A crisis is any event, or series of events, that threatens a severe negative impact to an organization’s financial results, brand, reputation, or relations with employees, customers, or suppliers. Research has shown that, on average, a company can expect to face a crisis every four to five years.

Today, crises may strike from more directions and do more damage, more quickly than ever before. Month after month, leading corporations have been jolted by sudden misfortunes — bringing home to other organizations the scale and unpredictability of the threats that they must confront. Crises can be caused by external events, such as hurricanes, infrastructure disruptions, and terrorism. Frequently, a company crisis is generated by internal events – a reorganization gone awry, accounting irregularities, racial discrimination, or even a rogue trader. Interactions between internal and external forces can also lead to a crisis. Product recalls, information technology security breaches, workplace violence, and environmental damage are all common triggers of a crisis.

What Will You Say When They Ask What Happened?
Wherever it originates, a crisis will consume significant senior management time, and demand rapid and coordinated responses. As organizations begin to embrace the notion that crisis management is a defining test of corporate leadership; executives should be dealing with questions such as:

• How vulnerable to a crisis is our organization?
• How comprehensive is our crisis management plan? Is it integrated across multiple disciplines and across the entire organization?
• When was the last time we tested our crisis management plan? Have there been significant changes in our organization that requires major changes to our plan?
• Is our senior leadership team a vital component of our crisis management plan with clearly defined roles and responsibilities?
• Would our crisis management plan stand up against industry best practices?