Crisis management: Definition, tips and planning

Crisis management is a process of dealing with emergencies within a company or organization. Whether a business faces small threats or major problems, there needs to be a plan in place. Crisis management involves taking steps to secure the situation while also communicating with internal and external shareholders (employees, investors, the media, etc.).

There are several moving pieces in crisis management, which means the best time to develop a strategic plan is before the crisis hits. Here’s what you need to know about effectively handling a crisis.

The importance of crisis management efforts

The phrase “an ounce of prevention is worth a pound of cure” summarizes the importance of crisis management efforts. No one actually wants to implement these crisis strategies, but they are invaluable when an emergency hits. Everyone knows their expected roles and the company can quickly reach a point of stability.

Your business crisis management strategy is like a fire drill. You practice exiting the building in the event of a fire so everyone knows where to go to secure an accurate headcount. You take steps to prevent fires within the building, but your team is prepared in case one breaks out.

Examples of crisis management efforts

There are two types of crises you need to plan for: general crises that could hit any organization and specific crises related to your company. Here are a few examples of general crises:

A natural disaster is hitting your headquarters and you need to close your business and alert your employees.
A scammer launches a phishing attack on your business and compromises your financial health.
Your CEO passes away unexpectedly and you need someone to step in and run your organization.

Along with brainstorming potential issues within your organization, consider industry-specific challenges you might face. Here are a few examples of niche crises.

A food company is accused of selling tainted products and needs to issue a recall.
An animal escapes from its enclosure at the zoo and the executive team needs to assure customers and media that everything is under control.
An employee at a private security company uses excessive force on someone breaking into a client’s warehouse, which makes headline news.

A major part of developing a crisis management plan is to consider what can go wrong in your business and how you should react to it.

How to build a crisis management team

One of the first steps when establishing a crisis management plan is to develop a team of experts who will jump into action when an emergency occurs. Here are a few ways to build your crisis management team so you have an effective support system in place:

Understand all aspects of the crisis. How will a specific crisis affect the operations, communications, legal, accounting and HR teams? Review immediate and secondary problems related to the crisis.
Identify key stakeholders who need to be involved. Who needs to know about the crisis immediately? This can help you build your team and establish a chain of communication.
Create a plan and assign roles. Every member of the team should have dedicated tasks that are specific to their positions within the company. If you don’t have someone to take on specific tasks, consider growing the skillset of employees in your organization.
Make crisis management part of your turnover and succession planning. When a member of your crisis team changes roles or leaves the company, make sure they pass the responsibilities on to the next person in their position.

Each member of the crisis management team can take steps to prepare for serious issues. For example, your digital marketing representative can draft social media posts before a crisis hits, so they can be quickly edited and published as soon as you are aware of an issue.

Roles in a crisis management team

The roles assigned to your crisis management team might look different from the positions these employees hold during normal operations. The employee’s title isn’t as important as their skillset at executing their jobs in a crisis situation. Here are a few roles to fill:

Facilitator: this person guides the team through the crisis plan and ensures every aspect is covered.
Monitor: this person tracks the emergency to see whether it is getting worse or improving.
Internal communications: this person alerts employees to the issue and provides updates and instructions to them.
External communications: this person communicates with customers and media about the crisis.
Legal: this person consults on what the company can do during the crisis.
Financial: this person approves emergency spending.

Additionally, each crisis will have a designated point person to handle the emergency and implement solutions. This could be an IT executive in the event of a website hack or an operations leader if there is a product recall. Each point person might have a team of helpers underneath them, which is why it’s important to staff your crisis team with strong leaders.

How to develop a crisis management plan

Take your time developing your crisis management plan. It needs to be thorough otherwise you could create confusion during an emergency. Here are a few steps to follow:

Identify potential emergencies related to your business.
Consider how the crisis could affect each department.
Develop steps each department should take to resolve and address the crisis.
Assign roles to staff members to lead and execute these steps.
Conduct a training needs assessment to identify any missing skills required to execute the plan.
Document your plans in writing so they can be updated and shared with new employees when needed.

Additionally, review your crisis plans regularly so you can fill in any gaps and update information. In an emergency, you don’t want to rely on a plan developed a decade ago.

How to review crisis management efforts

Developing a crisis management plan is a good start for protecting your company, but you also need to test these strategies. Here are a few steps to take.

Run mock crisis drills where you execute your plans.
Follow the crisis responses of other companies and compare their efforts to yours.
Work with a crisis consulting firm to review your plans and take their feedback to improve them.
In the event of an actual crisis, review your efforts and consider what you would have done differently if given the chance.

Set aside a date at least once per year to focus on your crisis management plans. This can give you space to update them regarding employee turnover, process changes and technology improvements within your firm.

Typical stages of crisis

Your crisis manager should account for all four parts of a crisis. Each emergency is unique, which means some parts will be longer than others. Keep this in mind as you develop your plan.

Pre-crisis: the period before a known crisis hits (or the planning of a potential crisis). For example, an approaching hurricane could give you up to a week of crisis planning.
Crisis: this is the actual emergency phase. People are just becoming aware of the issue.
Response: everyone who needs to be aware of the issues is and all teams are completing their tasks to resolve the problem.
Post-crisis: this is when you evaluate your efforts and track the effects of the emergency.

Consider the crisis faced by Southwest Airlines during the 2022 holiday travel season. The airline’s system shut down and canceled hundreds of flights — this is the crisis. The company responded to get fliers where they needed to go. The lost customers who switch to other airlines are part of the post-crisis fallout.

Resources for crisis management

You don’t have to be a crisis expert to develop effective plans within your organization. Here are a few resources you can use to learn more about developing crisis response strategies.

Preparing for crisis management means drafting plans you hope to never use. It is a project that you never want to execute. However, that doesn’t mean you shouldn’t dedicate your efforts to making sure your team is ready for action the second an emergency occurs.