Crisis management is the application of strategies designed to help an organization deal with a sudden and significant negative event.
A crisis can occur as a result of an unpredictable event or as an unforeseeable consequence of some event that had been considered a potential risk. In either case, crises almost invariably require that decisions be made quickly to limit damage to the organization. For that reason, one of the first actions in crisis management planning is to identify an individual to serve as crisis manager.
Other crisis management best practices include:
- Planning in detail for responses to as many potential crises as possible.
- Establishing monitoring systems and practices to detect early warning signals of any foreseeable crisis.
- Establishing and training a crisis management team or selecting an external crisis management firm with a proven track record in your business area.
- Involving as many stakeholders as possible in all planning and action stages.
The field of crisis management is generally considered to have originated with Johnson & Johnson's handling of a situation in 1982, when cyanide-laced Tylenol killed seven people in the Chicago area. The company immediately recalled all Tylenol capsules in the country and offered free product in tamper-proof packaging. As a result of the company's swift and effective response, the effect to shareholders was minimized and the brand recovered and flourished.