All About Crisis Management

Sections of This Topic Include

What Really Constitutes a Business Crisis?
What is Crisis Management?
Guidelines for Successful Crisis Management
Guidelines for Successful Social Crisis Planning
Examples of Organizations' Successful -- and Unsuccessful -- Crisis Management

Also see
Crisis Management: Advice about responding to a crisis, once it's already occurred
Business Insurance: Guidelines and advice about buying various kinds of insurance
Risk Management: Guarding against theft, fire, disasters, etc.
Safety in the Workplace: About types of workplace injuries, programs to reduce accidents, etc.)
Protecting or Repairing Your Reputation What to do to ensure your reputation remains strong

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Library's Business Ethics Blog
Library's Crisis Management Blog

What Really Constitutes a Business Crisis?

© Copyright Michael Nayor

There are many types of issues facing businesses, but what counts as a true crisis?

It’s not always immediately apparent when your organization is in the initial stages of a crisis. To this effect, I am pleased to bring you a guest blog submission by Michael Nayor, founder and CEO of crisis consulting firm The Rhodell Group, that investigates “What Really Constitutes a Business Crisis.”

What is a Business Crisis?

A business crisis can be anything that can negatively effect a company’s reputation or bottom line. Many events at first blush may not appear to be serious. HP’s firing of Mark Hurd and the subsequent entanglement with Oracle was not a big deal in the scheme of things, even though internally it must have been a shocker. However, the death or resignation of a key person in any organization could very well be serious for any company depending on just how key that person really was. Natural catastrophes, product recalls, labor disputes, computer data losses. The list is endless. Some are temporary. Some can cause the demise of a company. Most can be handled with honesty and the realization that it may be necessary to absorb losses over the short haul in order to achieve a long and healthy business life.

Two Categories of Business Crises

Two distinct categories of crisis need to be recognized. In one we lump all those events over which we have no control, such as product tampering by outside forces or natural disasters. Even in these situations there are always some actions we can take: tamper-proof packaging, liability insurance, proper protocols. But generally these events can blind-side us.

The second category contains all those events that might have been avoided had we chosen to take the actions necessary to protect ourselves and the public. Some are obvious. We look at the BP oil spill and see things that surely could have been done. Other events are not so obvious and these are the ones that can be insidious. When a management believes it is doing the right thing but in fact is fueling a potential crisis we have the makings of a catastrophe. A couple of examples will make this abundantly clear.

Market share is usually very important to a company, oddly sometimes more important than the bottom line. There is always great competition for new customers. Many times the efforts and resources devoted to advertising, marketing and selling to new customers are at the expense of a company’s loyal customer base. This can even be seen at the local level. Where I live heating oil companies consistently offer new customers a deal for the first year in order to lure them in. This, of course, is done at the expense of old, loyal customers who have to make up the slack. The result is that many savvy oil customers these days do a lot of shopping each year to find the best deal. Loyalty is a thing of the past. On a national level the problem has gotten even more serious. A recent financial story in The New Yorker last month observed that there is almost universal recognition that customer service in this country has deteriorated. Such service is considered a “cost”. Companies are looking for the customers they don’t have so they are willing to spend on marketing and advertising but are not as interested in adding to their costs of service. The article made it sound a little like cynical dating. Companies are interested in luring you in but then once they have you, they don’t quite value you as much as the next potential customer they want to corral.

Lack of service is not just a pain for helpless consumers. In this internet age they can do something about it. This is how a company can sow the seeds of its own destruction, and inexorably create its own crisis. Companies and their products and services are being rated on the internet and consumers don’t hold back. They tell it like it is. Granted, competitors may be planting some of these negative comments but for the most part product and service evaluations are being taken at face value. The moral of the story: be faithful to those who brought you to the dance, or the consequences could be severe.

Another form of self-inflicted crisis involves weathering the storm

Whether in politics, professional sports, or in business, “players” still believe that because of their importance they can ride out any issue or problem. They can’t. We can all easily tick off a dozen or so examples, but the latest is surprising. Johnson & Johnson has recently gone through a spate of recalls of tainted children’s Tylenol and Motrin. The Company has generally kept a low profile and even contracted with a third party to buy up Motrin off retail shelves rather than announce an actual recall. And for the last decade it has been settling with claimants for a variety of injuries and death allegedly due from Ortho Evra, a contraceptive patch made by its subsidiary, Ortho McNeil. It appears clear that the current management of J&J has not followed in the footsteps of the management that handled the Tylenol crisis of 1982 which is often cited as the quintessential example of crisis management in modern corporate history. Back then cyanide had been found in bottles of Tylenol in the Chicago area. J&J immediately issued public warnings, issued a product recall, created tamper-proof packaging, and before long was back in business. The Company was up-front and willing to bite the bullet in the best interests of the public. Unfortunately that does not appear to be the philosophy today. There is clearly a danger in believing one’s invincibility. The trust and respect of the public is at stake, and once lost, is very difficult to retrieve.

A crisis is not just the obvious explosion at a plant or a mine. Companies can and do create their own crises. Companies must evaluate their philosophy, their strategy and their honesty. They must take action to minimize their vulnerabilities but at the same time be prepared to take action in the best interests of the public if they value company longevity.

What is Crisis Management?

Crisis management is the nature of activities to respond to a major threat to a person, group or organization. Crisis management is a relatively new field of management. Typically, proactive crisis management activities include forecasting potential crises and planning how to deal with them, for example, how to recover if your computer system completely fails. Many people would refer to this, instead, as risk management and not crisis management.

Hopefully, organizations have time and resources to complete a crisis management plan before they experience a crisis. Crisis management in the face of a current, real crisis includes identifying the real nature of a current crisis, intervening to minimize damage and recovering from the crisis. Crisis management often includes strong focus on public relations to recover any damage to public image and assure stakeholders that recovery is underway. (The library includes a variety of related topics.)

Crisis Management
Making a Statement
Are You a Crisis Manager?

Guidelines for Successful Crisis Management

The following links are to a wide variety of guidelines for successful crisis management. Many of the articles include real-life examples of success.

Recommended Articles

Coping with catastrophe: what keeps us going in the face of adversity?
Managing in Crisis
Your Crisis Communication Response Plan is Due for Maintenance (And/Or a Rewrite)
Questions to Avoid Crises
Prevent and React

Additional Articles

Who Does What?
Turning a Public Crisis Around
The Crisis Counselor
The Doctor Recommends Crisis Prevention - But It's Your Choice
Information Security as Crisis Prevention (video)
Crisis Simulation
The Right Steps
Take Advantage of Crises to Grow and Learn
Crisis Management and Customer Service
After A Crisis
Various Manuals for Crisis Interventions
Questions to Avoid Crisis
Reality of Communication
Training to Prevent Disasters -- Not Just the Job of TSA
Turning a Liability into an Asset
Proactive Crisis Management
Avoiding Pain
Crisis Leadership
Transparency in Crisis
Can You Simulate a PR Crisis and Then Handle the Real Thing?
Your Crisis Communication Response Plan is Due for Maintenance (And/Or a Rewrite) Fix the Problem
Prevent and React Online Crisis Management Tools
Honest Insurance?
Crisis on Stage
The Human Touch
Coping with Tragedy
Take Responsibility
Ready and Able
Three-Act Crises
Own It
Learning from Crisis
Prepare With Dark Sites
Real Crisis Management
Simplify and Repeat
Have a Plan
Reputation Combat
Are You Vulnerable?
Bring On The Hate
Crafting the Ideal Apology
Role Responsibility
Rumor and Innuendo
When Share Price Puts a Value on Brand Reputation
Business as Usual
10 Ways to Ruin Your Company’s Communications Efforts
Don’t Tip Your Hand
Red Cross UK Disaster Challenge
You Know What You’re Talking About…Right?
Bird Flu Breakout
Caribbean Cops Get Crisis Communications Training
The Digital Media Law Project
FEMA’s Pledge to Prepare
High-Speed Crisis Management
Shoe Shackles Raise Consumer’s Hackles
Video Crisis Management
Paterno Family’s Reputation Management no Touchdown
Romney Film Reveals Crisis Management Risk
Calm Yourself Through Crisis
Hotel Hacker Exposes E-Vulnerabilities
Make Your Apology Mean Something
Short Term/Long Term

The Crisis Show
The Crisis Show Ep. 2 – Crises, Crises, Everywhere!
The Crisis Show Ep. 3 – Data Jackings and #Fail Tweets
The Crisis Show Ep. 4 – Corporate Crises
The Crisis Show Ep. 6 – Colorado, Tony Robbins, Olympics & Penn State
The Crisis Show Ep. 9 – Back to School

Also see

Social Networking and Social Media
Public and Media Relations (including online reputation management)

Guidelines for Successful Social Crisis Planning

Copyright Jonathan L. Bernstein

As it stands today, crisis management is very much entwined with social media. Whether you like it or not, when trouble hits you’ve got to quickly meet your stakeholders in the places they frequent in order to maintain control of your story, and that means being ready. In an article for, David Vap provided some solid tips for getting your organization in position to handle social crises:

  1. Understand your organization. Review external communication processes, social capabilities, and corporate culture. This is where we recommend scenario planning. Key questions could include: how would we respond if a vocal customer complaint suddenly went viral? How would we respond to a brandjacking attack?
  2. Create a new social mindset in your organization. The social shift calls for a mindset characterized by transparency, accountability, employee empowerment, and planned spontaneity. Technology is certainly a crucial component of dealing with crisis communication, but preparing processes and practices must come first.
  3. Know your consumers. Listen to conversations unfolding on the social web about your brand, and respond/employ proactive social support. Also identify your customer advocates on the social web – they will be invaluable in the event of a crisis.
  4. Form a social crisis team. A successful social strategy must cross the boundaries of department and hierarchy because consumers expect a seamless experience. Build a cross-functional team, including a social media manager, a product owner, and at least one executive sponsor. Draw up a social team charter to clarify roles and responsibilities and create an internal collaboration space for this team.
  5. Roll out a social crisis communications plan. Develop a playbook with guidelines for the social crisis team. Define an escalation process for potential PR issues. Build feedback into every step so you can adapt. Your plan needs to think through three areas – process and culture (what / who needs to change), technologies and tools (what to use to get there), and key metrics (what to track).

I especially like this list because of step two, “create a new social mindset in your organization.” Far too many businesses create social media accounts and install fancy managing programs but neglect proper training and education, not only stifling possible gains but also creating the risk of improper use, which raises the chance of crisis even further.

Uses of Social Media for Disaster Response
Are You Prepared For a Social Media Crisis?
Uses of Social Media for Disaster Response
Avoiding Pain
Transparency in Crisis
Social Media in Emergencies
How to Start a Social Media Crisis
Qantas Neglects Twitter in Crisis
Unintended Consequences: How to Keep Social Media from Becoming a Security Risk
Social Crisis Planning
Social Management
Twitter Mistakes to Avoid
Blogging for Crisis Management
Getting Started with Social Media
Crisis Communication via Twitter
Fight Back with Social Media
Putting Out Fires with Twitter
Tech to the Rescue
Rounding Up Rumors
Disaster Management
Emergency Twitter Tips
FEMA and Social Media vs. Irene
Define Your Goals for Social Media
Twitter Underprepared for Censorship Backlash
Social Media and You
Social Media Crisis Management Strategies
Social Media Preparedness
$28k of Taxpayer Money…to Tweet?
Flinging Mud with SEO
Listening for a Crisis
Social Media and Your Next Crisis
ASUS Fails at Social Media
Handling Negative Comments
Social Media for Reputation Repair
The Outrage Trap – How You Get Turned into a Dupe by Political and Activist Groups
One’s Missed Opportunity is Another’s Brilliant PR
When Deleting Social Media Comments is OK
Winnie the Pooh on…Social Media

Examples of Organizations' Successful -- and Unsuccessful -- Crisis Management

One of the best ways to learn is from the mistakes of others. The following links are to many examples of crisis management done poorly.

Chevron Gets Pranked
Qantas Neglects Twitter in Crisis
Monkey Business at the Better Business Bureau
Air New Zealand Shows How to Fight Back
Dell Has a New Crisis
Man Declared Dead too Soon
Bad Guys Lose with Google
Bad Crisis Communications Hurts Electronics Manufacturer
Most Hated Companies
Twitter or the Web?
Storing Good Will
Charlie Sheen -- Misunderstandings about Addiction and Crisis
Crisis Leadership in Japan
Celeb Denies Make-A-Wish
If You Lie Down With Dogs…
Southwest’s Sub-Par Crisis Management
Lessons from P&G
Playstation Network Breach
Southwest Gets It Right
Zombies Attack
Weiner Scandal
Almost Good Crisis Management
Delta Drops Fees, Learns Lesson
E.coli Crisis
Responsible Behavior
Nikon Averts Facebook Crisis
Penn State Crisis Management – ESPN Interview with Jonathan Bernstein
USAJobs Controversy
BofA Gets Brandjacked
GM’s Crisis Management
Kansas Gov. Bungles Social Media Crisis Management
Can Apologies Be Funny?
Don’t Let Reputation Damage Become Disaster
NY Times Pays for Errant Email
Ryan Braun: Victim or Villain?
Talk About Transparency!
Citibank – A Grimm Fairy Tale
Crisis Management During Hard Times
Crisis Management from the Marine Corps
Dane Elicits Pain About Obama’s Public Speaking
How To Say No Comment Without Saying No Comment
More Military Crisis Management
Army General Neil Tolley Opens Mouth, Inserts Combat Boot, Endangers Secret Ops
Citibank – A Grimm Fairy Tale (update)
Correcting a Customer Complaint Crisis
How You Can Cause a Crisis by Giving Someone the Finger
Is Siri Stalking You?
Glaxo’s $3 Billion Deceit
Toyota’s Crisis Management Runs Flat
SumoSalad Hepatitis A Disaster
Travelocity’s Good Deed Goes….Punished
Crisis Management for Android in OS Wars
GoDaddy Does Online Reputation Management
Worried About Mass Shootings? Think Prevention
Employee Error Dings Aussie Red Cross’ Reputation
FEMA Combats Sandy Rumors Online
When it’s OK to laugh, and when it’s not
Quick Crisis Management from O2

Also see:

Failure Mode and Effects Analysis
Preventing Violence in the Workplace
Safety in the Workplace
Crisis Manager Newsletter and various information on crisis management

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Risk Management -- Recommended Books

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