Natural disasters, fraudulent activities of employees and customers, and inner-company friction can wreak havoc on a small business. Your employees may threaten to quit amid unexpected chaos. Customers may cancel orders or even steal from your company. 

As the company owner, you may find yourself in crisis management mode. Learn how to do it effectively. 

The definition of crisis management 

Crisis management is the process of helping an organisation, business, or individual prepare for an unexpected threat. The main focus is on preventing and handling a crisis when it occurs. 

What is a crisis management plan?

Within a business, many situations can cause reputational damage that can affect its operations. As such, it is crucial to be prepared for any unforeseen situation to avoid a corporate downfall. This is where a crisis management plan comes into play. 

A crisis management plan is a detailed document that describes the steps that an organisation can take to address a disaster that could potentially harm employees, customers, or other stakeholders. It aims to shield the business from harm and to return to normal operations as quickly as possible. 

Additionally, it identifies the positions and responsibilities of key personnel, describes the methods for judging and responding to a disaster. The plan may also incorporate suggestions on how to communicate with the media and other outside parties. 

crisis management
Image by Mohamed Hassan from Pixabay

Stages of crisis

It’s vital to understand and be conscious of the different stages of a crisis prior to developing your crisis management plan. This knowledge may assist you in determining how you should respond to the situation at various times.

There are generally four stages of a crisis in business scenarios:

  1. Pre-crisis: This is the stage where the business is operating normally and is not yet aware of any potential crisis.
  2. Warning: During this stage, the business becomes aware of a potential crisis and starts to gather information about the situation.
  3. Crisis: This is when the crisis is happening, and the business must take immediate action to address the situation.
  4. Post-crisis: This is when the business assesses the damage caused by the crisis and takes steps to prevent similar crises from happening in the future.

Crisis management process and steps

To make it easy and efficient to develop a crisis management plan, divide it into smaller, more achievable tasks. 

You will be able to identify potential risks without being overwhelmed by the situation by using a crisis management template with the following six steps:

  1. Assess your risks: When assessing the dangers to your organisation, the first step is identifying potential problems that could disrupt your business procedures.
    In addition to leadership, your crisis team, and other important stakeholders, list all possible threats and vulnerabilities that could impact the business. This might include product recalls, cyberattacks, workplace issues, and natural disasters, among others.
  2. Determine the business impact: Use high-probability risk assessment to determine the business impact of these threats. Each risk may cause different outcomes, so it is critical to investigate them separately.
    Customer loss, damaged reputation, delayed sales, and lost income are just a few of the possible business impacts.
  3. Plan the response: Once you know what risks your organisation might be confronted with, plan up the actions that would be required to effectively respond to them.
    Consider the steps involved in handling the issue, the resources required, and the help that employees might provide.
    For example, as part of a social media PR nightmare, your digital team would have to address emergency statements posted across various platforms. On the other hand, your customer service team should be trained on what to say on incoming calls.
  4. Build a plan: Once you’ve verbally discussed the threats that your company may face, and the business impact, solidify your plan. A crisis management plan should include key items like an activation protocol and emergency contacts.
    You’ll also need to collaborate with all key stakeholders to ensure everyone understands what to do and when.
  5. Familiarise users: Creating a clear understanding of employees’ roles during a crisis is vital. In cases where stress and panic prevail, it might be difficult to recall your position in a crisis scenario.
    However, there are two methods to deal with the consequences of stress.
    First, employees must have all the relevant data. During a crisis, people need immediate access to simple information, incident reporting, contact lists, messaging features, and collaborative tools.
    Next, stakeholders should be treated to frequent drills and rehearsals to ensure they are familiar with the plan. This is to ensure that they can respond confidently, know where to get additional information, and understand their roles.
  6. Review and update: Make sure to revisit your plan frequently after it has been approved and tested. It’s critical to maintain the plan as updated, regardless of the addition of new technologies or the departure of employees. 

Crisis management strategies for business owners and managers

A company can successfully defuse and resolve crises by applying the following six crisis management techniques.

Meet the crisis head-on

There are certain precepts that apply to most crises regardless of their nature. Whatever the nature of the crisis, the media and the public want to know what happened. Your customers will want to know why it occurred and how it can be repaired, including any damage or trouble that they might face. 

Always convey the facts accurately. Do not make assumptions, guess, or speculate about any element of the incident. Additionally, before releasing any information, legal counsel should be consulted.

Address the media

In most cases, when a public relations predicament strikes a firm, the media will contact the CEO, the firm’s spokesperson, the public relations department, or some senior executive. Reporters will ask for precise explanations and quotes they can cite in their news. 

The spokesperson or crisis management team should then handle all questions. All questions should be directed to a designated group member or the spokesperson. 

In case there are technical points to disclose, an expert in the specific area should be designated to answer media inquiries. A live broadcast on television or a recorded interview with the CEO might be offered as an alternative.

Offer a public statement

A company’s public statement should inform people about the problem and how it might affect them. For example, customers who have purchased a recalled, faulty, or contaminated product should be notified. 

Be aware of any potential legal issues

Before legal issues are addressed, it is advisable to consult a lawyer. A “no comment” to the media may be issued until the legal aspects of the crisis are properly understood and dealt with. 

The “no comment” approach, though, might lead to increased media investigation and a bad public image. If and when civil lawsuits are filed or even criminal charges are brought,  the company being sued will suffer as a consequence of its refusal to provide comments.

Support your customers

Customers may be angry or disappointed when they hear about the affected company’s problems. The business should act responsibly, and these emotions should eventually fade away, resulting in renewed loyalty. 

Customers may, for example, demand refunds for recalled or faulty goods or for affected services. In such cases, the company should immediately offer a full refund or replacement policy to restore customer goodwill. Gift cards or discount coupons might also help rebuild customer loyalty, inspire consumer confidence, and even spur more vigorous sales in the wake of a crisis.

Develop an advertising campaign that is PR-friendly

When the crisis appears to be diminishing, a business should consider using digital or traditional media to disseminate further and reinforce its message. All available digital content channels should be utilised in the PR advertising message. 

critical event management officet

Crisis management skills

Regina Phelps is an expert in the field of emergency management and continuity planning. She emphasises on seven essential skills  that members of an organisation’s leadership team must possess to navigate critical events effectively, protect their people, and maintain business continuity:

  • Situational awareness
  • Improvisation
  • Creativity & adaptability
  • Decisiveness
  • Action
  • Communication
  • Reevaluation

Crisis management vs. risk management

Crisis management and risk management, while closely related, are not the same.

Crisis management is the practice of handling an unexpected and disruptive event that jeopardises an organisation or community. It requires taking action in response to the crisis, reducing its damaging effects, and returning to regular operations as rapidly as possible. 

Crisis management is usually a reactive process because it addresses a crisis as it occurs.

Risk management, on the other hand, is the process of identifying, analysing, and prioritising risks to an organisation or community, and taking steps to mitigate or eliminate those risks. 

Risk management is proactive, as it involves identifying potential risks before they occur and taking steps to prevent them from occurring or to minimise their impact.

risk management
Image by Mohamed Hassan from Pixabay

Crisis management examples

There are many examples of crisis management in various organisations and industries. These include:

  • A natural disaster, like a hurricane or earthquake, which requires an organisation to evacuate employees, secure its facilities, and help affected employees.
  • A data breach necessitating an organisation to notify affected individuals, secure its systems, and take steps to prevent future breaches.
  • A product recall requiring an organisation to remove faulty products from the market, notify affected customers, and take steps to prevent future defects.
  • A financial crisis, such as a bankruptcy or major fraud, which requires steps to stabilise its financial situation, restore investor confidence, and rebuild its reputation.
  • A public health crisis, such as a pandemic, where steps are required to protect its employees and customers, and to comply with public health guidelines.


Crisis management allows an organisation to navigate its way out of a crisis situation with minimum losses. In addition to the financial impacts, a crisis affects shareholder confidence, employee engagement and productivity, customer retention and innovation.

Growth Academy Asia provides crisis management training for organisations using VR technology. Contact us to discuss more!