Definition of Crisis Management

Crisis management, at its most basic definition and meaning, is the ability of employees, managers, or individuals in any type of atmosphere, scenario, or work environment to deal with an emergency or crisis. Emergencies can happen in every company, from the Pentagon to your local dry cleaner.

Understanding how to anticipate, plan for, and deal with a variety of potential crises, dangers, or catastrophic circumstances may not only save lives but also a company's reputation, thus saving billions of dollars in business or investment funds.

Crisis management, or at least a plan to deal with unexpected situations or emergencies, is required in most public facilities, from airports to schools. Crisis management is an important aspect of society today and provides a variety of challenges to managers regardless of the scenario.

Why Crisis Management Is Important

Crisis management is a system of dealing with potential emergency situations or dangerous scenarios, regardless of the environment. We send our children to school knowing that they should be safe there. We go to work every day, assuming that our employers have provided a safe environment for us to do our jobs. We travel the freeways, believing that the structural integrity of roadways and bridges has been adequately designed with volume and congestion taken into consideration by architects and construction workers.

However, no matter how carefully or safely we plan our day, emergencies happen. We don't expect them, but we can plan for them. At school, we engage in fire and earthquake drills, but back in the 1950s and early '60s, drop-drills were practiced weekly in case of atomic catastrophes. Today, security is a big concern for many schools, and many school districts employ security officers as well as metal detectors to make sure that knives and guns are not brought onto school properties.

Because the safety and well being of our children are important, we expect school administrators, from preschools to college universities, to take appropriate caution when determining potential scenarios that may impact safety or harm life.

At work, we also practice fire drills and evacuation plans, and we sometimes must pass through a variety of security measures before we reach our desk or place of employment.

Unfortunately, people in business today must also plan for the worst and do whatever is possible to protect not only lives but businesses from damage and destruction. From chief executive officers to employees, we must all be diligent in understanding why crisis management planning is important in everyday life.

Challenges to Managers

Crisis management involves a variety of challenges to managers, school administrators, CEOs, and government employees. This artcle on crisis management will cover a variety of the basics regarding crisis planning that include but are not limited to identifying a potential crisis, detecting warning signs that a crisis may occur, and controlling the damage of any crisis situation.

Among the most noticeable challenges to managers in such situations is the ability to train and inform employees, encourage compliance, and provide adequate preparation and training to deal with potential crises. Other challenges include selecting a team of individuals responsible for handling information, offering potential solutions, and putting those solutions into practice.

Establishing a crisis management team involves choosing individuals capable of leadership and taking responsibility, as well as the ability to delegate functions and roles to other individuals.

The outcome of any crisis cannot be absolutely guaranteed. Situations differ, as do human emotions when reacting to specific crisis scenarios. A crisis can range widely from a CEO assessing damage from embezzlement, to handling a public relations disaster, to dealing with a university campus shooting.

Many crisis management teams feel that they have created adequate scenarios for their specific business environment but then fail to follow up by creating contingency plans, identifying weaknesses in a plan, and developing a variety of additional emergency response scenarios, expected or not.

The main focus of crisis management is to protect life and limb, limit damage, and restore confidence. Again, depending on environment, this is often easier said than done.

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Scenario, environment, age of employees, schoolchildren, and adults all come into play in how a crisis or dangerous scenario may be anticipated, perceived, played out, and resolved.

What would happen if the CEO of an important company on the cutting edge of releasing a new technology was suddenly killed in a tragic accident? What happens to the employees and investors of that company? What happens to the stockholders who have invested in the technology?

How would school employees deal with evacuating damaged buildings following an earthquake or fire? How does your local post office protect itself from enraged employees who come looking for revenge with a weapon?

As you can see, emergencies are unexpected situations, and many emergencies are based on human factors and emotions. Hospitals may very well have a secure evacuation plan in the event of a fire, but what happens in the event of an earthquake? Or what if there's flooding caused by plumbing damage?

It can be said that Murphy's Law is alive and well in the 21st century: Bad things happen, and they often happen even to those who have done their best to protect themselves, their companies, their employees, or other individuals from danger.

Whether it's an oil spill in Alaska, faulty brake pedals in an automobile, bad public relations damage resulting from such faults, or financial misdealing from a leading investment company, crisis management is an essential part of contingency planning and preparation, as well as reducing losses from setbacks in today's business environments.


While it's impossible to offer solutions and protection for crisis management scenarios in every environment, this article will strive to offer the basics in determining, identifying, planning for, and recovering from many types of crises.

Whether you are a manager or an employee, a professor or a student, an administrator of a hospital, or the janitor who works there, every individual should be aware of the basic importance of safety and protection in his or her environment.

Identifying a crisis is one of the basic foundations of being able to deal with the crisis. Learning how to prevent, detect, and control a crisis situation in a variety of scenarios will be covered in our next lesson.

Identifying a Crisis

The basic idea of crisis management is that the process begins before a crisis occurs. It's established through careful examination and analysis of potential risks in any business or public environment. One of the best ways of preventing a crisis is to prioritize and identify risks that may present the greatest possibilities for problems in the future.

Crisis situations may occur in a variety of industries, including:

  • Airline industries. From baggage checking, to airplane maintenance, to safety, to potential crashes.
  • Chemical industries. Gas spills, explosions, pollution, escape of toxic materials, or crashes involving trucks, trains, or airplanes carrying potentially dangerous chemical products.
  • Product tampering. Many people recall the fear that swept the public during the 1982 Tylenol product tampering case, which ended up costing that company over $1 billion in lost revenues, product recalls, and the design and development of new tamper resistant packaging.
  • Financial industries. Poor investment strategies, inadequate or inappropriate recommendations by stockbrokers, faulty diligence performed by brokers or dealers regarding investments.
  • Environmental hazard. Industries such as factories, coal mines, oil drilling, or logging carry with them their own dangers and potential crisis scenarios.
  • Nuclear accidents. Chernobyl in 1986 is still widely remembered, as is the Union Carbide chemical plant explosion in India in 1984 and Three Mile Island in Harrisburg, PA. Concerns remain regarding nuclear power plants, waste disposal, and environmental exposure to radiation.

A crisis may also involve power blackouts, storms that knock out electricity in wide areas, and economic downturns.

Employee rage also has increased the dangers of hiring individuals without completely checking backgrounds, especially in areas where security needs are heightened. An individual accused of sexual harassment may end up costing an employer hundreds of thousands of dollars in lawsuits.

Creating guidelines and protocols regarding ethics, legalities, rules, and regulations within companies is essential as one of the cornerstones in preventing a crisis management situation. It isn't an exaggeration to say that one employee has the power to bring down an entire corporation or company if the situation is right.

Identifying a Crisis

Identifying a potential or impending crisis depends on an individual's ability to focus on details and to read circumstances around him or her. However, one of the best methods of identifying crisis situations is knowing where weaknesses or potential risks lie in any company.

The way to identify a crisis in a company environment is to examine each department or section, find its weaknesses, and anticipate worst case scenarios that may arise in those departments. For example, an employee under frequent disciplinary action or warnings may be identified as a risk, but only if individuals who work with that person are paying attention to human behavior.

Managers, team leaders, and management personnel should make an effort and take the time to be familiar with departments, understand the probability of different risks, and make a list of potential problem areas.

This may involve more than one individual; it may involve several different viewpoints and opinions from individuals ranging from management to employees. Regardless of industry, the management or supervisors should always pay attention to concerns broached by employees, who are often the first to be aware of difficulties, problems, glitches, or risks that may create a potential for greater danger or damage later.

It's important for management to talk not only to project or team leaders but to employees on the floor, corporate staff, suppliers, and customers when trying to determine whether or not an operation or endeavor has the potential for risk.

This process can be extremely time consuming but is well worth the effort if it serves to head off a potential crisis. Using a systematic approach to determining risk is the first step toward identifying potential crisis scenarios.

Managers should frequently meet with employees to access performance, opportunities to improve, potential identification of risks, and even discuss complaints regarding a variety of processes and job expectations.

Individuals may be offered the chance to write down a list expressing five or ten of the worst things that may happen in a given area. Employees, management, and corporate members should also be encouraged to express what might be done about those situations, without fear of reprisal or criticism.

Detecting a Crisis

The best way to detect a crisis is to collect and analyze data in order to make a determination whether something is merely a risk or may be leading to an imminent crisis. In many situations, a crisis doesn't necessarily have to be catastrophic.

For example, prioritizing the risk for a potential crisis may help individuals identify a situation that is close to getting beyond control. Let's say it's raining, thundering, and lightning. A man walks out onto a golf course with an umbrella and a bag full of golf clubs. Then he stands under a lone tree on the top of a small rise. You can say that this man is in a crisis waiting to happen.

Taking each of the aspects of the situation and the environment alone may not necessarily point to a crisis, but by putting them all together, it's easy to see that the man may be putting himself in a great deal of danger. Being able to identify a cluster of situations or factors that may develop into a crisis situation is one of the best ways of detecting and deflecting a crisis in the first place.

Risks and crises in the financial field may also be determined by a methodology that prioritizes the amount of risk that should be taken in various scenarios. For example, a mere interruption of supply materials to an industry caused by a transportation strike (two risk factors) occurring at the same time may only be determined to be about 15 percent, but the estimated costs of both those scenarios happening at the same time may cost $300,000 in lost revenues for a company that relies on those parts.

Controlling a Crisis

The best way to control any crisis is to develop routines, training, and compliance to help reduce the damage or potential cost of a crisis scenario. Preventing a crisis involves an effort to identify and quantify the number of risks in a potential situation in an attempt to determine their possible impact and the probability of such an occurrence. However, in any situation, it's best to prepare and expect the unexpected.


Crisis management is not a black or white situation. It can't really be learned merely through textbooks or courses but takes into consideration human intuition, experience, and the ability to notice details.