Crisis Management (HL IB Business Management)

• Contingency planning is the process that occurs when a business tries to predict risky or unwanted events, and then develops a process for how the business will respond to the occurrence of any such event
  
  
• Crisis management refers to the immediate handling of a disruptive and unexpected event
  
  • It includes communication, coordination, resource mobilisation and decision-making under pressure
    
    • Short-term significant disruption is likely and long-term business survival affected
    • Radical solutions such as autocratic leadership and centralised decision-making could ensure business continuity
    • Work activity may need rapid reorganisation
      • For example, many businesses swiftly implemented remote working for staff during the Covid-19 pandemic
         

Diagram: Examples of Crisis Situations

Businesses face threats from a range of sources including IT systems failure, natural disasters and theft
 

•  If a business were to lose all of its customers data, this would be classed as a crisis and require an immediate response from management

• The effectiveness of crisis management depends on a range of factors

Factors Affecting Crisis Management

Speed	Transparency
A rapid response can contain or reduce damage  Procter and Gamble's crisis team responded rapidly when a viral challenge encouraged teenagers to film themselves eating Tide Pods detergent  It quickly created a commercial featuring a well-known sports personality, immediately published warnings and updated disclaimers on its website This quick response protected P&G from legal action	Keeping customers informed and telling the truth can protect reputation Supply issues in 2018 caused KFC to run out of chicken leading to the temporary closure of half of its UK outlets KFC used humour on social media to keep their customers informed at every stage They apologised and quickly addressed customer concerns, turning the negative story into positive PR
Control	Communication
Ensuring that leaders have the authority and resources to perform at the highest level in a crisis Walmart's Emergency Operation Center operates 24 hours a day It manages the company's response to events that could affect operations Coordinated by senior Walmart leaders it can assemble support teams immediately	Rapid issue of communications such as press releases can reassure stakeholders and reduce recovery time Scandinavia Airlines (SAS) used social media effectively during the 2010 Icelandic Eyjafjallajökull ash cloud crisis Customers were directed to SAS's Facebook page Staff responded to every message, comment and wall post Problems were solved immediately and regular updates kept customers satisfied