Risk and Crisis Management 101

RM 3

by Michelle Grandchamp

Sometimes things don’t go as planned. In your daily life, this is usually a small frustration, or, if you are like me, panic-inducing at your loss of control. (Yes, I have cried over spilled milk, but to be fair the milk was mixed with my coffee so I feel like my tears were justified…) When you’re running a business, however, unplanned events can be a lot riskier and involve many more people. This can lead to a loss of clients, revenue, reputation, and a great many other things. So how can we plan for these unforeseeable yet inevitable events to avoid losing our business altogether? 

I have done a lot of research on how a business can stay afloat through tough times, and have discovered many tips and tools that might help you to get ahead of the game and keep your staff, clientele, and stakeholders happy.

Enter Risk and Crisis Management Plans 

These are your contingency plans detailing how to proceed in all situations when you come up against an obstacle that threatens your business livelihood, and are often included in your business plan before your official launch. Some examples of this include responses to physical damage to your business or inventory, illness among staff (like, say, a pandemic perhaps?), workplace injuries, technological failure, or any other event that could affect your usual day to day activities. Some measures in your risk and crisis management plans will be preventative and generally ongoing, such as workplace training, but some will simply be put in place in preparation for sudden emergencies.

The risk management plan and the crisis management plan are often confused or used interchangeably, but these two are actually very different from one another and can be distinguished in several key ways.

The Crisis Management Plan

Crises are events that happen suddenly at specific points in time and are, for the most part, totally unforeseen and have the potential to cause a lot of harm to a business. Though some crises could be related to natural disasters, some more common situations of crisis could include:

  • the sudden departure of a long-standing chair of the board, CEO, or other important staff member
  • allegations of sexual or physical abuse
  • viral videos or news that contradict the organization’s values and affect its credibility
    • This could be considered either a crisis or a risk, depending on your organization’s involvement in the matter. 
    • For example, videos being published of police brutality against black men and women could be considered a crisis for the police departments involved as the videos were intentionally directed at them to demonstrate the systemic racism immanent in the justice systems across the globe.
    • As an “unaffected” organization, like women-centred community economic development organizations, not taking a stance in the Black Lives Matter movement, and not demonstrating and adhering to your organization’s values and mandate would be considered a risk to that organization. 

The methods a business uses to address crises will directly relate to the level of impact a crisis could have. A business that stays two steps ahead of a crisis and quickly adapts to a situation will generally provide a more positive outcome than a business that is slow to respond to a crisis, deflects rather than reflects on their position in the crisis, or does little else to address the public about the situation at hand.

The Risk Management Plan

Risk management, on the other hand, addresses the potential for any activity or event that affects revenue, reputation, market, or ability to deliver services or products. These can be related to strategic risks or operational risks such as:

  • not preparing for new trends in the market
  • taking a course of action that doesn’t follow your organization’s objectives
  • making major investments in anything that is on the verge of becoming obsolete, such as technology
  • overspending on projects
  • improperly managing your organization
  • insufficiently or improperly training your staff

The types of activities or events that could be considered risks to an organization’s operations can have various or multiple effects on how your business conducts itself both internally and externally. The way that these are addressed will reflect upon its credibility as an organization.

Though planning for possible risks or crises may seem difficult, there are a few ways in which you can organize yourself and your business to be ready for anything.

Your Organization’s Risk and Crisis Management Plans

Create a plan that thoroughly details all potential risks and crises that your business could face. A good idea would be to do some research into what types of crises and risks other businesses like yours have experienced, and see how they responded to their particular situations. Did they respond well? Poorly? How could your business better address that type of scenario?

Determining in advance how you could minimize the negative effects of the risks and crises you have identified, and the likely frequency of their occurrence will help you to calmly address them in the moment later on. When events are unpredictable, it can be easy to feel stressed and flustered, but with a clear plan for how to react and adapt to each disaster, you will reduce the potential for a fatal fumble.

Finally, you should consistently review and update your risk and crisis management plans, the same way you would routinely refresh your business plan to address new factors in your market or clientele. These plans will also provide proof to your clients, insurers, and other stakeholders that your business has the means to survive through anything that could affect you.

Other Risk and Crisis Safeguards

Beyond the risk and crisis management plans, there are also other steps that you and your organization could follow in order to effectively manage your business through a crisis. Each business is unique and will have different needs and capacities. Feel free to pick and choose which strategies work best for your organization and its financial and staffing capabilities.

Amidst a crisis, your staff and clientele will look to the faces of the organization for guidance and reassurance, so forming a strong leadership team will serve as a foundation for any and all of your risk and crisis planning initiatives. This leader or leaders, as the face of your business, will take the brunt of the backlash for any negative repercussions, but will also act as the main representation of how your business is reacting to a crisis. If a single leader is behaving negatively with regard to a crisis, it will appear as though the entire business he or she leads is behaving the same way – even when that’s not the case.

In this same vein, for any larger businesses or corporations, it could be beneficial to your organization to assemble a team that is specifically dedicated to managing crises. This group should include members from various departments of your organization in order to offer the insight of specialists in any given field.

Furthermore, ensure that all the appropriate and relevant training is offered and standards are enforced among employees so that all staff members in the organization’s hierarchy are promoting the same values as members of the executive team.

Finally, your best bet for upholding your company’s brand and reputation – particularly during a crisis – is timely and consistent communication with both internal and external parties. Communicating to the public and to stakeholders should include an acknowledgement of the crisis, your organization’s position on the matter (if applicable), and details on how your business will be moving forward. Over communication is not a bad thing in these cases, so make sure to include provisions for updates as necessary. State the facts, stay positive, and keep in mind that although transparency is key, the media does not need to know all the ins and outs of a crisis to report on it. You are well within your rights to keep details internal until you have more information on how to provide solutions.

Risk and Crisis Management Queens

Though you now have all the tools to successfully defend against risks and crises that may affect your business, your work does not end here. As previously mentioned, it’s important to always be on the lookout for new information on how to further educate yourself, how to adapt to any crisis, and how to not only survive but thrive as a business.

Michelle Grandchamp is a recent graduate of the Public Relations program at Collège La Cité, from Ottawa, Ontario. She has been working for the Women’s Economic Council in St. John’s, Newfoundland since June 2019, and has interests in environmentalism and feminism.


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Janet Kranz
3 years ago

This is a wonderful article and really useful tool. Organizations in the nfp sector can learn a great deal.