Crisis Management in Business 

What is Crisis management 

Crisis management is the the capability of a company to detect that a crisis or a threat that might be coming and then reacting to it in a good way to minimize the damage for the company.  Many companies are aiming for detecting the threat before it even hits the company, this is because they are then able to minimize the damage to the company so the company takes as little hit as possible. In some cases when the critical crisis gets to the company, the company might have to completely change their direction in order to survive the company. A lot of the times companies have already planned out a strategy in case a crisis hits, then they already know how they are going to react when it hits. The process of having a business continuity plan in the case of a crisis is called crisis management.  Most companies start their operations by going trough a risk analysis. This is the process of identifying detrimental events that may occur and estimating probabilities of happening. Risk managers can calculate these things with things like scenario tables and risk models. Once these things have been calculated, the crisis management team can start working on the risk and then react if the threat is bout to happen. These situations when the crisis actually happens might slow down the company for a while but the goals is to minimize the damage which is the result of the crisis management team working well and having good plans. (Hayes 2022) 

If a business faces a big crisis of any kind and the company is not well prepared with a proper crisis management plan. It is highly possible that your business will face heavy long-lasting consequences. These consequences can be related to a variety of different legal and operational relational issues. In the worst cases these bid crisis’s can lead to the company going to bankruptcy and put the company completely out of business. Even when this is known that the crisis can be the last thing to happen for a company, 29% of companies that faced a major crisis from 2014-2019 are telling that do not have any employees dedicated for crisis management to prepare or respond for them. If we are thinking logically, it is clear that every company should have at least a small team to have them prepared for an upcoming crisis so the whole company won’t go down when the crisis hits. (Baker) 

Crisis management is a lot of times started with risk analysis, but it should not be mixed with risk management. Risk management means the planning of events that might happen to the company in the future, when crisis management is reacting to the negative events during and also after the crisis has already happened.  (Hayes 2022)  

Coverage 

Crisis management coverage is designed to help companies limit the negative impact of events in its reputation. Crisis management coverage is an insurance that is used to cover the expenses of a company going trough a crisis and to restore confidence in the security of the insured companies systems in the case of data breach or data breach. The insurance also can cover things like natural disaster, political violence or terrorist attacks. These coverages are mostly used by big corporations which naturally have the most to lose in case of a big crisis. (Hayes 2022) 

Making sure that your business is well prepared for a crisis allows you to keep and maintain a positive and professional reputation within your clients and business partners and on top of that also your employees.  When a company has developed their crisis management plan well, considering about all of the possible things that could damage the company while also gathering a good team around the topic, they are then able to prevent the company from suffering from long-lasting negative repercussions when the crisis hits them at some point.  

Conclusion 

To conclude all of this we can see that the importance of companies being prepared for the possible crisis that might be heading to them is often overlooked and companies might just take the chances of them not being hit with a crisis. This is often not a good choice for the companies, because when the crisis in the end then hits, these companies that are not properly prepared are the ones that are the most likely to go down first and run out of business.  

Sources:  

Hayes, A. Crisis Management : Definition, How It Works, Types and Example. Updated on 22.3.2022. Read on 4.12.2023. https://www.investopedia.com/terms/c/crisis-management.asp 

Baker, K. How Crisis Management Can Change Your Business and Customer Relationships. Read on 4.12.2023. https://blog.hubspot.com/service/crisis-management