Crisis Management

Presented by :Nupur Bhardwaj

Crisis

Crisis is any event that is expected to lead to, an unstable and dangerous situation affecting an individual, group, community or whole society.

It is a situation that is unpredictable, but it is not unexpected.

Common features of Crisis

The situation materialises unexpectedly. Decisions are required urgently. Time is short. Urgent demands for information are received. There is sense of loss of control. Pressures build over time. Routine business become increasingly difficult. Reputation suffers.

Types of Crisis

Financial Crisis Technological Crisis Crisis of Malevolence Natural Crisis Crisis of Deception Workplace Violence

Financial Crisis These are the crisis that occur in an organization due to its

prevailing financial conditions.

Losses, increase in costs, non-availability of funds, bankruptcy, unable to pay back loans, etc.

Examples of Financial Crisis

Kingfisher Airlines, recently faced a financial crisis.

Deutsche Bank faced a financial crisis in USA, in 2009.

Technological Crisis

Technological crisis are caused by human application of science and technology. This occurs when technology becomes complex and the system breaks down.

Software failures, Industrial accidents etc.

Examples of Technological Crisis

Exxon Valdez, oil spill in Alaska, on March 24,1989.

Union Carbide India Ltd, gas leak in Bhopal, on December 2, 1984.

Crisis of Malevolence When opponents or miscreant individuals use extreme

tactics for the purpose of expressing anger or seeking gain from, a company or economic system, perhaps with the aim of destroying it.

Product tampering, kidnapping, malicious rumors, terrorism etc.

Example of Malevolence Crisis

The Tylenol (Extra-Strength capsules) murder case in Chicago, on 29 September, 1982.

Natural Crisis

Natural crisis, are natural disasters considered as 'acts of God,' are such environmental phenomena.

Earthquakes, volcanic eruptions, tornadoes and hurricanes, floods, landslides, tsunamis, storms, and droughts etc.

Examples of Natural Crisis

The Power Project of Jaiprakash Associates, at Nathpa, in Himachal Pradesh was devastated by floods.

The Indian Ocean earthquake (Tsunami) , in 2004.

Crisis of Deception

Crisis of deception occur when management conceals or misrepresents information about itself and its products in its dealing with consumers and others.

Example of Crisis of Deception

Dow Corning’s silicone-gel controversy in Michigan, USA.

The Satyam scam, which came into light, in 2009

Workplace Violence and Rumors Crisis occur when an employee(s) or former employee(s)

commits an act of violence against other employees on organizational grounds.

Rumors are, when false information about an organization or its products creates crises hurting it’s reputation.

Example of Workplace Violence and Rumors

A workplace violence had occurred between the laborers and higher authority, in Vardhman Group of Companies.

Procter & Gamble’s Logo controversy in 1985.

Crisis Management

Crisis management is the process by which an organization deals with a major event that threatens to harm the organization, its stakeholders, or the general public.

Crisis Management Plan

Gather facts. Be prepared. Communicate quickly and accurately

conduct brainstorming. Develop policies to minimize crisis. Assemble and organize resources. Create a Crisis Management Team.

Example of Unsuccessful Crisis Management

Union Carbide India Ltd, gas leak tragedy in Bhopal, on December 2, 1984.

It occurred on the night of December 2–3, 1984 at the Union Carbide India Ltd, pesticide plant in Bhopal, Madhya Pradesh.

A leak of methyl isocyanate gas and other chemicals from the plant resulted in the exposure of hundreds of thousands of people.

Estimates vary on the death toll. The official immediate death toll was 2,259 and the government of Madhya Pradesh.

Example of Successful Crisis Management

The Pepsi Corporation faced a crisis in 1993, which was successfully managed by the company.

In 1993, claims of syringes being found in cans of diet Pepsi were made.

Company urged stores not to remove the product from shelves while it had the cans and the situation investigated.

Pepsi released videos and made public, showing the production process to demonstrate that such tampering was impossible within their factories.

Crisis was managed through effective communication.