5.7 - HL - Crisis Management and Contingency Planning

These flashcards cover key concepts and important details relating to crisis management and contingency planning, including definitions, characteristics, and impacts.

What is a crisis?

A crisis is a situation of instability that results in major problems for a business, often unexpected and requiring quick decisions.

What distinguishes crisis management from contingency planning?

Crisis management is reactive, responding to immediate crises, while contingency planning is proactive, preparing for potential future crises.

What are four key factors that affect effective crisis management?

Transparency, Communication, Speed, and Control.

Why is transparency important during a crisis?

Transparency (being open and honest) prevents further damage to the firm's reputation.

How does communication affect crisis management?

Effective communication with stakeholders is critical for managing a crisis, ensuring timely contact with emergency services and others.

Why is speed crucial in a crisis situation?

A rapid response is critical to reducing the impact of a crisis and managing it effectively.

What leadership qualities are important during a crisis?

Leaders must control the situation, communicate effectively, make quick decisions, and work well under extreme pressure.

What are some benefits of contingency planning?

It can minimize financial damage, save valuable time during a crisis, reduce risk, and reassure employee safety.

What are some drawbacks of contingency planning?

Opportunity costs, potential inaccuracy of plans, and the necessity of regular risk assessment reviews.

What was a major consequence of the United Airlines incident in April 2017?

UA's market value fell by $1 million due to damage to its reputation.