5.7.

Crisis Management and Contingency Planning (HL only)

 Contingency/crisis planning
 Proactive to changes in the business environment
 Developing plans before crisis to reduce its risks and impacts
 Involves a crisis plan (e.g. in case of fire)
 Details roles and responsibilities, procedure, etc.
 Has to be regularly updated and tested
 e.g. Xavier emergency drills
 More quantifiable crisis = better contingency plan
 Advantages
 Reduces risk since what-ifs are accounted for
 Reduces impact of crisis or disaster
 Reassures staff; satisfies safety need (Maslow)
 Enhances motivation, communication, and productivity
 Disadvantages
 Uses up time and resources; costs
 Crisis may not happen
 Plans can be based on inaccurate or dated data
 Cannot totally prevent disasters/external shocks are inevitable
 Crisis management/disaster recovery
 Reactive to events
 Formulating the best response to a crisis to minimize impact
 Important to act fast, communicate effectively, and maintain control
 Favors radical measures and autocratic leadership
 Focus on public relations to restore image and stakeholder confidence
 Benefits of open and immediate crisis mgmt.:
 CSR – honest business
 Minimize negative reactions
 Reduce personal liability (compliance to legislation)
 Handles staff concerns and anxieties
 Minimize financial loss