Since time immemorial we have seen the devastating effects of major disasters and other uncontrolled events, coupled with eye-watering estimations of the financial costs of their remediation. Union Carbide’s tragic accident in Bhopal resulted in 1,000s of deaths and a loss of over $500 million. More recently, UBS’s “Rogue Trader” cost them over $2 billion, and the total bill for BP’s Deepwater Horizon catastrophe will be at least an order of magnitude more, estimated at a whopping $35 billion. Accordingly, the term ‘crisis management’ will be a stranger to very few people, and it would be remiss of any large organisation not to have a crisis management plan of some sorts (though I would question if they are all (1) fit-for-purpose, and (2) practiced).
That’s all very well for the large conglomerates with access to buckets of resources, but where does that leave the likes of me as a lone trader or running a small family business, I hear you cry? Well, my answer is simple … if you do the same it’s madness, it would be a massive waste of resources which you just don’t have. However, in my opinion by applying the same principles, picking out a few elements of a good crisis management plan and doing a bit of light-touch preparation you can develop and implement a half-decent plan with minimal effort that might just tip the balance in your favour when things start to turn south without warning.
So what constitutes a crisis management plan? Well, ask 20 professionals and you’ll get at least 30 opinions, and I’m not going to pretend that what I’ll cover is the textbook answer, but given that our principle at SLB is simplicity what I’ll briefly demonstrate here is good enough for this article.
In essence, an effective crisis management plan contains the following core components:
- Principles – the purpose of the plan (e.g. minimise risks to life, limit damage to the environment, preserve the company’s reputation…), recognition of the types of crises it may cover, perhaps guidance on when to trigger the plan (i.e. when an incident or event becomes a crisis)
- Structure – composition of the crisis management organisation (e.g. a crisis management team with designated leader, communicator, coordinator, log keeper, functional experts, etc.)
- Process – the steps to be taken in a crisis (or preferably before a crisis materialises)
- Practice – exercise the plan and the crisis management organisation
The challenge then is how can this be applied to small businesses or individuals? Let’s keep this simple (that’s what we do, right?!), so in Part 2 of this article we’ll start very small and only build on it if we need to.