Managing Crises

I have been reading Ian I Mirtroff and Gus Anagos on managing crisis which is a worthwhile reading in this current Economic crisis. I have captured some salient points which I am storing for memory.

What Is a Major Crisis?

It’s not possible to give a precise and general definition

of a crisis, just as it’s not possible to predict

with exact certainty when a crisis will occur, how it

will occur and why.

We can, however, propose a guiding definition of a

major crisis. First, a major crisis affects, or has the

potential to affect the whole of an organization. If it is

an event that will affect only a small, isolated part of

the organization, it may not be a major crisis.

A major crisis will also exact a major toll on human

lives, property, financial earnings and the reputation

and/or general health and well-being of the organization.

Often these effects occur simultaneously. As a

result, a major crisis cannot be completely contained

within the organization’s boundaries.

And some major crises, such as the one suffered

by Barron’s Bank several years ago, will actually

destroy the organization.

The Systemic Nature

of Crisis Management

A complex system involves a number of intertwined

parts working together. The separate parts of the system

cannot exist nor function in isolation from one

another. For instance, you can’t remove the heart or

lungs from a human body and have the human body

survive. Also, because systems are so tightly interconnected,

one event in one part of the system can

have system-wide effects.

These characteristics of complex systems are

reflected in modern society. We are much more interconnected

than before. The impact of one event in our

society will have much wider implications than in the

past.

For example, 60 years ago, the impact of humancaused

crises, such as a mine disaster or an explosion,

would have been limited to one particular community

or region. Today, crises can impact vast areas

of the globe in little time. A rogue trader in the Far

East, as was recently shown, can bring down one of

the oldest blue-chip banks in the world. Or a nuclear

disaster such as Chernobyl can threaten the health of

people on two continents.

As a result, crisis management must always include

the big picture. For example, ask yourself: “How can I

temper how a crisis in one area of the company will

impact the entire company?” “How can I prevent one

crisis from causing another crisis or a chain of

crises?”

The systemic nature of crisis management also

means that it must be integrated with other important

organizational programs in your company, such as

quality assurance, strategic planning, environmentalism

or issues management. Crisis management

should never be viewed as another separate, standalone

program.

Risk Analysis vs.

Crisis Management

Author Ian Mitroff strongly counsels against traditional

risk analysis for companies. The reason: Risk

analysis mainly selects crises with which the company

or the company’s industry is familiar. One of the

fundamental steps for traditional risk analysis is to

construct models of the probability of occurrence of

past crises. These models will give a higher ranking

to certain types of crises based on how likely they are

to occur. Conversely, the models give low rankings to

crises that are least likely to occur.

However, it is precisely those crises that have never

occurred before that must be anticipated. Yet, using

traditional risk analyses, companies will not prepare

for a crisis until it happens — at which point, of

course, the unprepared company can be significantly

damaged

. Four Types of Signals

Signals can be differentiated along two dimensions.

The first dimension relates to the source of the signal.

In this dimension, signals can either originate from

inside or outside the organization.

The second relates to the kind of signal. Signals

can be either technical (recorded by remote sensing

devices), or noticed by people.

If you put these two dimensions together, you have

four types of signals that apply to every company:

1. Internal technical signals, such as monitoring

devices for hazardous operations.

2. Internal people signals, for example, people

working in a plant.

3. External technical signals, such as monitoring

of plant emissions carried out by environmental

activist groups.

4. External people signals, including members of

surrounding communities who may literally “smell”

that something is wrong.

Needed: One Champion

For an organization to successfully instill a crisis

management program, it must find an organizational

champion to lead the way. This champion should be

a leader who has championed other system-wide

programs. He or she must be able to see the big picture

and make the connections between the various

parts of the organization. The champion also needs

to understand and be able to explain to top executives

how a major crisis will derail the major business

objectives of the company.

Crisis Management: An

Exercise in Creative Thinking

Crisis management requires individuals and companies

to think about the unthinkable. It is, in other words,

an exercise in creative thinking. Creative thinking is

especially important in preventing a crisis from escalating

into a worse situation..

My NLP training refers me to the ‘what if” frame….