A crisis (plural: “crises”; adjectival form: “critical” from the Greek κρίσις, krisis) is any event that is, or expected to lead to, an unstable and dangerous situation affecting an individual, group, community or whole society. Crises are deemed to be negative changes in the security, economic, political, societal or environmental affairs, especially when they occur abruptly, with little or no warning. More loosely, it is a term meaning ‘a testing time‘ or an ‘emergency event‘.
Crisis has several defining characteristics. Seeger, Sellnow and Ulmer say that crises have four defining characteristics that are “specific, unexpected, and non-routine events or series of events that [create] high levels of uncertainty and threat or perceived threat to an organization’s high priority goals.” Thus the first three characteristics are that the event is
- unexpected (i.e., a surprise)
- creates uncertainty
- is seen as a threat to important goals
At this article, however, We will treat more specifically about the Business Crisis and how to manage them.
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.
There are 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. 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 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.
I will talk a little bit more about this topic in another article. Stay tuned!