Question

Define the concept of crisis and discuss the stages of crisis formation? (in business)

Answer 1

Answer

Crisis

A crisis or disaster is an unexpected event that disrupts normal operational processes and has the potential to create significant financial, security, safety and reputational harm. It interrupts everyday operations and can cause financial losses, destruction of property, security breaches, personal injury, loss of life and damage to an organization’s reputation.

A crisis is also complex and of unknown duration. As the crisis unfolds in real time, circumstances can change radically, as will the requirements, roles and responsibilities of the various people involved.

There are six identified phases within every crisis:

(1) Warning;

(2) Risk Assessment;

(3) Response;

(4) Management;

(5) Resolution; and

(6) Recovery.

1. Warning

The first part of a crisis is the Warning Phase. This stage can vary depending on the type of situation or different conditions that trigger a crisis. During the warning phase, an effective communication plan must be in place. Adequate preparations must be done to circulate the critical information effectively to those who will be most affected by any possible untoward incidents that might occur.

This includes proper notification to specific concerned individuals or organizations such as law enforcement, key constituents, and other risk management personnel.

The manner of communication during this stage must be designed to heighten awareness, which means that simple, consistent, and direct language is recommended.

2. Risk Assessment

This is the stage in which the crisis management team assess the risks, review potential consequences and inspect damages caused by the crisis. It assists them to decide what the next steps should be based on the extent of the damage. It also helps them determine what should be done to avoid a disaster or reduce its negative effects.

For best results, the risk management stage requires critical communication interaction, participatory decision making, and information exchange in the crisis management team and other outside resource personnel. It is good to have An emergency response plan in place too.

3. Response

This is the phase where the focus is fixed on the organizations and individuals who appear to be involved in the crisis. Spectator’s attention will move from the incident itself to the personalities who appear to be at the center of the storm.

It’s important to have a spokesperson who is prepared and capable of responding to news and media appropriately.

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4. Management

This phase requires management to be accountable and accept responsibility. Ideally, the organization must have a written crisis management plan that is available when a crisis arises. It should be published on the company’s intranet and in hard copy.

This phase requires to accept the responsibility , be transparent, and always be responsive to media to establish credibility and public trust.

5. Resolution

The outcome of a crisis will depend on how well it was handled during the previous stages. Some might result in cases involving litigation, in which case the next course of action will depend on the judgment in the courts. Others might involve out of court resolutions for the aggrieved parties. Regardless of the resolution, it is best to always be on top of the media scrutiny that might arise and have the right spokesperson to handle this situation. Always accept responsibility and be held accountable for any oversights.

6. Recovery

This the final stage usually takes up a long period. It can take months or even years to get back to “business as usual” both on the front end and the back end of daily operations. Communication tasks during the recovery period is interdependent and should be expected to overlap with various individuals and target audiences. Be mindful of the differences when it comes to purpose, function, and characteristics of each group, and address these varying requirements as best you can.