As the name suggests, a crisis management plan (CMP) is a strategy document that describes the preparedness of a business to respond to a crisis. A crisis in this regard is a critical situation that can potentially jeopardize the reputation or profitability of the company in question. A CMP can be prepared by anybody, but it is best to involve emergency & crisis management, business continuity, communication and public relations, and damage assessment experts.
Which types of crises should you prepare for when doing business?
- Natural disasters especially flooding, wildfires, earthquakes, and hurricanes. Basically, any natural occurrence that can jeopardize your operations either by damaging your property or disrupting your supply and/or distribution chains.
- Biological hazards such as the ongoing coronavirus pandemic.
- Accidents that emanate from human errors, e.g. accidental fires, your office building collapsing due to structural faults, or hazardous material spilling and causing extensive damage to company property occupants’ health.
- Damages that are caused by human malice, e.g. arson, robbery, or terrorism.
- Tech-related losses, especially cyber-attacks and data losses.
Many businesses don’t invest in crisis management because, in their reasoning, there is almost zero chance that an ordinary business will ever suffer any of the losses described above. Well, that school of thought has been ruthlessly tested by the coronavirus pandemic. Truth is, your business may never be hit by a serious crisis but if (emphasis on if) a crisis strikes, the business may be quashed completely, sometimes so much so that you end up in huge financial and/or legal trouble that will haunt you long after the business has shut down. In that context, to keep your company doing business you need to establish a crisis management plan. Here are 4 reasons why you should change your mind:
This article explores the importance of crisis management plan for success in 7 elaborate points:
1. It helps you define what a crisis is and who should manage it if it arises
You need to define what a crisis is within your line of work otherwise every blip might be translated as a crisis. Define how big a problem must be in order to be categorized as a crisis, and how problems can be countered early enough before they morph into full-blown crisis. A crisis management plan does not only help you with that but also outlines your communications plan, create protocols that define who should be contacted when and why, and which problems can wait and which might necessitate senior decision-makers to be called in urgently. The plan defines who will manage or call the shots during the crisis, who will be the organization’s spokesperson/public face, and which company policies will keep employees in line during the crisis.
2. Going forward, a CMP might be a factor potential employees consider before agreeing to work for you
We mentioned that public relations are a key part of any crisis management plan. That is why anyone can tell apart companies that were prepared for the coronavirus pandemic from those that were caught flat-footed from the way they have been handling the communications aspect of the pandemic. Organizations that were equipped with stellar CMPs have been able to ease concerns, resolve the crisis situation quickly enough, and protected their human resource from unwanted public attention. Such organizations are more likely to attract top talents post-coronavirus than those that seemed underprepared.
3. Helps you keep everyone safe
Crisis management planning is the prerequisite of crisis management. There is no way you will avoid the harsh repercussions of the crises we described above without a foolproof contingency plan. And when the repercussions are mitigated, your employees, clients, and the public at large will have a better shot at being safe.
A CMP also has an emergency response plan that outlines the actions that you will take in case of an emergency crisis. If, for example, there was fire at your place or a bomb scare, how would you evacuate people? Which public safety responders would you engage? A well-defined emergency response plan will help you make every second count. Note that as short as a one-second delay during an emergency could end up being the reason someone dies.
4. It can minimize damages both in reputation and revenue
A Crisis Management Plan makes it easy to detect and prevent a crisis before it happens or before it gets out of hand. That has an impact on both revenue and reputation. In terms of reputation, your company will pass as truthful and self-sufficient if it’s able to communicate promptly of an impending crisis and thwart it before it inflicts untellable damages. Potential customers will definitely notice the quick actions you take to deal with a crisis, and that is good for lead generation. Existing customers and partners, on the other hand, already have a positive image of your company, an image you cannot afford to ruin by being dragged through legal and financial turmoil in the aftermath of a crisis. You also don’t want to lose existing customers to competitors because a crisis shut down your operations. In terms of productivity and revenue, your business will suffer financially if it experiences a downtime of any kind or duration, regardless of whether or not you lose customers or you are sued.
Furthermore, if you are considering global expansion, you need to consider that all of the aforementioned crises can as well as happen abroad, and therefore you need to have a customized CMP that would appropriately address the crisis specific to the country of operation. Global PEO is always a great step you can take to navigate crises that might occur when you’re operating abroad.
5. It could be a legal requirement in your location
Crisis management planning is mandated by regulators in most countries. You could be risking hefty fines and penalties if you operate without one.
6. Helps you determine who needs what information
Most crises are defined by misinformation and falsehoods. Competitors can, for example, easily capitalize on your problems to spread falsehoods about your brand both online and offline. That is why you need a crisis management plan that outlines the communication plan that will keep the general public informed, and that will counter the falsehoods that competitors might peddle against your brand.
Note that communication during a crisis has to be multi-phased for it to be effective. The information you share with the general public, for example, must not be as detailed as the information you share with loyal customers. What you tell the media is not necessarily what you send to clients’ newsletters. What you tell government regulators isn’t necessarily the same information you share with investors and shareholders.
7. It is the base upon which you rebuild after the crisis
A crisis has three phases: The prevention phase, mitigation phase, and the recovery phase. Although you will need a recovery plan for the recovery phase, the importance of a crisis management plan isn’t confined to the first two phases. You will need it for your crisis debriefing soon after the crisis is contained. It is the document that will help you analyze what went wrong in the run-up to the crisis, how the response fared, and which challenges needs to be addressed during the recovery process. It is the foundation upon which you gather ideas on where improvements could have been made in order to be better prepared the next time a crisis comes around.
No matter what type of crisis strikes your business, insufficient and inadequate crisis management comes at high reputational and financial costs, that will for sure be always too much to quantify. Having a proper crisis management plan beforehand can save your company keep employees safe, safeguard your company’s reputation and revenues as well as adhere and be at par with local legal requirements. By having such a plan, your company will be one step ahead of the crisis and at the moment it strikes, your company will be fully prepared.