Crisis management - planning and action

Contingency planning Organisations prepare contingency plans in recognition of the fact that things do go wrong from time to time Contingency planning involves:

Preparing for predictable and quantifiable crises Preparing for unexpected and unwelcome events

The aim is to minimise the impact of a foreseeable event and to plan for how the organisation will resume normal operations after the crisis Contingency plans The contingency plan:

Identifies alternative courses of action that can be taken if circumstances change with time etails standby procedures to enable the continuation of essential activities and services during the period of the emergency Includes programmes for improving the business in the longer term once the immediate situation has been resolved

Steps in drawing up a contingency plan

!ecognise the need for contingency planning Identify possible contingencies " all the possible adverse and crisis scenarios #pecify the likely consequences $ssess of the degree of risk to each eventuality etermine risk strategy to prevent a crisis % to deal with a crisis should one occur raft the plan and identify responsibilities #imulate crises and the operate of each plan

Dealing with the what if question Scenario analysis:

This involves constructing multiple but equally plausible views of the future The scenario consists of a &story' from which managers can plan

Sensitivity analysis

Involves testing the effect of a plan on alternative values of key variables e(g( the effect of a )*+ loss of capacity

Crisis management

Crisis management involves: Identifying a crisis Planning a response !esponding to a sudden event that poses a significant threat to the firm ,imiting the damage #electing an individual and team to deal with the crisis !esolving a crisis

Stages of a crisis

Pre-crisis Warning

Prior to the event Indications that there is or may be or could be an event liable to cause a significant impact on the organisation -hen the event begins to cause significant impact on the organisation The acute stage of crisis has passed and the organisation is able to focus on a return to normal operations .valuation of the effects !epair to the organisation

Crisis point ecovery

Post crisis

Role of the crisis manager

Crisis assessment .vent tracking /anaging human considerations amage assessment $ssessment or resources and options evelopment of contingencies /anaging communications Co"ordination with external bodies Controlling information Controlling expectations /anaging legal requirements

Advice on handling a crisis

$ppoint a crisis manager !ecognise that the crisis manager is likely to adopt a more authoritarian style than is normal o an ob0ective assessment of the cause 1s2 of the crisis etermine whether the cause 1s2 will have a long term effect or whether it will be a short term phenomenon Pro0ect the most likely cause of events 3ocus on activities that will mitigate or eliminate the problem &,ook for the silver lining'" opportunities in the aftermath $ct to guard cash flow

Dealing with the financial aspects of a crisis

$ccelerate accounts receivable 1payment by debtor2" by offering a discount if necessary( #low up payment to creditors where possible( Increase short term4 sales !educes expenses " especially &non mission critical' expenses Outsource non mission critical operations( !e"schedule loans

Dealing with the people aspects of a crisis

3orm a crisis team esignate one person only to speak about the crisis to the outside world $ct to prevent or counter the spread of negative information /ake use of the media to provide a counter argument o not tell untruths " trying to manipulate or distort the information will backfire