Defining crisis management

Crisis Management (CM) is a strategic management process.

The British Standard BS 11200:2014 (Crisis Management – Guidance and Good Practice) defines a crisis as:

An inherently abnormal, unstable and complex situation that represents a threat to the strategic objectives, reputation or existence of an organisation.

A crisis can consist of four elements (Venette 2003):

  • A threat to the organisation
  • The element of surprise
  • A short decision time
  • Where the old system can no longer be maintained

Two very different examples of crises could include:

Is an incident different from a crisis?

The short answer is yes. The following table highlights how they differ:

Characteristic Incident Crises
Predictability Usually foreseeable but not necessarily predictable
Fit well into pre-planned responses
Unique, rare, unforeseen and therefore create unique challenges in management
Onset Can be both sudden and slowly developing May be sudden or may emerge as the result of an incident that has escalated
Urgency Response will usually be short term High pressure and requiring an urgent response
The response may need to run over a long period of time to minimise the damage
Impact Impacts are well understood and can be managed within a defined response plan Crises are usually more strategic and can have a wider impact (geographically, organisationally)
Media Scrutiny Negative media coverage may escalate an incident into a crisis Crises lead to significant public and media interest* with the potential for events to be inaccurately reported, particularly with the use of social media
Manageability Can usually be managed with pre-defined response plans/procedures Pre-defined practices may not offer enough flexibility or creativity

(Adapted from PD CEN/TS 17091:2014)

In many cases, crisis management and business continuity capabilities work in unison, although depending on the event, the crisis may need managing without any activation of business continuity. For example, averting or managing a crisis due to a malicious rumour.

In his book, The Black Swan: The Impact of the Highly Improbable, Nassim Nicholas Taleb focuses on the extreme impact of rare and unpredictable outlier events — and the human tendency to find simplistic explanations for these ‘black swan events’, retrospectively. While financially focussed, examples include the 2011 Japanese earthquake, tsunami and subsequent nuclear catastrophe.

Central to Taleb’s book is the notion of not attempting to predict black swan events but building robustness to negative events and an ability to exploit positive events.

Taleb asserts that banks and trading firms are vulnerable to hazardous black swan events and are exposed to losses beyond those predicted by their (potentially) defective financial models.

The objective should be to identify areas of vulnerability in order to turn the black swan threat into an opportunity.

The matrix below shows generally where events are managed within Business As Usual (BAU), BCM and CM. The ‘black swans’ are the ‘unpredictable’ high impact, lower probability events.

matrix figure

Alternative text is available as a pdf in the related files section of this step

CM acknowledges that, although rare, some risk events will be so extreme and/or complex (usually both) that the organisation cannot reasonably plan for them in advance, threatening it at a strategic level.

As such, CM seeks to build organisational capability to respond to these strategic-level disruptive events, swiftly detecting a crisis in order to take command and control and mitigate potential impacts while communicating effectively with all interested parties.

Perspectives of crises

Crises can be classified in many different ways. One, commonly used is to classify the speed of onset. It could be sudden (terrorist attacks or flooding) or slow to develop (whistleblowing events or management mistakes). Another could be the level of complexity; is there a singular event or are many (sometimes overlooked) dimensions in play?

When dealing with a crisis we can think of it from a time perspective (Coombs 2012), as shown below:

Figure showing the three phases of a crisis. 1. Pre-crisis when preparation measures such as training should take place and good communication is required. 2. Crisis, when action should be taken towards a resolution. Again communication is important during this phase. Finally, there is the post-crisis phase when final resolutions occur and learning can take place.

But one of the challenges of this approach is that it can be difficult to establish where a phase starts and ends (Björck 2016), which may make management more challenging. For example, drawing the line between who is responsible at each stage.

Further reading

You may find it interesting to read the following article which discusses two major crises in the US and how company responses affected the outcome, particularly in relation to the public and the media perception.

James, E. H., Wooten, L.P. (2005) ‘How to Display Competence in Times of Crisis’. Organisational Dynamics 34 (2), 141-152

Your task

There are many examples of crises that can affect an organisation, such as the examples shared above.

What examples of crises can you think of that come from slowly developing incidents? Are these examples of black swan events?


References

Taleb, N. (2007) The Black Swan: The Impact of The Highly Improbable. London: Allen Lane

Venette, S. J. (2003) Risk Communication in a High Reliability Organization

Coombs, T. (2012) ‘Crisis Communication and its Allied Fields’. The Handbook of Crisis Communications. ed. by Coombs T., and Holladay. Chichester: Blackwell Publishing, 54-65

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This article is from the free online course:

Business Continuity Management and Crisis Management: An Introduction

Coventry University