One can never predict when a tragedy may strike. We can plan and try to prevent mishaps but they can still happen. Crisis management in such conditions is one of the most important functions of managers. They must always be able to rebuild their organization after a crisis occurs.
A crisis is basically any mishap, tragedy or ill event that carries negative effects. It causes damage to an organization, its members, its business or customers. It can even affect an organization’s reputation and legal or financial position.
As the expression suggests, crisis management is simply the act of handling a crisis effectively. It refers to the response of an organization to an incident that can affect it negatively.
A business can anticipate crisis situations that may strike it but it can never completely prevent them. It is practically impossible to prohibit tragedies from occurring. Each kind of tragedy carries unique effects.
Not all crisis situations have common features. Hence, managers have to understand each possible crisis and deal with it differently.
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Crisis Management and Risk Management
Crisis and risk management may sound similar but there are some stark differences between the two terms. Thus, it is wrong to use them interchangeably.
The main difference between crisis management and risk management is the time when they occur. Crisis management takes place after an untoward incident occurs. It basically relates to the damage control measures that managers implement.
On the other hand, risk management includes anticipating crisis situations. It also requires managers to find ways in which they can reduce risks. A good risk management exercise will not only reduce risks but also try to prevent it completely.
Good managers will be able to perform both crises as well as risk management effectively. They should anticipate all possible risks and also resolve them if they crop up.
Types of Crisis
As we saw above, no two crisis situations are always the same. Each tragedy has its own attributes and one has to resolve them all accordingly.
In order to achieve this aim, managers must be able to understand every possible crisis situation. The following are some of the most common types of crisis a business organization can face:
a) Natural Disasters
Natural disasters are basically ‘acts of God’ that occur naturally. Environment causes are generally responsible for them. These include earthquakes, floods, tsunamis, storms, droughts, etc.
They affect human life as well as property. These kinds of disasters are almost always unpredictable and, hence, more difficult to prevent.
b) Confrontational Crisis
This kind of crisis occurs when two groups clash due to opposing interests. These groups may be businesses, workers’ unions, and even governments.
Their conflicting interests lead to a crisis that managers have to deal with. For example, protests, boycotts, sit-ins, blockades, and threats occur in such situations.
c) Technological Crisis
Human application of science and technology causes a crisis of this kind. Disasters like nuclear leaks are unpredictable until the science behind them is fully clear.
d) Organizational Misdeeds
Sometimes an organization’s management may take decisions that are not proper and informed. This can often lead to unpredictable incidents. Managers must make sure that they always back each decision with adequate precautions.
False information or rumours about an organization can damage its reputation and goodwill. For example, a company’s rival may spread misinformation about its products being toxic and poisonous.
f) Workplace Violence
Violence amongst workers can also be a common kind of crisis. The management must deal with such problems very delicately.
Solved Questions on Crisis Management
Question: Find the missing work in the following sentences.
(1) Crisis management happens after an event occurs whereas __________ management happens before that.
(2) __________ disasters are acts of God.
(3) Clashes of interests between two groups lead to __________ crisis.
Answers: (1) risk (2) natural (3) confrontational