5.7. Crisis Management and Contingency Planning (HL only)

  • Contingency/crisis planning
    • Proactive to changes in the business environment
    • Developing plans before crisis to reduce its risks and impacts
    • Involves a crisis plan (e.g. in case of fire)
      • Details roles and responsibilities, procedure, etc.
      • Has to be regularly updated and tested
      • e.g. Xavier emergency drills
    • More quantifiable crisis = better contingency plan
    • Advantages
      • Reduces risk since what-ifs are accounted for
      • Reduces impact of crisis or disaster
      • Reassures staff; satisfies safety need (Maslow)
      • Enhances motivation, communication, and productivity
    • Disadvantages
      • Uses up time and resources; costs
      • Crisis may not happen
      • Plans can be based on inaccurate or dated data
      • Cannot totally prevent disasters/external shocks are inevitable
  • Crisis management/disaster recovery
    • Reactive to events
    • Formulating the best response to a crisis to minimize impact
    • Important to act fast, communicate effectively, and maintain control
    • Favors radical measures and autocratic leadership
    • Focus on public relations to restore image and stakeholder confidence
    • Benefits of open and immediate crisis mgmt.:
      • CSR – honest business
      • Minimize negative reactions
      • Reduce personal liability (compliance to legislation)
      • Handles staff concerns and anxieties
      • Minimize financial loss


Kim De Leon5.7. Crisis Management and Contingency Planning (HL only)

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