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Definition and Characteristics of a Crisis

RiskLogic’s mandate is to build the crisis leadership capabilities of executive teams to improve outcomes during a crisis. We call this Crisis Intelligence.

Following is an outline of the fundamentals you need to know in order to kick start your crisis management planning function. In order to successfully plan your response to a crisis, it is essential to have an understanding of what a crisis event is and what it is not.

What is a crisis?
A crisis is an inherently abnormal, unstable and complex situation that represents a threat to the strategic objectives, reputation or existence of an organisation, (Ref – PAS200:2011 Crisis Management – Guidance and Good Practice 2013).

A crisis will typically present significant risk to an entity’s reputation, market share, financial stability and regulatory compliance.

Linking Crisis Management to the Organisational Structure
Crisis Management is usually the responsibility of executive management and operates at a strategic level. Decisions and actions of a Crisis Management Team will flow down to business continuity and incident management teams. Likewise information and action reports from lower level teams should be communicated upwards to the Crisis Management Team.

In terms of what sets a crisis apart from a critical incident or business disruption:

  • Crisis management is the domain of the leadership, executive team and requires strategic management.
  • Business Continuity is the domain of senior management and requires a tactical recovery response.
  • Emergency Management requires an operational response from all operational staff.

Over time, an immediate incident remains critical until the crisis management process has been completed and the organisation moves into the business recovery and resumption phases.

Characteristics of a Crisis
A crisis can be categorised as ‘sudden’ requiring immediate response and recovery or ‘smouldering’ which gradually builds up. A sudden crisis will often occur from external threats, whereas a smouldering crisis will typically result from internal organisational problems. A smouldering crisis has potential to be controlled if identified early enough. Whilst each type of crisis has their own set of unique characteristics, impacts may be the same for both.

A sudden crisis is:

  • Unpredictable, unexpected
  • Can happen any time
  • High degree of instability
  • Potential for extreme negative results
  • Management attention, time and energy required
  • Brings about change

A smouldering crisis is:

  • Starts small
  • Becomes public
  • May escalate to crisis
  • Protracted
  • Perceived as the fault of a firms’ leadership
  • Results in fines, penalties, legal costs

Will your crisis management response be tactical or strategic?
Management of a crisis can be either ‘tactical’ or ‘strategic’.  Crisis Leaders will need to be able to operate in both modes depending on the nature of the crisis, management decision making during the crisis and the crisis timeline.

Tactical crisis management is:

  • Reactive
  • Short-term focused
  • Process oriented
  • Narrow focused
  • Tactical (implement)

Strategic crisis management is:

  • Anticipating events
  • Long-term focused
  • Driven by your principles
  • Wide focused
  • Strategic (in judgement)

In conclusion
Recent worldwide events serve to remind us of the importance of being adequately prepared for any crisis situation. Being prepared means having a robust crisis management strategy that is well understood and well-rehearsed. Failure to do so will leave your organisation vulnerable with the potential for serious financial, operational, reputational and regulatory consequences.

RiskLogic’s CQ Crisis Management Leadership Program can help you kick start your organisation’s crisis management planning function. It is an industry first training course specifically designed to develop the crisis capabilities of managers. It builds awareness, critical skills and leadership capabilities using the latest experiential learning techniques. For further information, contact our dedicated team of resilience consultants on 1300 731 138 or email info@risklogic.com.au

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