Crisis management - planning and action Contingency planning:

•Organizations' prepare contingency plans in recognition of the fact that things do go wrong from time to timeContingency planning involves:•Preparing for predictable and quantifiable crises•Preparing for unexpected and unwelcome events•The aim is to minimize the impact of a foreseeable event and to plan for how the organization will resume normal operations after the crisis

• Contingency plans• The contingency plan:• Identifies alternative courses of action that can be

taken if circumstances change with time• Details standby procedures to enable the

continuation of essential activities and services during the period of the emergency

• Includes programmes for improving the business in the longer term once the immediate situation has been resolved

Steps in drawing up a contingency plan

• Recognise the need for contingency planning• Identify possible contingencies - all the possible

adverse and crisis scenarios• Specify the likely consequences• Assess of the degree of risk to each eventuality• Determine risk strategy to prevent a crisis & to deal

with a crisis should one occur• Draft the plan and identify responsibilities• Simulate crises and the operate of each plan

• Dealing with the “what if” questionScenario analysis:

• This involves constructing multiple but equally plausible views of the future

• The scenario consists of a “story” from which managers can plan

• Sensitivity analysis• Involves testing the effect of a plan on alternative

values of key variables• e.g. the effect of a 50% loss of capacity

Heads together what contingency plans does the school have ?

• Fire • Nutter with a gun plan• Earthquake • Nut allergy • Fainting• Injuries • Food poisoning • Typhoons

Examples of Crisis

• 1985 – Coca Cola• Bad publicity Nike • Adverse weather conditions

Crisis management

• Crisis management involves:

• Identifying a crisis• Planning a response• Responding to a sudden event that poses a

significant threat to the firm• Limiting the damage• Selecting an individual and team to deal with the

crisis• Resolving a crisis

How would you tackle a crisis

• In groups devise a step by step strategy.

Stages of a crisis

• Pre-crisis• Prior to the event

• Warning• Indications that there is or may be or could be an event liable to cause a significant impact

on the organisation

• Crisis point• When the event begins to cause significant impact on the organisation

• Recovery• The acute stage of crisis has passed and the organisation is able to focus on a return to

normal operations

• Post crisis• Evaluation of the effects

Repair to the organisation

Role of the crisis manager

• Crisis assessment• Event tracking• Managing human considerations• Damage assessment• Assessment or resources and options• Development of contingencies• Managing communications• Co-ordination with external bodies• Controlling information• Controlling expectations• Managing legal requirements

Advice on handling a crisis

• Appoint a crisis manager• Recognise that the crisis manager is likely to adopt a

more authoritarian style than is normal• Do an objective assessment of the cause (s) of the crisis• Determine whether the cause (s) will have a long term

effect or whether it will be a short term phenomenon• Project the most likely cause of events• Focus on activities that will mitigate or eliminate the

problem• “Look for the silver lining”- opportunities in the aftermath• Act to guard cash flow

Dealing with the financial aspects of a crisis

• Accelerate accounts receivable (payment by debtor)- by offering a discount if necessary.

• Slow up payment to creditors where possible.• Increase short term, sales• Reduces expenses - especially “non mission

critical” expenses• Outsource non mission critical operations.• Re-schedule loans

Dealing with the “people” aspects of a crisis

• Form a crisis team• Designate one person only to speak about the

crisis to the outside world• Act to prevent or counter the spread of

negative information• Make use of the media to provide a counter

argument• Do not tell untruths - trying to manipulate or

distort the information will backfire