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2.8 Crisis management and contingency planning

HL Human Resources
by

Deborah Kelly

on 6 January 2016

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Transcript of 2.8 Crisis management and contingency planning

2.8 Crisis management
and
contingency planning

Crisis Management
Contingency planning
Steps in contingency planning
A crisis is a situation of instability which results in a major problem for a business. Crises are usually unexpected and unpredictable. All businesses run the risk of experiencing a crisis. Managers plan for such events in order to minimize the damage that crises can cause to their organizations.

Crisis management refers to the response of an organization to a crisis situation. It will be radical and an autocratic style will prevail. Crisis planning is about being
reactive
to events and changes that might cause serious damage to a business.

Memorable crisis include currency collapse, natural disasters such as earthquakes and tsunami, mad cow disease and bird flu.
Contingency planning looks at how to deal with a crisis to ensure the continuity of the business. It is about being proactive to changes in the business environment. It involves developing a plan before an unwanted and unlikely event occurs by using "what if".

Contingency planning helps with crisis management - by being prepared with a series of procedures to be put into place if an emergency occurs, the organization will be better able to deal with most crisis situations.
1. Identify the potential disasters that could affect the business.

2. Assess the likelihood of these occurring. This will help managers to choose which disaster events to prepare for more thoroughly.

3. Minimize the potential impact of the crisis. This is often done best by the PR department telling the truth, indicating the causes when known and giving full details of how to contact the business and the actions being taken to minimize the impact on the public.

4. Plan for continued operations of the business.
Benefits and Limitations
+ can help reduce risks
+ can reduce the impact of a crisis
+ can help to reassure staff
+ it necessitates effective communication between management and employees

- it uses up valuable management time and resources thereby increasing costs
- crisis may never happen and therefore the time and money invested in contingency planning could have been better used elsewhere
- plans can be based on inaccurate or outdated data
- no plan can prevent the totally unexpected such as natural disasters
"By failing to prepare, you are preparing to fail." Benjamin Franklin

"Intellectuals solve problems, geniuses prevent them." Albert Einstein
Examples of business issues requiring contingency planning.
http://www.slideshare.net/tutor2u/buss4-planning-for-change-managing-risk
First 8 slides.
Contingency Planning (Japanese Style)
When it comes to contingency planning nobody does it better than Japan. Two humorous videos that demonstrate the extents to which you can go to prepare for risky events.
http://www.bbc.co.uk/news/world-asia-16950361
Prepare a contingency plan for _________________ at ISU.
Full transcript