Crisis management – how can businesses plan for the unexpected?

What is crisis management in business?

A crisis could be anything that threatens a company’s success, from a natural disaster to an employee breaking the law. Business crises could affect a company’s finances, reputation, operations, or staff.

The crisis management definition is preparing, managing, and recovering from any unexpected events that could harm a business.

Crisis management and business continuity plans are very similar and the phrases are often used interchangeably.

In most cases, a business continuity plan focuses on making sure a business can continue basic operations when a crisis happens.

Download our business continuity plan template to get started.

Crisis management examples

A business crisis can come in many forms, having a negative impact on different parts of your business.

Here’s an overview of some of the most common:

• staff crisis – an employee does something illegal that affects the reputation of the business they work for
• natural crisis – your office suffers serious storm damage, meaning you lose equipment and customers can’t visit your premises
• financial crisis – demand for your services falls significantly, or a new competitor takes your market share
• organisational crisis – selling faulty equipment that has to be recalled, or breaching GDPR regulations
• technological crisis – the company servers go down or you’re the victim of a cyber attack

How to create a crisis management strategy

Events like the Covid-19 pandemic have shown how unpredictable the world can be and how businesses can be severely affected. Meanwhile, a business could suffer from internal, financial, or local market issues at any time.

That’s why it’s important to have a crisis management strategy in place. Being prepared for a crisis, rather than reacting to one after it’s happened, can help businesses to recover quicker.

Below is an overview of how you can plan for and manage a business crisis effectively.

What are the stages of crisis management?

There are various stages of a business crisis. Understanding what you need to do in each stage can help you to create your crisis management framework.

Here are the five main stages:

• detecting and assessing risks – understanding the impact different crises could have on your business
• preparing for crises – doing your best to prevent them and creating a plan for when they do happen
• managing crises effectively – putting your crisis management plan into action to minimise damage to your business
• recovering from crises – following the steps you’ve set out to get back to where you were before the incident
• learning from crises – documenting the lessons of previous crises to prepare for the future

How does crisis management planning work?

When you create a crisis management plan, you’ll need to answer these key questions:

1. What types of crises could affect your business?
2. How could these crises impact different areas of your business?
3. What actions would you need to take to manage the crises you’ve identified?
4. Who in the business would be responsible for managing the crisis?

These decisions and processes will need to be documented so they can be actioned quickly if your business experiences a crisis.

You’ll also need to consider whether the staff responsible for managing a crisis will need extra training.

Once you have a crisis management plan in place, remember to review and update it regularly so you can take new threats into account.

Crisis management PR

If your business is facing a reputational issue, crisis management public relations can help you to take control of the situation, maintain trust, and communicate with your customers.

Preparing company communications in advance of a crisis can help you to respond quickly when something bad happens.

Here’s how you should approach crisis management communications:

• acknowledge and own mistakes or issues
• explain how you’re going to fix problems
• keep customers and stakeholders up to date

One of the main aspects of crisis PR planning is creating written statement frameworks that can be updated and reviewed quickly, before being distributed.

You can also use social media to share updates, while also monitoring channels for posts about your company that you may need to respond to.

Make sure that your crisis communications are genuine, take responsibility, and offer clear solutions to problems.

If you work with an outsourced PR agency, they’ll be able to offer you advice on crisis PR. If you manage PR in-house, it’s worth creating a crisis communication management plan so you’re ready to act quickly.

How to respond to a business crisis

Once you’ve assessed the risk and potential impact of the crisis, you can refer to your crisis management plan.

Your team will then need to take their assigned actions, with the aim of getting the crisis under control.

Strong leadership and communicating with staff will be key. Updating customers and external customers is also important, so this is when you can put your crisis communication plan into action.

For larger companies and significant crises, it’s not unusual to assemble a crisis management team. This will work best with a mix of skills from across the business, including finance, communications, and legal.

Once the crisis is under control, you can update your crisis management plan to help reduce the impact of future incidents.

Crisis management training

If you think your staff need training, there are crisis management courses and qualifications available, such as:

• The Risk and Crisis Management online certificate course (London School of Economics)
• Incident Response and Crisis Management Training Course (Business Continuity Institute)
• Crisis Management – Online Training Course (The Mandatory Training Group)

Recovering from a business crisis

Recovering from a business crisis could take time, particularly if it was unexpected.

Alongside updating your crisis management model, there are several steps you can take to help your business recover.

With this in mind, here are some useful resources to help keep your business running smoothly:

• What is a cash flow forecast?
• How to calculate profit
• What is a SWOT analysis?
• Business growth guide
• How much does public liability insurance cost?

Do you have any unanswered questions about small business crisis management? Let us know in the comments below.