From crisis prone to crisis prepared: a framework for crisis management

Abstract

Executive Overview For the first time in history, human-induced crises have the potential to rival natural disasters in both scope and magnitude. The financial costs of some crises have exceeded one billion dollars; the devastation wrought by these crises has included loss of hundreds of human lives as well as immeasurable damage to future generations and to the environment. For instance, major crises such as Chernobyl and Exxon Valdez, as well as the oil spills and fires during the Gulf war, affected large regions of the globe. Previously, such effects could only have been wrought by natural disasters. This article seeks to explain how organizations may actually contribute to their own crises, as well as what can be done to avert human-induced disasters, and to manage those that still occur. A framework is provided for executives interested in improving their organizations' crisis preparedness. First, we consider how to determine those crises for which a company should prepare. Next, the phases of a crisis are described followed by a description of the organizational systems which affect and are affected by it. Stakeholders' roles in the management of a crisis are discussed. The article concludes with implications for managers and executives interested in taking action.