Crisis Prevention in Business: Steps & Examples

Instructor: Scott Tuning

Scott has been a faculty member in higher education for over 10 years. He holds an MBA in Management, an MA in counseling, and an M.Div. in Academic Biblical Studies.

No matter how well prepared an organization may be, crisis will still find many businesses during their lifetime. This lesson explores preventing and responding to crisis.

Anatomy of a Crisis

Early in 2016, Swedish Medical Center, a large hospital system in Denver, Colorado, found itself mired in one of the biggest crises the organization would ever experience. In total, over a period of several years, the crisis affected thousands of patients and nearly a half-dozen large healthcare organizations.

This particular situation started when an employee working in the surgery department observed a surgical technician, Rocky Allen, exchanging syringes of medication from a tray inside an operating room. As was appropriate, the employee reported the incident. Following a brief review of the situation, the organization's chief executives began forming a crisis management team.

As the details unfolded, it became clear that Allen had been discharged from the Army some five years earlier after being caught diverting prescription opiate pain medication - a situation nearly identical to the one he was now involved in. Allen was court-martialed, sentenced to 90 days confinement (later reduced to 60 days), reduced one-step in rank, and discharged in 2011.

After being discharged, the surgical technician made his way through five separate hospitals in the western United States. On each occasion, he stayed no more than a year. In most cases, Allen stayed for only months. In four of these hospitals, Allen was involuntarily separated after staff observed similar behavior.

One of the hospital's most pressing crisis management tasks was to identify the number of potentially affected patients. Determining how far the crisis has had an impact is called determining its scope. After determining the scope of their crisis, Swedish quickly realized that the organization was experiencing its worst nightmare.

Everything that could go wrong in the crisis did indeed seem to be going wrong. Some of the elements that made this an extraordinary crisis included:

  1. Allen subsequently tested positive for HIV and hepatitis. In some instances, patients were exposed to these diseases.
  2. The number of affected patients exceeded 2,900.
  3. There was evidence that his tampering may have resulted in patients receiving unknown substances or substances that were not opioid pain management medications. Thus, patients may have experienced an elevated level of pain because of the switch.
  4. During the hiring process, the hospital inexplicably managed not to discover anything about the surgical technician's past actions.

In light of these facts, this crisis would be one of the most significant in the hospital's history.

Managing Crisis Using the RPM Model

Recognition

The acronym RPM stands for 'recognition, prioritization, mobilization'. In this incident, there was a significant delay in the recognition phase of this process. Several hospitals and organizations failed to recognize that there was a crisis building beneath the surface. For a thriving business, an unrecognized crisis is a cancer that insidiously deteriorates an organization from within until it is discovered and managed appropriately.

Although it was Denver's Swedish Medical Center that ultimately had the Allen crisis delivered to their doorstep, they were most certainly not responsible for the largest portion thereof. In a slightly unbalanced turn of fate, Swedish was the organization left without a chair when the music stopped. This was primarily because nearly half a dozen companies had failed to recognize Allen's behavior as a crisis. Despite appearances to the contrary, Swedish acted appropriately by recognizing the crisis and addressing it with the gravity it deserved.

Notification and dissemination of information are also tasks that should be performed in the recognition phase. This is primarily because such notifications may change an organization's understanding of the crisis. These notifications can be internal resources such as company leadership or the larger employee workforce. Reporting to external entities like government regulators, insurance companies, or vendors may also change the understanding of an emerging crisis.

Prioritization

Once a crisis has been identified, the organization must transition into a new phase of the crisis management plan. Containing and resolving a business crisis often requires significant resources which in turn requires significant resource coordination. A nuanced crisis calls for an equally diverse resource pool. Since it is highly unlikely that a significant crisis can be resolved using an all-at-once approach, the organization in crisis must determine what types of resources are needed and in what order. This is called prioritization. Organizations facing a crisis should prioritize the tasks that must be accomplished in order to resolve the immediate threats first.

Mobilization

Once the most significant aspects of the crisis have been identified, the organization can empower the amassed resources to execute their tasks. This is called mobilization. It is worth noting that one of the most significant mistakes made by an organization in crisis is the mobilization of resources before understanding the scope and priorities of the crisis. Despite being involved in a serious crisis, organizations must resist the temptation to simply dispatch an amalgamation of resources toward the issue. Serious risks associated with the practice include:

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