Crisis Planning & Management in Business: Definition & Elements

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  • 0:01 Crisis Planning
  • 1:05 Elements of Crisis Plan
  • 6:36 Lesson Summary
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Lesson Transcript
Instructor: Jennifer Lombardo
Companies should be educated about crisis planning and management in business. In order to avert or repair any crises, there are numerous crisis planning elements that need to be in place in order to prevent a corporate downfall.

Crisis Planning

How a company manages problems and overcomes crises can make the difference between a successful and a bankrupt company. Many businesses are not prepared to handle problems that develop within their organization.

In this lesson, you will learn what constitutes the definition of a business crisis and the elements of an effective crisis plan, managing the crisis and analyzing post crisis. A crisis is an event, or series of events, that can create a threat to an organization's existence. We are going to examine a case study to demonstrate how the crisis-planning process should effectively work in order to prevent further complications for a company. Let's take a look at Healthy Drugs, the manufacturer of a heart medication that is about to face a massive crisis that could destroy the company.

Elements of Crisis Plan

An effective crisis plan is able to avert any potential problems and also manage any crises that do slam an organization. Healthy Drugs successfully launched an effective heart medication last year. Users of the drug complained immediately that although the drug worked, it made them feel extremely odd. It turns out that the long-term use of the heart medicine Plasma2 slowly turns consumers into vampires! Healthy Drugs is facing a massive crisis. Here are the steps of the crisis plan that Healthy Drugs has put into place in order to save the company:

1. Identify and define the crisis

Healthy Drugs' first step in the creation of an effective crisis plan is to identify and define the crisis. This can be accomplished by identifying the size of the crisis (is it local, national or global?) and what organizational areas will be effective. Healthy Drugs should also research how other companies reacted to a similar problem. For example, researching the Tylenol-laced cyanide disaster could help give Healthy Drugs a plan of action.

2. Establish an overall corporate response

In this step, it is crucial for Healthy Drugs to develop a key point person who will handle all legal, authorized statements to the media, public and consumers or an overall corporate response. The Vice President of Public Relations, Hugo Bites, has been tasked with speaking to multiple news networks to address the vampire symptoms and to warn the public that although it is a scary side effect, once a patient has stopped taking the drug, the vampires will return to their normal selves.

In addition, Hugo is promoting a central message supported by the company to inform the public, provide information directly to those taking the drug and other safety precautions. In addition, Hugo is disseminating a 1-800 number for anyone to use who has a need for additional information. This will show that Healthy Drugs is aware, concerned and mobilizing a solution to the issue.

3. Build a crisis team task force

After Hugo's initial communication with the public and media, it is now vital that Healthy Drugs establishes a crisis team task force. The company should locate the task force away from the crisis site and locate all staff members at the central location. This way, all communication and information can be standardized and reflect the same message.

The crisis team task force should be capable of handling any questions from the media or public and be able to utilize emergency services if needed, such as if a new vampire goes on attack. The team should be effective in working with stakeholders (no pun intended) and the government in order to rectify this crisis situation. This is a significant crisis, as consumers are being dramatically affected and turning other citizens into vampires as well.

4. Provide vital information immediately

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