The importance of confidence in crisis preparedness cannot be overstated. Knowing that you and your organization are prepared to face the unknown gives one considerable confidence. And feeling, being and acting confident is a crucial preparation for facing unforeseen and unsettling events.
Most organizations are capable of accurately identifying many potential crisis triggers, the critical first step toward preparedness. There are six categories of general risk areas capable of triggering corporate crises. Smart companies use the list below for Preparedness Planning by conducting “what-if?” scenarios. They provide a framework with which to anticipate events. Smart companies also build “early warning systems” to get a head start on crisis resolution or even better, crisis avoidance. By far, the best way to manage a crisis is to avoid it in the first place. Anticipation is the only thing that will lead you to either avoidance or preparedness.
The Six Risk Areas for Organizational Crises
- Operating or Business Failure — Examples: Management decisions (bad) and indecisions (failure to act). Poor financial performance or questionable management, dramatic stock price drop, product failures, supply disruptions, failure to deliver, customer, vendor or other contract disputes, gross waste, failed union negotiations, computer or telecommunications breakdown, major employee defections, merger, acquisition or takeover, downsizing, competitive attack, interrupted operations from natural disaster, succession issues.
- Legal or Ethical — Examples: Corporate misbehavior, misuse of funds, illegal organizational activity, questionable or illegal political involvement, lack of regulatory compliance, unethical marketplace behavior, overreaching or unwarranted onerous initiatives by regulators, threat of government sanctions, fines, penalties, institutional corruption or accessory to corruption, botched reaction to industrial accident, protests, boycotts.
- Individual Misconduct — Examples: Sexual harassment, bribery, embezzlement, fraud, racist behavior, workplace violence, scandal.
- Political — Examples: Civil and military unrest, pending legislation that can change business fundamentals, special interest and advocacy group threats, misinformation campaign that casts you as “the enemy”, illegal or questionable political campaign contributions, participation [unwitting or not] in human rights violations, boycott.
- Environmental — Examples: Activist attacks, compliance failures, aggressive regulatory initiatives, environmental damage from industrial accident, boycott.
- Safety and Security — Examples: Workplace violence, war, natural disaster or catastrophe, kidnapping, terrorist threat, travel disaster, sudden loss of key management, failure to take proper precautions, erroneous response to disaster, industrial accident with loss of life, hazardous or inhumane labor conditions, sabotage, product tampering.