Crisis - Unexpected, and often unpredictable, situations of instability that result in major problems for a business. At its extreme, a crisis can threaten the survival of a business, which is why managers devote time to devising plans to minimise the damage that crises can cause to their organisations.
Crisis Management - The reactive response of an organisation to a crisis situation. Crisis management aims to minimise the negative impact of unpredictable situations, such as a fire or a hostile takeover from a competitor, in order to guarantee the survival of the business. An autocratic style of leadership and centralised decision-making will find the most success in crisis management.
Contingency Planning - A proactive plan that identifies all probable threats and prepares a plan of how to deal with such threats. Contingency plans are integral to a business’ continuity strategy as it helps to ensure that the organisation is ready for unpredictable events.
Proactive vs Reactive - Contingency planning is proactive, preparing for events before they ever occur to ensure that the business is prepared for what may come. Whereas crisis management is reactive, only taking effect once the business has entered a crisis situation, to empower the business to manage its response and ensure its survival.
Transparency - Hiding the extent of a crisis from all internal and external stakeholders of the business may lead to speculation, negative media coverage, and a damage of goodwill. Being honest and open about a crisis will help defuse negative speculation about the business.
Communication - Effective communication with all key stakeholders is critical to prevent negative media coverage and maintain a positive reputation. Ensuring that the business has a clear and consistent message to ease doubts and mitigate pressure on the business will benefit its recovery after the crisis.
Speed - The speed of the response is critical to mitigating the growth of a crisis and reducing the damage caused. The longer the business takes to respond to a crisis, the greater the impact of the crisis, which increases the costs to repair the damages.
Control - Competent leadership, and the ability to make quick and effective decisions, is necessary to lead the business through the crisis with minimal damage. A crisis is ruled by unfamiliarity and uncertainty; leaders must be able to adapt plans and maintain composure in order to promote rapid problem solving and execution under high-stress conditions.