Crisis Management For Corporate Leadership (Part 2)

In Part 1 of our article on crisis management in corporations, we looked at some of the catalysts that can precipitate a crisis. From some of the more obvious ones like a cyber security breach, human error, reputational damage to more specific causes like rapid asset devaluation or maybe a new regulatory bombshell. These events all have a tendency to spiral out of control and cause a cascading effect which can erode financial value and further exacerbate the problem.

Dealing effectively with crises, however, is what separates the good companies from ones which achieve greatness. By providing the right leadership and effective communication, and with a bit of preparation and pre-planning, management can come out of these crisis events stronger than before. Here are the key tools in the crisis management arsenal.

Planning and Structuring

Crisis planning is never really a fun thing. After all, you are thinking about worst-case scenarios which can potentially lead to financial losses, job cuts or worse. Furthermore, the probability of such events is also low. However, what matters for crisis planning is the severity of the events. In the event of such crises, even the best management teams can be paralysed into inaction because they are overwhelmed by the rapidity of crisis escalation and crippled by a lack of information flow.

Having a core team in place with the right expertise in each filed would be the first step towards crisis planning. The team must comprise of members form core business functions as well as support functions who have enough confidence in each other to work effectively during a crisis. In addition to this core team, a more specialised extended team might also be formulated which can assist the core team with the actual implementation.

Once the teams are in place, various scenarios can be played out and contingencies defined. For example, having a Business Continuity Plan in case of a core system failure and so on.


In times of crisis, the CEO usually leads the charge. Leadership in a crisis is not just about inspiring people but also about:

  • Defining the crisis and the risk that it poses
  • Effectively and quickly gathering accurate information
  • Relying on the right people
  • Managing the concerns of stakeholders
  • Providing clarity in terms of responsibilities and action items
  • Seeking outside assistance from specialised firms where appropriate

Managing all of these and other tasks in a rapidly deteriorating situation can become challenging for anyone and that is why pre-planning helps so much.

Information Gathering and Dissemination

Having effective two-way compunction with every stakeholder is important. One of the biggest concerns for CEO’s in times of crisis is that they might not be getting the full picture to make the right decision. Sometimes they might even be getting contradictory information because biases and personal opinions can have an impact on what the managers end up telling the leadership.

Similarly, it also important for the leadership to send the right messages to internal teams as well as external stakeholders like vendors, stockholders, regulators, etc. Not providing reliable information can lead to erosion of trust and further exacerbate the situation.

Crisis management is more of an art than an exact science. But pre-planning, structuring and a focus on effective communication can lead to remarkable results.

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Similar posts:

Do You Make These 6 Common Crisis Management Mistakes? (Part 1) The Top Ways to Succeed in Governance, Risk and ComplianceThe Best Risk Management Steps to Improve Process and Structure, How is Corporate Governance Preparing for the Future.


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