Tag: Business Risk

Crisis management is a method that can be used for two purposes: as a way to help the contractor deal with a crucial problem that could cause severe losses; and also as a form of prevention against any type of crisis, preparing the company to deal with this situation.

In other words, this methodology brings together a set of strategies and actions aimed at minimizing, reducing, or reversing the possible consequences of these problems, which can range from economic to those related to the organization’s image.

But after all, what exactly characterizes a crisis?

According to a communication and crisis expert, this concept describes any serious event that breaks the normality of a company or causes an extremely formal impact, causing serious damage and even affecting people’s safety and lives.

Companies must always be prepared to give a quick and effective response in these situations, and for that, the first step is to know the main types of crisis that can affect your business.

What is the Origin of a Crisis?
How to Manage a Crisis in a Company?
How can HR Help in Crisis Management?
FAQs

What is the Origin of a Crisis?

Every company can be affected in different ways, there is no single source and in each of them, the answer must be as assertive as possible. Therefore, it is important to know the main cause of the crisis in the corporate world so that you can adequately prepare for each one of them.

Check out this brief description of the main causes of the crisis:

Economic or Financial:

One of the most common types to be seen, and occurs is when the company suffers a significant reduction in its business. When there’s more supply than demand, your profitability and revenue decline, and your cash flow or working capital isn’t enough to balance the bills.

Structural failures:

Structural failures are most often seen in large companies such as factories and construction companies. They are characterized by the failure of equipment or structures. In more serious cases, damage to families can result in the loss of life.

Rumours of sabotage:

Many rumours or accusations spread by competitors or even dissatisfied customers can cause significant crises in organizations, especially when spread quickly through technology and social media.

Reputation:

When internal and confidential information leaks to society, every company is at great risk of facing a severe crisis, especially if this data involves illegal issues about its operation.

Natural disasters:

Natural disasters like earthquakes, storms, floods can damage your business, causing operational and, consequently, financial problems.

With these examples, we can see how there is a great diversity of causes that can lead to a business crisis, whether internal or external. But don’t worry, we will give you fundamental tips, later on, to help you with this management.

How to Manage a Crisis in a Company?

There is no denying the importance of having good crisis management, but the big question that makes this process difficult for many professionals is: where to start?

Assertive crisis management must be organized and prepared with great care, which is why we have created a step-by-step guide that can help your company with this task. Check out:

1. Map the Company’s Risks

For your company to have good crisis management, it is necessary to carry out a complete mapping of all the company’s risks.

Raise the entire history of the organization and analyze the main issues that could affect it. It is important to simulate these possible scenarios to have a better understanding of what could happen and, based on that, devise the best strategies for each situation.

2. Create a Crisis Committee

Once all the risks that could affect your business are mapped and understood, the second step is to establish who will be responsible for this crisis management.

The leaders and managers should be in front of this command-line process, but beyond them, you have to define representatives from each sector of the company, who will also be responsible for dealing with problems that reach their respective areas.

After all, the crisis can affect the organization as much as a specific sector, so it is important to have an employee responsible for this task in each team.

3. Strategy Elaboration

Then, it is time to devise the strategies to be used in each crisis.

Establish the actions that will be taken, train the spokespersons responsible for each team, and analyze how information about the event will be transmitted, both internally to all employees and the press and the public.

With these actions, your company will be better prepared to deal with crises and solve the problem in the best way possible. Besides them, other tips are fundamental for this process and must also be followed to avoid mistakes that could compromise this management.

4. A Contingency Plan to Manage a Crisis

No company wants to face a crisis, but as we mentioned above, we are often subject to unexpected situations that will drastically affect our daily lives.

Therefore, all companies must be ready to deal with these unexpected events, not only through the strategies we mentioned above but also through a contingency plan.

Typically, it is based on risks that have already been identified and decided upon as situations that can critically impact the company, to maintain or restore the organization’s critical operations.

As an example, we can mention the coronavirus pandemic, which impacted and changed the routines of several organizations, forcing them to quickly adapt to this new scenario to ensure that their business continued to function.

In situations like this, the contingency plan must be activated so that the company can maintain its operations. At this point, all teams must be aware of the actions that will be taken to resolve the crisis and work together to put them into practice.

Good communication is essential not only for this plan but for all crisis management so that everyone is aligned on the procedures that will be taken. In addition, the organization’s response must be as quick as possible, as the longer it takes, the more difficulties can arise in solving the problem.

Finally, it is noteworthy that this process must be closely monitored by leaders or managers so that they can be sure that the necessary actions are being taken and that the desired results are being achieved.

5. The Importance of Internal Communication in Crisis Management

In times of crisis, a small flaw, miscommunication or rumours can disrupt this entire process, and even bring serious consequences. Therefore, the first item that should not be dispensed with is internal communication.

In this process, HR must be concerned with being transparent and objective about the procedures being taken, and always be available for any queries that may arise.

Maintaining good internal communication will bring greater security to those involved, ensuring that employees are always aware of the organization’s position at these times, feel at ease, and know what is being done to fight the crisis.

How can HR Help in Crisis Management?

HR is one of the most important departments in the corporate world. As well as dealing with bureaucratic issues, the contractor is also responsible for a broad range of management that involves the welfare of employees. Therefore, in times of crisis, the professionals in this department are extremely important to contribute to the management’s focus on the internal public, that is, in establishing all the measures that will be aimed at the company’s employees.

These actions provide high-performance management, which will not only increase the teams’ performance but also contribute to greater motivation and, consequently, better crisis management.

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Conclusion

Managing a crisis is not an easy task and requires a series of components to be able to minimize the consequences, such as good planning, preparation, and leadership from everyone involved.

Therefore, in this article, we explain the main crisis that can affect your business and offer tips on how your company should prepare to face these moments.

We hope that it will help you in developing a great crisis management system for your company.

FAQs

How do Companies Manage Crisis?

To manage crisis companies should develop a crisis management plan by assembling a crisis management team and ensuring strong leadership and training the employees.

How do you prepare for crisis management?

The company should be prepared for the crisis by recognizing a potential crisis, checking the crisis readiness, researching your company records, reviewing your social media status, building the image of key leaders, strengthening your key relationships.

What are the six steps of handling a crisis?

The six stages within every crisis are warning, risk examination, response, management, resolution, and recovery.

What are the three stages of crisis management?

The management of crisis can be divided into three phases are pre-crisis, crisis and response, and post-crisis.