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Enterprises and crisis management: How to efficiently avoid problems and reduce any potential losses?

Effective management and overcoming sudden crises is one of the principal tasks of each management team. It is a far from a simple mission– there are usually numerous important factors and consequently every minute and every step are often important. How to effectively deal with crisis situations? How to get ready for them? We focused on these and other questions during another one of our seminars at Deloitte Academy.

Every working person has likely found themselves in a crisis situation in their career, be it as an entrepreneur, employee, manager or assistant. We describe crisis as an extraordinary event or situation that may jeopardise the integrity, or even the existence of a particular firm. A crisis may be caused by a human error or natural elements, it may significantly impact and paralyse business processes, may destroy property, sources and lives. How to prevent such consequences? The only truly effective method to outsmart crisis situations is thorough preparation.

Crisis life cycle

  • Phase 1: Potential problem
    People start to worry and search for information and support in colleagues who work in the vulnerable segment. Certain involved persons admit that there might be a problem.
  • Phase 2: Emerging problemThe pressure on the organisation to admit the existence of the problem has been increasing. The pressure results from an increased activity of one or several groups affected by the problem. In this phase, media start to be interested in the problem.
  • Phase 3: Fully developed problem and crisis The problem has fully developed and shows its full potential and scope to all involved parties. It is difficult to influence the problem as it has become omnipresent and its intensity increases. All involved parties understand the existence of the problem and their role in the problem and seek to find a solution. In this phase, there is a full-blown crisis in the strict sense.
  • Phase 4: Addressing the problemThe crisis life cycle is coming to its end; the organisation is made to accept obvious consequences resulting from specific measures.

Recipe for success? Learn from your mistakes!

Most organisations are largely (or entirely, in worse cases) not ready for any problems or crises that might affect them. Yes, companies are ready for threats such as a fire or a bomb – they have a clear crisis plan and organise regular security training. However, they do not have similar crisis scenarios for addressing numerous other problems, primarily those directly relating to their (business) activities. Key principles of an effective response include timely warnings, identification of an appropriate procedure and its subsequent implementation. These steps must be proactive and must be part of a process planned in advance which aims to stop the problem before getting into later stages and developing into a crisis that can no longer be tamed.

7 steps to addressing a problem

  1. Monitoring
    • Analyse the business environment.
    • Follow what is happening in the media, steps of the government, public groups, etc.
    • Assess which of the gathered information may have an impact on your company.
  2. Identification
    • Identify the most significant problems that have an impact on your company and start to get serious.
    • Find out what the nature of the problems is and their stage.
  3. Setting priorities
    • Find out whom/what the problem will affect and to what extent.
    • Identify what is at stake (product, sector, entire company…).
    • Find out what the likelihood is that a critical situation will actually occur.
    • Assess how urgent the problem is.
  4. Analysis
    • Analyse the most pressing problems in detail.
    • Estimate their anticipated impact on the company and particular department as best as possible.
    • If the situation indicates so, call the team which is able to effectively deal with the situation.
    • Identify all involved parties.
  5. Strategy
    • Create and plan strategy.
    • Identify target groups and inform them of the strategy in an appropriate manner.
    • Assess the company’s possibilities, what specific steps will need to be made, whom they will affect, when they will have to be made, etc.
    • Create a communication plan.
  6. Implementation
    • Implement the strategy, policy and programmes approved by the management.
    • Communicate with target groups in a consistent and effective manner.
    • Intensively emphasise and defend the standpoint of the company and its approach to handling the crisis.
  7. Evaluation
    • Evaluate the results of the process.
    • Evaluate the success rate of steps made to determine further plans and strategies.
    • Learn from your errors and successes.

If the company copes with the encountered problem or crisis, it should make full use of this experience. There are two manners how an organisation may deal with a past event. Worst case, it will not learn from the problem that occurred and will not take it into account in the preparation or adjustment of crisis plans. The correct approach is to create a strategy open to changes that takes both errors and successes into consideration.

Deloitte Academy

A good knowledge of theory is a prerequisite for good practice. In Deloitte Academy, attendants of our courses have an opportunity to find out how to approach crisis management from the very basics. However, security managers, analysts, consultants and other professionals will also find the courses useful. Whether you are interested in cybersecurity, project management or other topics relating to your business activities, you will find it in our courses!

Crisis management Deloitte Academy

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