal, insurance or other professionals.

The Importance of Crisis Management

If and when a crisis occurs, it will critically challenge your organization, and the way you respond can have a direct impact on your brand. In fact, following a crisis, businesses often incur unexpected costs related to responding to customer inquiries, updating internal policies, or paying legal fees and settlements. Additionally, your business may see a steep drop in stock valuations, which can impact a variety of company shareholders, including employees and outside investors. Without a plan in place, financial damages like these can quickly get out of hand, and your business may experience extensive disruptions or even have to close its doors for good.

What’s more, the effect of a mismanaged crisis isn’t always tangible. Following a highly publicized incident, brands can quickly lose customer trust, suffering long-term reputational harm. As a result, companies with a tarnished image may have difficulty finding and recruiting talent or finding businesses and vendors that are willing to partner with them.

While you can’t always prevent a crisis and the concerns that come with them, you can reduce the impact of one through proper planning. Specifically, organizations need to have a crisis management plan in place—one that’s flexible and can account for different events that affect their business.

In general, crisis management involves preparing for, mitigating, responding to and recovering from a crisis situation. It requires creating an organized plan of attack for when a crisis arises, outlining what the organization needs to do before, during and after a crisis. The importance of proper crisis management can’t be overstated, particularly when you consider that—according to a survey from PricewaterhouseCoopers—54% of firms that had a crisis management plan in place fared better post-crisis than those that didn’t.

A successful crisis management plan takes into account pre-, mid- and post-crisis activities. 

Please contact me if you would like to discuss crafting a crisis management plan of your own.