Speaker 1: Industrial accidents, product recalls, lawsuits, natural disasters, market crashes. These are just a few examples of business crises, or unexpected and large-scale events that threaten the stability of your business. And if you think that your company is immune to a crisis, then think again. Crises strike companies of all sizes, industries, and track records. They can be difficult to predict, and they're sometimes impossible to prevent. So how can you minimize the potential damage of a crisis and prepare for the worst? You can practice effective crisis management, which you'll learn about next. Crisis management is the process of preventing, containing, and minimizing the negative impact of a business crisis. In other words, it's damage control, and it can be broken down into three stages. The first and most important stage of crisis management is prevention and preparation. Prevention and preparation take place before a crisis happens. Planning helps you to systemize crisis management, or make it routine. A routine saves time and reduces mistakes or missteps. Prevention involves analyzing your risks, identifying the types of crisis your company is most vulnerable to, and then taking steps to lower your risks. Prevention involves building and training a crisis team, developing a crisis response plan, and assigning roles in the event of a crisis. Prevention will reduce your chances of experiencing a crisis, and preparation will equip your team with the strategy, knowledge, and training they need to respond effectively when a crisis strikes. The second stage of crisis management is crisis response. This stage takes place during a crisis. It's how you coordinate efforts to respond to and contain the crisis. Responding to a crisis involves many steps. For example, you need to recognize that you're experiencing a crisis, assess the scope of its impact, take corrective action or steps to contain the crisis, and communicate with the public, stakeholders, and employees. The response stage of crisis management is high pressure and high stakes. Time is urgent, resources may be scarce, and your actions may lose or save your business, or even lives. Again, that's why doing the legwork in stage one is so important. By reducing the chaos, you improve your outcomes by having a crisis team, plan, and protocols prepared. Finally, the last stage of crisis management is recovery. This is the aftermath of a crisis. It takes place after the significant threats of a crisis have been avoided, minimized, or otherwise handled. Recovery focuses on rebuilding your business, reputation, and lost customers or profits. Another critical component of recovery is formally reviewing what you can learn from the crisis, and implementing business changes to avoid similar situations in the future. All together, effective crisis management is comprised of three stages, prevention and preparation, response, and recovery. You need all three stages to take a comprehensive approach to reducing the damage pre-crisis, during a crisis, and post-crisis. While you may like to think that a crisis won't happen to you, overconfidence can leave your company vulnerable. Make crisis management a priority and put together a crisis team to get started on crisis prevention and preparation. It may just save your business. What types of business crises are you at risk for? Is your data backed up? Does your business disproportionately depend on a few key clients? How much financial runway do you have before you're in trouble? Understanding the different types of crises that can happen is the first step to identifying the types of crises that are most likely to happen to you. And once you know your risks, you can then work to reduce and prepare for them. So here are five types of business crises. Review this list with your crisis team and assess your own company's risks. The first category is natural disasters and epidemics. Natural disasters can wreak havoc on your equipment or your building, and potentially your employees' lives. Outbreaks of illness or disease can quickly incapacitate your workforce. Examples of natural disasters are hurricanes and tsunamis, tornadoes, floods, earthquakes, wildfires, and droughts. Consider your geographic location and the likelihood that you may face a natural disaster or epidemic. What safety or insurance measures do you have in place? The second type of crisis is financial. Financial crises are events that may be catastrophic to your company's finances or the vital resources that you need to run the business. A few examples of financial crises include strikes or labor unrest, losing a major client or supplier, market crashes, lawsuits, bankruptcy, or even losing important leaders on your team. Ask yourself and your crisis team what factors could threaten your company's financial viability. What and who do you depend on for the company to function and sustain itself? Third is technological crises. Technological crises are caused by human errors in developing or using technology, or they happen when a system that your company depends on breaks down. Technological crises have a high risk of harming the public or the environment, and they're often caused by mistakes made by the company. Some examples include phishing, hacking, or cyberattacks, mishandling of sensitive data, critical equipment or software failures, industrial accidents, and product defects or recalls. Take a close look at what technologies you use and create. What protocols and training do you have in place to prevent accidents and mistakes? What technology systems do you rely on to run smoothly? The fourth type of crisis is organizational misdeeds. Organizational misdeeds describe when management's actions have a significant negative impact on the public or business. Crises caused by organizational misdeeds include management misconduct, which occurs when management engages in illegal behavior such as accepting bribes, embezzlement, sexual harassment, discrimination, or other corporate crimes. This also covers crises of deception, which happens when management intentionally withholds or misrepresents information to the public. Carefully consider the power structures and code of conduct you have in place at your company. Is there a safe way for employees to report illegal or unethical behavior about managers? Finally, the last type of crisis is workplace violence and acts of malevolence. Example of workplace violence and acts of malevolence include physical fights, workplace shootings, kidnappings, acts of terrorism, product tampering, or malicious rumors. Consider the levels of tension that exist between employees or the company and the public. Does the political landscape or nature of your work make you a potential target of an act of malevolence? Crises can appear in a variety of forms. Don't leave your business vulnerable to them. Ask yourself, what could go wrong? Be proactive about assessing your risk factors and then work to reduce and prepare for them. It's better to look ahead and take action rather than look back and regret inaction. Have you ever packed an umbrella just in case it starts to rain? Sure, the extra weight and space the umbrella takes may be inconvenient, but you know that it's worth the hassle to avoid getting caught in a rainstorm with no protection. This is a simple example of why it's important to be prepared. And getting caught in the rain isn't even an outcome that's all that consequential. Think about your business. Instead of getting caught in the rain without an umbrella, what would you do if you got caught in a scandal, a public relations crisis, or an emergency without a plan or any sort of protection? Investing in crisis prevention and preparation is critical to protecting your business and public safety. Here are four steps you can take to get ready. First, form a crisis team. This is a group of people who will be responsible for your crisis prevention, preparation, response, and recovery efforts. Ask yourself, what perspectives or areas of expertise should be represented? For example, you might include leaders in executive management and managers in human resources, public relations, finance, operations, and information technology. The second step is twofold. It's to understand and reduce your risk factors. Start by bringing your crisis team together to analyze what types of crises are most likely to happen to your business. Then brainstorm ways that you can reduce your risks and prevent these crises from happening. For example, you might realize that you're at high risk for a crisis if something were to happen to a critical team member. So you might develop a training plan for that team member to pass on their knowledge and skills, thus reducing the risks of a crisis. While you can't eliminate all your risk factors, focus on the risks that are most pressing or most preventable. Now let's move on to a crucial step for preparation. The next step is to develop a crisis response plan. A crisis response plan details procedural guidelines for managing information, activities, operations, and communications during a crisis. Some of the key questions your crisis response plan should cover include how will you determine what's considered a crisis, what's your plan for controlling information and communicating the crisis to the public, what are the different roles of your crisis team members, and what are the resources and key contacts for dealing with a crisis. While you can't possibly plan everything that needs to happen for a crisis in advance, any legwork that you do now will save you valuable time and potential harm later. Finally, set up regular intervals to review, practice, and refine your crisis response plan. Conduct training sessions, practice drill or mock exercises, and try to find holes in your crisis response plan. Make updates when you discover areas that could be improved or clarified. It's easy to procrastinate or underestimate the urgency of crisis prevention and preparation. You may tell yourself, I'll deal with that if the time comes. But this reactive approach is perhaps the greatest threat of all. It leaves your team, your company, and the public vulnerable to serious harm and damage. Adopt a proactive approach to crisis management instead, by forming a crisis team, understanding and reducing your risks, developing a response plan, and practicing it annually. Dealing with a business crisis can be chaotic, stressful, and downright painful. For example, how do you handle a major product defect? What do you say to the customers who are rightly angry, upset, or distrustful of your brand? What do you do to make things right and keep your doors open? While the answers to these questions will vary depending on the type and cause of the crisis, here are some basic guidelines that you should follow. First, you need to start by simply recognizing that you're in a crisis. That means you need to detect the early warning signs of a crisis and alert the right people. Recognizing a crisis is an essential step for activating your company's crisis response mode. Next, take a deep breath and a step back to try and understand the problem. What do you know? What's the impact? And what is the scope of the crisis? Don't speculate or make assumptions about the situation. Do your research or seek further information to understand and list the facts. So far, you know there's a problem, you've activated your crisis response team, and you understand the facts. Now it's time to make some moves. Aim to communicate quickly. Issue a public statement as soon as you can, ideally within an hour or two after you realize that there's a crisis. You need to get ahead of public communications and take control of the narrative that's being told about the event and your company. Otherwise, someone else will. As a general rule of thumb, be quick, be honest, and be accurate. Do not give information that isn't confirmed. If you don't have all the facts yet, simply say that you don't have all the facts yet. Give regular updates across multiple communication and social media channels. Finally, a crisis requires businesses to take swift and effective action. Your first priority must be to protect people. Are people in danger? And what can you do to protect public and employee safety? After public safety is secure, you can tackle other priorities, including your business, facilities, technology, and reputation. Get your crisis team together to assess the current damage and lingering threats. Then decide what steps you can take to contain and prevent further damage. In summary, after a crisis hits, you need to recognize the crisis, understand the situation, communicate with the public, and take corrective action. Do share the facts. Take responsibility for the situation and address victims or customers directly. Always put public safety first. And be accessible for answering questions and addressing concerns. Don't speculate, lie, or distort the truth. Also, don't blame others or disappear in the aftermath of a crisis. Follow these guidelines to help you navigate a crisis effectively and minimize its overall impact. First of all, congratulations. You've survived a business crisis, and that's no small feat. But before you get too comfortable, remember that you're not out of the woods yet. There's still a lot of work to do. That's because no business comes out of the crisis 100% unscathed. Like a boulder that's been hurled into company waters, a crisis can create a ripple effect of damages on your company's finances, customers, reputation, operations, or staff. Recovery takes time and effort, and here you'll learn how to best focus those efforts. But first, let's start with the basic definition and goals of crisis recovery. Recovery is the process of returning to normal business operations and rebuilding or recovering what was lost due to a crisis. It's the aftermath of a crisis, when you clean up the mess. There are five activities that your recovery process must entail to be effective. The first one is to take care of the victims. Follow up with the people who were hurt or harmed by the crisis by making sure they are out of danger. Be ready to connect them with counseling or support services and offer appropriate compensation for damages caused by the company. Ask yourself, what's the right thing to do in this situation? Then do it. A genuine and generous approach to compensating victims will help to restore your reputation. It's also essential to continue internal and external communications. Provide all of the information that you said you would during the crisis. Maintain external communications and give updates about what your company is doing to take corrective action. Also, don't forget to develop an internal communications plan to talk about the crisis with employees. Don't minimize the incident's impact. Instead, listen to employees' concerns and include them in conversations about how to make impactful changes in workplace policies or practices. The third critical activity is to develop a strategy to repair your reputation. Negative press, social media, stories, and other forms of publicity can linger in online search engines well after the crisis is over. Your team needs to develop a strategy to counteract the negative content, generate positive or valuable content that's associated with your brand, and rebuild your reputation. Fourth is conducting a post-incident review or PIR. A PIR evaluates the factors that contributed to a crisis, what actions your team took to respond to the crisis, and the strengths and weaknesses of your response. In other words, it gives you clarity about what happened, why it happened, how your company responded, and how you can improve. Gather the members of your crisis response team to identify strengths and weaknesses in areas such as crisis prevention and preparation, detection and notification, assessment and mobilization, and internal and external communications. Finally, you must learn from past mistakes and take corrective action. Use your PIR to help you brainstorm improvements to make in areas like prevention, early warning systems, staffing, insurance coverage, quality control, finances, security, and others. Approach the recovery phase as an opportunity to learn, re-evaluate, and grow. Crisis recovery isn't about dwelling on the past. It's about following up with the public, following through with promises, making things right, repairing damages, and creating lasting, impactful changes. Only then can you expect your company to truly move forward and rise above a crisis.