is defined by the dictionary as a 'critical moment or turning point.'
A business book, on the other hand, might define a crisis as a
substantial, unforeseen circumstance that can potentially jeopardize a
company's employees, customers, products, services, fiscal situation, or
reputation. Both definitions contain an element of urgency that
requires immediate decisions and actions from people involved.
is the process of preparing for and responding to an unpredictable
negative event to prevent it from escalating into an even bigger
problem, or worse, exploding into a full-blown, widespread,
life-threatening disaster. Crisis management involves the
execution of well-coordinated actions to control the damage and preserve
or restore public confidence in the system under crisis.
context of corporate governance, excellent crisis management is a
crisis occurs because of the crisis' enormous potential impact on the
company's reputation and financial standing. Poor handling of a
crisis situation can ruin the confidence of the customers or the public
in a company and jeopardize its survival, a situation that normally
takes a long time to correct, if it still is reparable at all. Such is
the importance of public perception of a company's handling of a crisis
has become an important ingredient of crisis management.
In fact, the definition given by the
American Institute for Crisis Management (ICM) for the word 'crisis'
underscores the association of a crisis with media coverage by default.
ICM defines 'crisis' as "a significant business disruption which
stimulates extensive news media coverage. The resulting
will affect the organization's normal operations and also could have a
political, legal, financial, and governmental impact on its business."
management doesn't start only when a crisis arises and ends when 'the
last fire has been put out'. Crisis management requires actions
before a crisis happens, while the crisis is unfolding, and after the
crisis has ended. In fact, crisis management is divided into these three
which involves identification of potential crisis situations and
developing contingency plans for responding to each of them; 2)
which involves management of an ongoing actual crisis situation itself;
which includes corrective and preventive actions to preclude the
recurrence of the same crisis situation and business recovery actions to
restore public confidence in the brand or the company.
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many different ideas or
on how to best manage a crisis situation. These differing ideas,
nonetheless, have some
the need to anticipate potential crisis situations and prepare for them;
2) the need to provide accurate information during a crisis; 3)
the need to react as quickly as possible to the situation; 4) the need
for a response that comes from the top; and 5) the need for long-term
potential crisis situations that a company may encounter and formulating
contingency action plans
for them are a basic requirement of any crisis management program.
These plans should also be well-rehearsed by all employees, so the
needed. Any company must be prepared to deal with fires, bomb threats,
personnel violence, and natural disasters such as earthquakes and
tornadoes. In the semiconductor industry, the discovery of a
life-threatening device reliability issue, process gas leaks, hazardous
chemical spills, and even the sudden loss of a major supplier are
examples of crisis situations.
One of the
hardest things to contend with during a crisis is the
of customers or the public for a constant supply of
Accurate information pertaining to a crisis are often not readily
available at once, and are too bitter to announce to the public once
they become available. If the crisis does not concern the public,
then a company may get away with staying quiet about it.
the press will usually be all over the place within hours. In such
a case, there is no choice - most experts agree that it is better to
no matter how painful they sound, than to manipulate the situation by
giving false information to the public, which often backfires with
tremendous repercussions. Thus, a company that has developed a
culture of internal secrecy and manipulation is of great disadvantage in
this respect, because they would find it difficult to provide honest
information and subsequently resort to the thing they usually do: hide
the truth. PR work for high-profile crises is something that any
management team must be well-trained for.
indecisive, playing time, or inability to get accurate information
quickly can be disastrous during a crisis. Management must act
to contain the problem, assess affected goods, ensure business
continuity, allay public fears, and preserve company reputation even
while the crisis is still unfolding. Since a crisis by definition
is unpredictable, a company needs to have a system for assembling a
crisis management team that knows what to do within an hour after a
crisis occurs, 24 hours day, all year long.
during a crisis is highly recommended by experts because it assures the
public that the problem is getting due corporate attention.
Management must also actively pursue
corrective and preventive actions to avoid being in the same crisis
comprehensive crisis management program includes the following
components: 1) an
which consists of all activities pertaining to safe management of
immediate physical, health, and environmental effects of the crisis; 2)
or the company's ability to continue delivering goods and services
despite the crisis; 3)
which pertains to the internal and external PR management activities
during a crisis; 4)
or the company's efforts to alleviate the physical, emotional, and
psychological effects of the crisis on other people; and 5)
that allow personnel to rehearse what they need to do in a crisis
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