Sub-Chapter 5.7 (Crisis Management & Contingency Planning)

What is a crisis?

- A crisis is an unpredicted event with largely negative consequences
- It is something that cuases major disruption to normal business operations and can range from fire to stoppages in the supply chain.
- A crisis will affect every business at some point.
- Black Swan Events and Dragon-Kings and the predictions of crisis.
- Crises may come in many forms, for example: a cyber attack, a product recall due to defects, war/conflict, employee conflict, a natural distaster, a lawsuit or a public accusation.

What are some examples of
a crisis?

- Finanical Crisis of 2007-2009 affected more than just the United States (where it started) and had consequences for many other countries.
- Eruption of volcano in Iceland in 2010.

What is the difference between crisis management and contingency planning?

- The aim of any crisis management situation is to return to normal business operations as swtifly as possible.
- One way to achieve this is to use a contingency plan that was prepared in case the crisis arose.
- Crisis management would also focus on communicationm transparency, sped and control of the sutation.
- Contingency plans are sometimes refered to as a Plan B.

What is contigency planning?

- A contingency plan outlines the immediate actions a company should take in the event of a crisis.
- Contingency planning is all about asking "What if?" questions about the future.
- Ex. Fire Drills.
- Contigency plans ensure the aftermath is less chaotic.
- With a detailed contingency plan, people know what to do, where to go and where to seek help if they need it.

What are the advantages of contingency planning?

- Costs and time : (A detailed plan should aid swift decision making. Potential problems are evaluated in advance, then rapid implementation should be possible.) , (Should be able to return to normal quickly and minimise losses.), (Include a detailed communications stategy that outlines how customers, staff and potentially the media will be contacted in the event of a crisis.) , (Minimises the chance of them making costly mistakes in a high-pressure environment.)
- Risks and Safety:

What are some disadvantages of contingency planning?

- Costs and time : (For plans to be relevant, they need to be reviewed and updated regularly.) , (This has an opportunity costs in terms of time and resources.) , (Firms will need to develop a range of different plans for diverse situations).
- Risks and Safety : (How similar would it be to the one written in the contingency plan and the actual?), (Everyone knows it's a drill and not everyone will take it seriously, in a real fire, panic and confusion might set in.) , (If a contigency plan doesn't take these factors into account, it's use is limited).

What are the concerns to consider during crisis management?

- Crisis management concerns the steps a company can take to limit the damage caused by an upredcited event or crisis.
- he aim of any crisis management situation is to reutnr to normal business operations as switfly as possible.
- Effectve crisis management depends upon things: Communication, Transparency, Speed and Control.

What is meant by communication in crisis management?

- Effective communication with both external and internal stakeholders is essential at times of crisis.
- Initially, internal one-way communication with employees ensures that everyone understands that

What is meant by transparency in crisis management?

- Transparency and full disclosure of the gravity

What is meant by speed in crisis management?

- The goal of crisis management is to return to normal business operations as soon as possible.
- Rapid decision making and effective implementations.

What is meant by Control in crisis management?

- A crisis is one of the few situations where an autocratic leadership style migh be the most effective.
- Autocratic leaders make quick decisions and ensure that actions are carried out, which can lead to an effective response.
- In addition, people may be motivated by strong, decisive leadership in times of crisis.