Why Crisis Management Planning Should Be On Your To-Do List

In a competitive market regularly impacted by events which disrupt the ability to operate, a volatile social climate, and rapidly shifting consumer expectations, what separates businesses that thrive and those that struggle is often their preparedness for crises. Crisis management planning is the strategic process of preparing for situations can threaten to interrupt reputation, operations, or the financial bottom line. Sometimes these situations are unexpected and unpredictable, while sometimes they fall under the category of ‘distinctly unpleasant, yet predictable for our industry, niche, customer base, or similar’. By planning ahead for both the unpredictable and the to-be-expected, you can better equip your business to handle crisis management efficiently and with confidence.

Why Crisis Management Planning Is Essential

1. Financial Protection: A well-structured crisis plan can significantly reduce financial losses by minimizing downtime and operational inefficiencies during a crisis.
2. Reputation Safeguarding: In our digital age, a company’s response to a crisis can profoundly impact its long-term reputation.
3. Building Confidence: A solid plan reassures employees and stakeholders that the company is well-prepared, fostering trust and stability.
4. Legal and Compliance: For many industries, having a crisis management plan can be a legal or insurance-mandated necessity.

Key Components of an Effective Plan

1. Risk Assessment: Identifying and evaluating potential crisis scenarios.
2. Communication Strategy: Ensuring clear, timely communication internally and externally.
3. Defined Roles and Responsibilities: Establishing a crisis management team with specific roles.
4. Response Procedures: Outlining specific actions for different types of crises.
5. Regular Testing and Revising: Ensuring the plan remains effective and up-to-date.

Real-World Examples of Effective Crisis Management

1. Cybersecurity Breaches: Equifax and Capital One
   • Equifax faced a massive data breach in 2017. They were criticized for their delayed and confusing response, which aggravated public distrust.
   • In contrast, when Capital One experienced a data breach in 2019, they quickly identified and fixed the vulnerability, clearly communicated what happened and what customers could do, and offered free credit monitoring to affected customers. Their prompt and transparent response helped preserve customer trust and confidence.
2. Product Recalls: Toyota and Johnson & Johnson
   • Toyota’s response to their acceleration issues in 2009-2011 involved recalling millions of vehicles, cooperating with investigations, and improving quality control processes. This response helped to restore public confidence in their commitment to safety.
   • Johnson & Johnson’s response to the Tylenol tampering crisis in 1982 is a classic example of crisis management done right. The brand immediately recalled 31 million bottles of Tylenol, communicated openly with the public, and introduced tamper-proof packaging. Prompt action and concern for public safety helped to regain consumer trust.

Encouraging Proactive Crisis Planning

Proactive crisis management planning is a strategic investment in your business’s resilience and sustainability. Proper planning reduces lost productivity, spares you the cost of repairing reputation, and allows your leadership team to better manage issues or incidents before they escalate to the level of a true crisis. All of this boils down to saving you significant resources in the form of time and money while reducing the likelihood that your brand becomes the latest topic of negative headlines around the world and across social media. While planning for crises might seem overwhelming, those who have survived major disruptions will testify to the fact that the cost of encountering a tough situation unprepared is typically much higher.

Now that you understand a bit more about the importance of crisis management planning, maybe it’s time to revisit your to-do list?