5.7 Contingency Planning and Crisis Management
Difference between crisis management and contingency planning
• the aim of crisis management is to return to normal business operations as swiftly as Crisis Management:
possible, this can be achieved by using a contingency plan
• crisis management focuses on communication, transparency, speed and control of the • crisis management - concerns the steps a company can take to
situations limit the damage caused by an unpredicted event or crisis
• A contingency plan is the means of acting in a situation when something has not gone to • the aim of crisis management is to return to normal business
plan operations as swiftly as possible
• crisis management will vary according to situations
• Effective crisis management depends upon communication,
transparency, speed and control.
Contingency Planning • Communication
• effective communication with both external and internal
• contingency plan - outlines the immediate actions a company should take in the event stakeholders is essential at times of crisis
of a crisis • internal one-way communication with employees ensure that
• contingency plans ensure the aftermath is less chaotic once a major incident has everyone understands the problem, the plan, and their
occurred responsibilities
• with a detailed contingency plan, people know what to do, where to go, and where to • After this, two-way communication may be necessary to listen to
seek help if they need it the viewpoints of workers who can help managers fully understand
• Advantages of contingency planning: the problem, find potential solutions, and increase motivation
• cost and time • External communication can earn goodwill at a time when it is
• a detailed plan should aid swift decision making needed most
• rapid implementation of decision should be possible • deciding not to communicate with external parties such as
• the business should be able to return to normal quickly and minimise losses suppliers is risky as it can damage trust
• minimises chance of managers making costly mistakes in a high pressure • Transparency
environment • transparency and full disclosure of the gravity of the situation is
• Risk and Safety advisable, this is because people will be sympathetic and willing to
• keep everyone as safe as possible give the benefit of the doubt
• minimise the risk of potential accidents or loss of life • Speed
• specific contingency plans will be in place for specific situations • rapid decision making and effective implementation of those
• Disadvantages of contingency planning: decision will help return to normal business operations as soon as
• costs and time possible
• plans need to be reviewed and updated regularly which has an opportunity cost in • the use of a contingency plan can help
terms of time and resources • Control
• contingency plans take a lot of time to write up for specific situations • autocratic leadership might be most effective
• the cost of contingency may be too much for small firms so their plans are less • autocratic leaders make quick decision and ensure that actions are
effective carried out which can lead to an effective response
• some firms may allocate resources elsewhere rather than to contingency planning • People may be motivated by strong, decisive leadership in times of
• Risks and safety crisis
• a contingency plan must take into account that in the real situation panic and
confusion may set in, which makes contingency planning unpredictable in reality
Difference between crisis management and contingency planning
• the aim of crisis management is to return to normal business operations as swiftly as Crisis Management:
possible, this can be achieved by using a contingency plan
• crisis management focuses on communication, transparency, speed and control of the • crisis management - concerns the steps a company can take to
situations limit the damage caused by an unpredicted event or crisis
• A contingency plan is the means of acting in a situation when something has not gone to • the aim of crisis management is to return to normal business
plan operations as swiftly as possible
• crisis management will vary according to situations
• Effective crisis management depends upon communication,
transparency, speed and control.
Contingency Planning • Communication
• effective communication with both external and internal
• contingency plan - outlines the immediate actions a company should take in the event stakeholders is essential at times of crisis
of a crisis • internal one-way communication with employees ensure that
• contingency plans ensure the aftermath is less chaotic once a major incident has everyone understands the problem, the plan, and their
occurred responsibilities
• with a detailed contingency plan, people know what to do, where to go, and where to • After this, two-way communication may be necessary to listen to
seek help if they need it the viewpoints of workers who can help managers fully understand
• Advantages of contingency planning: the problem, find potential solutions, and increase motivation
• cost and time • External communication can earn goodwill at a time when it is
• a detailed plan should aid swift decision making needed most
• rapid implementation of decision should be possible • deciding not to communicate with external parties such as
• the business should be able to return to normal quickly and minimise losses suppliers is risky as it can damage trust
• minimises chance of managers making costly mistakes in a high pressure • Transparency
environment • transparency and full disclosure of the gravity of the situation is
• Risk and Safety advisable, this is because people will be sympathetic and willing to
• keep everyone as safe as possible give the benefit of the doubt
• minimise the risk of potential accidents or loss of life • Speed
• specific contingency plans will be in place for specific situations • rapid decision making and effective implementation of those
• Disadvantages of contingency planning: decision will help return to normal business operations as soon as
• costs and time possible
• plans need to be reviewed and updated regularly which has an opportunity cost in • the use of a contingency plan can help
terms of time and resources • Control
• contingency plans take a lot of time to write up for specific situations • autocratic leadership might be most effective
• the cost of contingency may be too much for small firms so their plans are less • autocratic leaders make quick decision and ensure that actions are
effective carried out which can lead to an effective response
• some firms may allocate resources elsewhere rather than to contingency planning • People may be motivated by strong, decisive leadership in times of
• Risks and safety crisis
• a contingency plan must take into account that in the real situation panic and
confusion may set in, which makes contingency planning unpredictable in reality
