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How To Identify a Crisis

A Crisis is any internal or external event that causes an interruption of normal operations and simultaneously threatens your organization’s reputation. Caution: “normal” out-of-the-ordinary events are not crises. Also note: not all crises are “bad”. “Good” things, such as a sudden overwhelming upsurge in sales, can potentially be just as disruptive to your operations and destructive to your reputation.

Your only goal must be to end the crisis as quickly as possible and return completely to business as usual. You must actively manage communications during a crisis in order to protect your most important asset… your organization’s reputation. How quickly an event is identified as a crisis and the speed with which your crisis response plans are enacted make the critical difference. How you handle yourself in the early hours of a crisis determines how you are ultimately viewed in the ‘court of public opinion’.

A Quick Crisis Test*

One way to recognize a crisis is to ask yourself the following four questions:

  1. Is there a good chance that this situation will, if left unattended, escalate in intensity?
  2. Might this situation foster unwanted attention by outsiders, such as the news media or some regulatory agency?
  3. Is it likely that the situation might interfere with normal business operations in some manner?
  4. Could it make your company “look bad” or cause people (the public at large or investors) to lose confidence?

If the answer to any of these questions is yes, you have a crisis unfolding and will need to enact your Crisis Communications Plan.

* From Crisis Management: Planning for the Inevitable by Steven Fink.

The Seven Warning Signs of a Crisis

  1. Matters that attract unwanted media attention or give rise to a dramatically increased level of activity, attention or commentary on the internet
  2. Incidents that involve serious personal injury, death or jeopardize public safety
  3. Activities that have or may cause law enforcement or regulatory involvement
  4. Matters that result in significant work stoppages or production delays
  5. Behavior by managers or employees that reflects badly on your company’s reputation
  6. Actions by competitors or others — including rumors — that threaten financial performance or customer or investor confidence
  7. Be especially alert to “Smoldering Crises”. Some indicators: dropping share price, sudden sales losses, employee exodus, pending lawsuits, government investigations, negative shift in media portrayals with company portrayed as villain, buzzing grapevine, rumors. Heed these early warnings.

Smoldering crises are often self-inflicted. Consolidations and restructurings with subsequent layoffs and facility closures are potentially volatile situations that can and should be properly anticipated. A management failure to plan accordingly, not the event, is what can cause the most damage to your reputation.

When a company takes drastic action to survive in poor economic conditions, the public is not surprised. Instead, how management communicates its actions is remembered long after the action itself has faded from memory. Loss of control of the situation due to rumors must be avoided, as they lead to a demoralized workforce, edgy customers, nervous shareholders and often, an exaggerated view of the situation.