Crisis Management: An Important Part of the Risk Management Equation
As business counselors, the attorneys of Much Shelist talk regularly with our clients about risk management. Simply put, if you're open for business, you're open to risk. Most business owners and executives recognize this fact, and take steps to identify and address potential threats through a combination of insurance coverage, company policies and other good common business judgment.
Crisis management, on the other hand, tends to take a back seat. Why? Perhaps the word crisis itself is the problem; in many business leaders' minds, it takes on negative connotations such as unpredictable, surprising, reactive and worst-case scenario. Some consider a crisis to be an event for which one cannot prepare, something that (hopefully) won't happen. All too often, however, businesses are directly affected by crisis events, including natural disasters, fires and floods, brownouts, defective products and workplace/employee issues.
At Much Shelist, we believe businesses can—and should—anticipate potential crises and take proactive steps to minimize their impact should they occur.
Identify potential issues. Examine your business thoroughly, scrutinizing your products, services, processes, customers, vendors, employees and regulators—as well as the interactions between them. Identify critical operations that must continue, even in a crisis. Understand the key players and stakeholders, and how their concerns must be addressed when risks become reality.
Develop an action plan. Many families create their own emergency plan. They stock food and other supplies to last them for a short period of time, and know whom to call and where to meet in an emergency scenario.
Every business should have a similar, well-documented plan. Develop a phone or e-mail tree to quickly communicate information to employees. Make sure your technology providers can support your IT and communication requirements. Identify offsite office or manufacturing space in case existing facilities become unusable. Create a designated and trained media team to handle public relations.
Communicate and rehearse the plan. Put your plan to the test before an actual crisis occurs. A formal run-through can help identify weak links and highlight areas that have been overlooked or need further attention.
Realistically speaking, a well-crafted crisis management plan can make the difference between a bump in the business road and an enterprise-threatening event.