You never think that it will happen to your business, but crises do happen every year and can have severe implications which is why every business owner needs to be aware of what the main types of crisis are and how they should be managed so that they can reduce risk and know how to react.
Natural
Natural crisis like earthquakes, floods and hurricanes are obviously completely out of your own control and are serious threats in many parts of the world. For those in these areas, having an emergency plan in place is key. The pandemic is actually an example of a natural crisis and businesses have responded through implementing remote work.
Organisational
These situations arise when management has made decisions fully aware of the harmful consequences, such as misusing powers or exploiting customers. This comes down to individuals which is why it is so important to have a positive company culture and to make sure that people are the right fit when recruiting.
Financial
As the name suggests, a financial crisis occurs when a business is unable to afford to pay off its debts and loses its value in its assets. Moving money around, reducing costs or securing funding is helpful in the short-term but action such as layoffs or creating new revenue streams are usually used for the long-term.
Workplace Violence Workplace violence or confrontation crisis involve clashes between employees or sometimes staff making demands from management by using strikes. Taking legal action is obviously important when a law has been broken, but these situations can usually be avoided through communication and taking measures to make sure the staff are happy and feel supported in their role.
What Action to Take
As you can see, some of these crises are easier to prevent than others and some are completely out of your control. The key is to be aware of each threat, be pro-active in finding ways to stop them/manage them and to learn from any crisis that you have. It is also useful to speak to risk management lawyers that will able to provide specialist advice for your specific company.
In business, you always need to be prepared and this will include being prepared to face the above crises. It may seem unlikely, but the coronavirus pandemic has been the perfect example of how a crisis can happen and how businesses need to be able to react quickly if they are to manage in situations like this.
