1. By: Dr. Sara Jeza Alotaibi www.drsara.co.uk
Chapter 1 THE CRISIS MANAGEMENT PLAN — WHAT IS IT?
By:
Dr. Sara Jeza Alotaibi

2. Chapter 1 Outline 1.1 Introduction 1.2 What Is a Crisis?
17 April 2017
Chapter 1 Outline
1.1 Introduction
1.2 What Is a Crisis?
1.3 Types of Crises
1.4 How to Determine Which Crises Could Strike Your Company
1.5 Why Companies Need a Crisis Management Plan
1.6 Preventing a Crisis from Occurring 2

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1.1 Introduction
Crisis management could be defined as ”special measures taken to solve problems caused by a crisis”.
Good crisis management should involve more than simply trying to minimize danger to an organization; it should also seek to maximize every possible opportunity. Good crisis managers achieve both. 3

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1.1 Introduction
Crisis management planning is not a science; it is more of an art.
Science is ”knowledge covering general truths” or the operation of general laws, as obtained and tested through scientific methods.
Art is ”skill acquired by experience, study or observation.”
The Crisis Management Plan (CMP) is a documented plan detailing the actions the executives want to be taken when a crisis strikes the organization.
Therefore, when referring to the members of the Crisis Management Team throughout the book, we are referring to a group of executives who have the expertise (skill acquired by experience, study, or observation) to carry out the successful management of a crisis situation. 4

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1.1 Introduction
When a crisis has reached the acute stage, the team will employ the following steps:
Take charge quickly.
Determine the facts.
Tell your story.
Fix the problem.
Adhering to these steps will enable your organization to achieve control of the crisis. Remember that the key to successfully managing a crisis is to Be Prepared.
After a crisis has surfaced, the executives who have been selected to serve on the Crisis Management Team (CMT) will work together to achieve control of the crisis in order to minimize the impacts of the crisis. 5

6. 1.1.1 Plan Should Be Inclusive
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1.1.1 Plan Should Be Inclusive
Organizations are exposed to more than one type of crisis, so the plan must identify actions to be taken based on a number of different crisis scenarios.
The plan will identify these actions based on the specific ”type” of crisis.
The plan cannot limit itself to disasters, or to one or two types of crises (non-physical crises.)
The actions needed for a product safety problem will probably differ from the actions that need to be taken when the organization experiences an incident that is threatening the organization’s reputation, or a financial crisis.
Throughout the book there will be a number of examples of organizations that have experienced a crisis.
The objective is not to cast aspersions on these organizations, or their management; rather, the objective is to share information acquired over the past three decades that will explain how a crisis started, its cause, and how an organization managed it. 6

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1.1.2 Plan Viability
Unlike most other plans in the organization, the Crisis Management Plan needs the participation of executive management.
They should identify the people they feel would be in the best position to answer the key questions of What, When, Why, Where, Who, and How. This is the group consisting of the members of the Crisis Management Team (CMT).
The members of the CMT will not feel they own the plan because they were not involved in preparing it.
What I mean by the participation of the executives is they have to do more than give the Crisis Management Plan.
They also need to do more than just provide a budget, they must participate in developing the plan.
Also, to be a viable, workable plan, the Crisis Management Plan must be developed with the participation of the members of the CMT.
Without their participation, the plan lacks context, the interrelated conditions in which something exists or occurs.
Without their participation, there is no guarantee that they are committed to it. 7

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1.2 WHAT IS A CRISIS?
A crisis is defined in Webster’s New Collegiate Dictionary as “a time of decision,” an unstable or crucial time whose outcome will make a decisive difference for better or worse.
Keep in mind that crisis does not only mean danger. It also means an opportunity.
For the purpose of this book, a “crisis” is an unstable time for an organization, with a distinct possibility for an undesirable outcome.
This undesirable outcome could interfere with the normal operations of the organization, it could damage the bottom line, it could jeopardize the positive public image, or it could cause close media or government scrutiny.
Obviously, the full gamut of disasters comes to mind; that is, fires, floods, tornadoes, earthquakes, bombings, etc. In addition, examples of a crisis can include when an organization experiences a product failure, a product safety issue, product tampering, a product market-shift, an incident that results in a poor image or negative reputation, an international incident that negatively affects the organization, and a financial problem — especially a fuzzy accounting problem. 8

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1.3 TYPES OF CRISES
An organization can face a number of different types of crises.
The list below contains some of the incidents that can evolve into a crisis. It is by no means an all-inclusive list. There are other incidents that are not identified here, yet could be considered a crisis situation by a particular company.
Ex: Incidents that can escalate into an acute crisis include:
A financial problem (cash problem, fraud, or fuzzy accounting).
Workplace violence (e.g., employees have been violently attacked while working on your organization’s property).
Acts of nature (e.g., earthquake, tornado, flood, etc.); accidents (e.g., fire, leak, lengthy power outages, etc.);
Incidents that can escalate into an acute crisis include:
A product issue: for example, a product does not work as promised (credibility), is injuring people (safety), has been tampered with; a market shift (sudden change, or over a long period of time).
A negative public perception of your organization (e.g., your organization has a problem, and it appears it does not care about the problem).
A financial problem (cash problem, fraud, or fuzzy accounting).
An industrial relations problem (e.g., worker strike problem, employee lawsuits).
An adverse international event (e.g., disaster at their location has jeopardized your product or service).
Workplace violence (e.g., employees have been violently attacked while working on your organization’s property).
Senior executives have died or been killed (i.e., executive succession problem). 9

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1.3 TYPES OF CRISES
Market Shift: This type of crisis occurs when a manufacturer of a product finds that one of its products is no longer selling as anticipated.
Financial or Cash Problem: This type of crisis occurs when an organization experiences a cash problem, a difficulty meeting its obligations, or an accusation of fuzzy accounting.
Industrial Relations Problem: This type of crisis occurs when a manufacturer of a product finds that one of its products is being accused of injuring or killing customers.
Adverse International Event: This type of crisis occurs when an organization is disrupted by an international incident.
Workplace Violence: This type of crisis occurs when an organization experiences an assault on its employees or management personnel by another employee on the organization’s premises.
A recent example of a market shift crisis is Packard Bell NEC (1999).
The Packard Bell name and 1600 jobs will cease to exist in the USA by the end of the year. The company failed to meet performance goals set by its Tokyo-based parent, NEC. Packard Bell was once the largest U.S. maker of PCs for consumers, had fallen to No. 6 by last summer. It lost $650 million last year.
An example of a financial or cash crisis is Executive Life (1991).
The warnings that Executive Life was teetering toward insolvency began a year before the State of California placed the insurer in state-controlled conservatorship. Executive Life had 245,000 clients and was holding $40.5 billion of life insurance and annuities when the California state insurance commissioner announced that his agents were seizing control of Executive Life.
Executive Life’s failure — the industry’s largest yet — comes when many insurers are burdened with large investments in mortgages and junk bonds that have gone south.
A typical example of Workplace Violence crisis is Windy City Core Supply (2003):
A man who was fired from an auto-parts warehouse six months ago came back with a gun and killed six employees before being shot to death by police. Salvador Tapia, 36, lost his job at Windy City Core Supply for causing trouble at work and frequently showing up late or not at all. 10

11. 1.3.2 Physical Damage Disasters: Examples
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1.3.2 Physical Damage Disasters: Examples
Other examples of incidents that can escalate into an acute-crisis include a physical disaster at one of your organization’s locations:
Acts of nature (e.g., earthquake, tornado, flood, etc.)
Accidents (a fire, leak, lengthy power outage, etc.)
Intentional acts (e.g., a bomb or arson).
A recent example of an earthquake causing an undesirable outcome is The Puget Sound, Washington, Quake (2001):
The strongest temblor to hit the Pacific Northwest in 52 years — deep beneath Puget Sound — sent Seattle’s high-rise office towers swaying. More than 250 people were injured but only one person died.
A recent example of a tornado causing an undesirable outcome is The Missouri Tornadoes (2003):
“Tornado ends year for some Missouri schools” — The tornado wrecked school buildings in De Soto, forcing officials to cancel classes for the rest of the year and send students home for an unexpectedly early summer.
An excellent example of a flood causing an undesirable outcome is The City of Grand Forks, North Dakota, Flood (1997):
The Red River crested at 54 feet on April 21, 26 feet above flood stage. It overflowed its 60-yard channel and at one point stretched 40 miles across the valley.
An excellent example of a hurricane causing an undesirable outcome is Hurricane Floyd (1999):
Hurricane “Floyd” slammed into North Carolina, causing that state’s costliest natural disaster, and then moved up the East Coast, dumping heavy rain as it went. Once deemed a Category 4 storm with winds of 155 miles per hour, Hurricane Floyd hit the Carolina coast on September 16 with winds of 115 miles per hour. The storm then proceeded through Virginia, New Jersey and parts of New York dumping up to 20 inches of rain on the region, causing “500-year” floods in some areas. Altogether, “Floyd” killed at least 69 people from the Bahamas to New England.
A recent example of a fire causing an undesirable outcome is The Comfort Inn, Greenville, South Carolina, Fire (2004):
Fire broke out in a five-story motel around 4 a.m. while guests were asleep, killing six and forcing others to leap from windows or climb down bed sheets to safety. At least a dozen people were injured, including at least five in critical condition at a burn unit in Augusta, Ga.
An excellent example of a leak causing an undesirable outcome is The Chicago River Flood caused by a leak into the tunnel system (1992)
A good example of a power outage causing an undesirable outcome is The San Francisco Blackout (1998):
At 8:17 a.m. — the power went out for about 940,000 people across a 49-square mile area. Across San Francisco, office workers in high rise buildings were trapped in elevators. The cause — a construction crew forgot to remove the ground wire after completing maintenance on a substation switchboard, causing a blowout and triggering a chain reaction that knocked two generators off line.
An excellent example of a bombing causing an undesirable outcome is The Murrah Federal Building bombing in Oklahoma City, Oklahoma (1995):
A bomb, planted in a yellow Ryder rental truck parked at a meter on Fifth Street, exploded at 9:04 a.m., destroying the Alfred P. Murrah Federal Building. The entire north side of the 9-story building was blown off. The bombing killed 169 people; injured more than buildings in the blocks surrounding the site have been rendered unfit for occupancy. 350 businesses affected; 14 collapsed buildings, 30 with severe structural damage; and $650 million property and business loss.
The Boland Hall dormitory was set on fire around 4:30 a.m. The fire killed three students and injured 62. The building had no sprinklers because it was built before such devices were required.
The fire immediately set off fire alarms in the 640-student freshman dorm — but most students simply rolled over and went back to bed. There have been 18 false alarms in the dorm since the school year began in September, and students have become accustomed to ignoring them.
The fire alarms sounded. Unfortunately, because the students experienced 18 false alarms in the prior 4 months, most students simply rolled over and went back to sleep. They had become accustomed to ignoring the alarms. South Orange firefighters extinguished the third-floor fire quickly. 11

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As you can see, there are many different types of crises that can strike your organization.
Fact 1: You cannot prevent all crises from striking your organization. Therefore, you need to be prepared.
Opinion 1: The best way of managing the crisis so that it does the least damage is to be prepared. A Crisis Management Plan is a resource that prepares an organization to manage a crisis successfully.
Opinion 2: Just because an organization has developed a Crisis Management Plan, does not ensure that the executives will manage it successfully. 12

13. 1.4 How to Determine Which Crises Could Strike Your Company
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1.4 How to Determine Which Crises Could Strike Your Company
Part of the Crisis Management Planning process is to evaluate if a crisis could occur in an organization and the type of crisis with which the organization could be faced.
Then the organization needs to develop a strategy on how it will handle the crisis, or each of the crises if there is more than one.
Every organization should perform a risk analysis that will identify the most likely types of crises that could occur to their organization. This allows them to concentrate initially on building a plan to respond to the more probable crises.
Even after this risk evaluation step has been completed, many organizations have been faced with a crisis that was either not identified as having a high probability, or one or more that was not identified at all. 13

14. 1.5 WHY COMPANIES NEED A CRISIS MANAGEMENT PLAN
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1.5 WHY COMPANIES NEED A CRISIS MANAGEMENT PLAN
When this question is raised to me, I use a comparison of the Crisis Management Plan with the organization’s Emergency Response Plan (ERP): the objective of the ERP is to safeguard employees.
The ERP tells employees what they should do when an emergency arises. What are employees expected to do during and immediately after an earthquake? A tornado? A flood? A hurricane? A bombing? A fire?
The ERP is documented. Copies of the plan are distributed to employees or posted in various locations throughout the facility. As part of the policy to keep the ERP current and ready for use, the alarms are tested frequently.
Executives must be prepared — because the news media is prepared. They are prepared to write (or speak) about your crisis. And they will continue to write and speak about the crisis until your organization gets it under control.
As soon as it moves to the acute stage, and the media knows about it, they are prepared to announce “breaking news.” 14

15. 1.6 PREVENTING A CRISIS FROM OCCURRING
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1.6 PREVENTING A CRISIS FROM OCCURRING
Preventing a crisis is the least costly and the simplest way to control a potential crisis.
Unfortunately, preventing crises or disasters from striking your organization is difficult.
As I said, preventing a crisis or disaster is difficult, if not impossible. Why?
1- One reason is that most organizations are threatened by a large number of crises.
2- Second, each type of crisis or disaster is difficult to prevent. 15

16. Any Questions?
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