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Coral Drake | January 12, 2024 |
A sudden health or safety issue with your inventory, an unforeseen natural disaster, or a security breach can halt operations and put your business in jeopardy. Without an effective crisis management planning and emergency response strategy, an event like this can be the end of your business.
Here’s how to plan for and handle a crisis, from building a crisis response team and creating a crisis management strategy, to sustaining customer trust during and after an incident passes.
If not managed with robust risk assessment techniques and incident management systems, an unexpected event can turn into a crisis, negatively impacting your business operations, brand image, and customer loyalty. In fact, over 60% of businesses that experience a major crisis never recover.
Every business, no matter the size or type, is susceptible to unforeseen circumstances. Proactive crisis management planning is infinitely more effective and less costly than reactive problem-solving.
Also, you're likely to need it. Over 80% of businesses that have a crisis management plan in place experience a crisis within five years. In spite of this, approximately three out of every four businesses don’t have a formal, documented crisis management plan.
Anticipating potential problems before they happen means getting ahead of the panic by staying focused and able to handle the situation.
Encourage staff to actively participate in crisis preparedness training so that they know their roles during a crisis.
Training sessions and drills enable teams to identify and address potential weaknesses. When team members suggest improvements, provide feedback, and ask questions they’re not just perfecting the plan, they’re learning to work together as they would during a crisis.
Crisis management planning encompasses preparation, mitigation, response, recovery, and learning, aligned with disaster recovery solutions and business continuity planning. Here are the steps to establish an effective crisis management plan:
What kind of crises might your business face? Encourage your staff to anticipate the kind of situations that could threaten your operations.
There are no bad answers. Anything from natural disasters to technological malfunctions and cyber-attacks are on the table. Don’t forget about societal issues like labor disputes or political brand loyalty.
Once you have identified potential risks, decide what you’ll do if they occur. Lay out immediate response actions, steps for building for recovery, and how you’ll handle the aftermath of the crisis. Don’t forget about working out the logistics for resources and personnel to enact these steps.
Assign roles and responsibilities to your team members for each crisis situation. Incident management systems are unlikely to be effective if your employees are running around not knowing who is supposed to do what.
It's critical that everyone knows their role and there’s a clear chain of command to ensure an organized response to a crisis.
How well do your employees remember what’s said in meetings? How about a month later? What about a year? There’s no point in crisis preparedness training if your employees forget it before the crisis.
Document your plan in a way that is clear and readily accessible to everyone in your business, and be sure to take time to go back over it. This documentation should be a living document, consistently reflecting updates in resilience building practices. It should be standard training for new employees and revisited by existing employees at least once a year, if not more.
Nothing is foolproof until it’s stress-tested. Conduct regular drills simulating various crisis situations and make sure your employees are taking it seriously as they act out their roles. Practice rules out any kinks in the plan and prepares employees for if they ever have to act in an emergency.
Between 2015 and 2018, the massive restaurant chain Chipotle encountered a major food safety crisis, resulting in more than 1,000 people getting sick. As a result, Chipotle paid out $25 million in damages.
However, Chipotle took a proactive and transparent approach to crisis communication that’s a superb example for any business handling a crisis.
In the aftermath of the outbreak, Chipotle immediately closed the affected stores and told the public what had happened. They regularly updated the media and public about the steps they were taking to resolve the issue, like enhancing their food safety measures and cooperating with health authorities.
Throughout the crisis and its aftermath, Chipotle maintained a direct line of communication between their brand and customers, employees, and stakeholders.
In the end, they navigated the crisis effectively and gained back customer trust. As of their third quarter in 2023, revenue was up 11.3%, shares were up 23%, and they opened 62 new restaurants. It’s pretty safe to say that they’ve recovered.
Chipotle’s handling of their crisis illustrates how good communication, honesty, and meaningful change can help a company navigate a tight spot.
Hopefully your company never faces a Chipotle level crisis. Unfortunately, you never know what might throw a wrench into business operations. Thinking ahead about what might go wrong and what your company can do about it is the first step in readying your brand for unforeseeable challenges.
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