The Business Owners Guide to Risk and Crisis Management


 

All businesses must invest in risk and crisis management, or their operations could suffer when something unexpected affects sales, reputation, or growth. A company could be ruined if the team isn’t ready to handle anything that comes their way, so it’s time to learn how to properly set up that department and train employees on best practices and protocols.

1. Have a Team to Respond to Crises

A risk and crisis management team is also known as a CMT. They are in charge of preparing the rest of the company for possible emergencies and scandals. This department will implement its protocols when an issue is detected and try to mitigate the event. Even a sea cargo service needs to have rules and training for this kind of situation.

A leader will create a team, each with their own responsibilities, which will be in charge once the crisis management stage is implemented. Larger companies have several subteams because they need to consider location or different kinds of products. Not every single one of those teams will be activated depending on the crisis. Remember the principle of divide and conquer. Interestingly, the people on these teams will have other positions in a business, such as HR manager, someone from legal, senior executives, PR reps, and more.

2. Ensure Legal Compliance

One of the main parts of risk and crisis management is dealing with possible legal consequences. Some businesses arrange their legal matters by filing for legitimacy and taxes. Yet, they forget what to do during a crisis, which comes with its own regulations and liabilities. No business owner wants to hire a criminal defense attorney. Therefore, the crisis management team or one of the leaders must understand the legal responsibilities.

It’s not just about avoiding trouble and going to court. You need to protect your organization from anything. While planning, investigate the legal risk involved in your industry and particular operations. Identify contractual obligations and go into a deep analysis of any found threat. For example, a team can thoroughly investigate a contract for crisis clauses.

However, this shouldn’t be done only when a crisis is happening. You need to avoid these issues in the first place. Legal reviews should be a regular part of your company’s policies. Laws can also change, so it’s imperative to check current contracts. Updating information will save you a ton of trouble later. Regulatory compliance is the key to staying in business.

3. Maintain Good Finances

Your company’s finances may be affected during risk and crisis management, but you can take several steps to prevent as much impact as possible. Analyze your financial statements, cash flow, balances, income, etc. Confirm the areas most affected to devise a contingency plan. For example, an AC unit service may face trouble if they get bad reviews from a viral video of one of their employees.

Your financial plan should try to keep cash flowing and reduce expenses because the scandal could result in fewer bookings. The rest of the team must devise a way to clear up anything and take measures like firing that employee to earn back the clients’ trust. If you can keep your budget going and cut everything unnecessary, you will probably survive this situation.

During a crisis, many organizations try to find different sources of income, such as asking for a line of credit or finding an investor. However, that can only happen if the management team has managed to mitigate all the negative consequences and create a promising plan for the future. Banks and investors will need to believe your organization will survive.

4. Secure Your Data

Another main risk and crisis management issue involves securing your company’s data. The team has to determine the threats and weaknesses of the business and change things. For example, will your data survive during a flood or fire? Can you get through a hacking situation with minimal losses? An initial assessment will help you understand where to place most of your resources.

A vented roof company must keep records of clients, payments, and employee salaries. What if that all disappears due to a data breach? Finding all that information without a contingency plan will take a long time. Therefore, keeping several backups of your data is always a good idea. They need to be updated frequently to keep up with changes.

Sometimes, it’s good to print important information as well, but it has to be kept in a safe place depending on how confidential it is. You don’t want anything getting into the wrong hands. During a crisis, you also need to secure your offices. Make sure no strangers can come in or take anything. Install security and alarm systems to prevent breaches.

5. Have a Public Relations Plan

You will need a public relations team for risk and crisis management because unexpected issues can hurt your organization’s image. How consumers perceive your corporation plays a huge role in its success. Your reputation needs to remain intact, so your PR team will have several responsibilities during a negative event. They should also be ready to work in an attorneys office to come up with the best statements to give to the public.

Anything that spoils your brand’s image and affects your workers’ safety or customers’ trust is considered a PR crisis. For example, connection issues with your website, anything that harms your employees, and social matters like racism or bullying accusations. According to Business Insider, some of the biggest companies in the world, like Amazon and Disney, have been sued for discrimination.

These companies continued despite the problems because they had great risk and crisis management teams. They acted quickly, released statements, checked the legalities, etc. They’re all still thriving today. Therefore, your PR team must be trained and ready for any possible issue. They first must gather information (the who, what, where, why, and when) to do that. They can decide afterward how to explain what happened to the public.

6. Invest in Quality Insurance

Most people don’t know businesses can have risk and crisis management coverage with the right insurance company. Consider paying for this protective policy because even a church window restoration company could face trouble. This coverage aims to mitigate the negative impact of an event or scandal on the organization’s reputation.

According to Investopedia, this insurance option is part of the technology errors and omissions and internet property and liability agreements. This means different parts of an insurance policy will protect the business depending on what happens. Unfortunately, small organizations tend to skip this option while they grow, but big corporations always get it, especially if their revenue is based solely on keeping their clients on board.

Still, it has become more necessary thanks to the internet and how easy it is to share information. This type of protection can cover all the services needed for proper crisis management, like assessment, impact analysis, and response. A company may have to hire outside help during this time, which can be part of the policy.

7. Prioritize Employee Satisfaction

A company must ensure employees are well during a risk and crisis management situation. Leaders must assure all teams that things will continue normally, even during the worst times. Otherwise, work will halt. Valued employees may start looking for other employment, and morale will decrease. Nowadays, even a tree maintenance company worker worries about another pandemic, cyberattacks, and horrible weather.

You need employees to remain engaged during a crisis, which can only happen when they’re reassured. They want to feel in the loop about possible issues, like layoffs. Therefore, a company needs to prepare everyone. Crisis training sessions are great ideas, both for leadership and workers. Team managers can create games and exercises to address concerns and engage with employees. Leave each training with a clear message for your workers so they feel better at the end of the day.

It’s essential to remain honest and open during the worst times. Companies can’t always tell their employees everything, but remaining transparent can help retain trust and prevent employees from rushing to interviews elsewhere. Excellent communication practices need to be implemented at this time. However, don’t sugar-coat or pretend everything is alright because the truth will always come out.

8. Keep Employees Well Trained

Even a concrete leveling company knows all employees must be well trained during a risk and crisis management situation. Your workers must be prepared for any situation, from internet data breaches to violent events and natural disasters. All emergencies need to be handled in certain ways and with clear heads, which can’t happen unless you’ve prepared the company beforehand.

Training will depend, however, on each employee’s role in the crisis management team. Regular employees should get training in evacuation and lock-down protocols. They should understand how to remain calm during any kind of crisis or if they need to shut down computers. Some workers have instructions to destroy certain documents during particular events.

People involved with the crisis management team need more training than anyone else to come up with all appropriate plans. They should be able to assess the risk, report it, and alert other necessary parties. If the emergency is a natural disaster, they must set off alarms, help evacuate, keep people moving, etc. For example, many are trained in handling fire extinguishers.

9. Have a Solid Communication Plan

No brand is safe from a crisis, and communication is a major issue. A septic repair company should also have a PR team and a good strategy. Aside from being open with employees, all businesses must be ready to address their customers’ concerns. A unique communication framework during risk and crisis management can make all the difference and should be part of your company’s plan.

You must inform all stakeholders of the issues, but be ready to tell them how you handle things. You can’t go to influential people with only problems. They will want solutions. Put a plan in place so that information can flow freely, but only what everyone needs to know. It should be an open channel with a solid message shared universally. This will maintain workers’ and clients’ safety and keep the brand’s image no matter what’s happening.

The best way to create a communication plan is to look at the situation before, during, and after. You may not know what could happen, but you could study the risks and weaknesses, compare them to what similar companies have faced, and plan. Secondly, you need to identify who and what’s involved during the crisis and create a hierarchy of information. Thirdly, prepare a statement. And finally, check public opinion.

10. Draw Out a Crisis Plan

Once you understand all the guidelines above, you need to create a risk and crisis management plan. You need to schedule the right time to come up with a plan. Many organizations put things off because it’s not a priority when there’s no emergency. Then, you need to identify all the threats to your business and determine how those weaknesses could impact your operations. Your team will have to create a response for different scenarios.

You may need to hire outside help, like a defense attorney, to work with your team during this time. Your stakeholders should also be trained and ready to face a crisis. Any knowledge gaps can make an impact. Your plan should include how to recover from the emergency. You can’t focus solely on the issue. People want solutions immediately.

Finally, you should be ready to revise, update, and adapt all these steps. Your plan can change, especially if you discover that the original protocol doesn’t work. That’s why it’s imperative to think of every single issue that could happen, from accusations to building fires. Review the strategy with the assigned team members every few months and check that everything still looks good. It’s also wise to keep up with business news to see what other corporations do during a negative event.

Now that you understand everything needed to create a team or department for risk and crisis management, it’s time to start implementing this guide. Don’t take this matter for granted because it could save your business from bankruptcy and legal issues. Start planning and training today.