Corporate Management of a Major Crisis

The way a company manages a major crisis can literally spell the difference between life and death — both for the immediate victims of the crisis and for the company itself. Over the past two decades, several major crises have had severe environmental, health, and safety consequences, as well as drastic implications for the companies involved. 

What distinguishes a major crisis? First, in terms of its physical effects, it either threatens to or actually does severely affect people, property, and/or the environment. Effects might include multiple deaths, disabling injuries, epidemics, or widespread destruction or contamination. Second, in terms of its impact on the corporation, a major crisis threatens material loss of control over the context in which the corporation operates. The events of a major crisis transcend an individual plant or facility and may endanger a company’s reputation, a specific product line, an entire manufacturing operation, or even a company’s survival. Operationally, a crisis demands fast decision making, often on the basis of incomplete information.

In summary, then, a major crisis is an event which causes the corporation to lose the balanced relationship it had enjoyed with its constituents, such as directly effected parties, employees, neighbors, financial institutions, insurers, industry groups, media, politicians, etc. Effective crisis management, then, is the systematic recovery of the lost balance. This paper addresses an approach to effective crisis management.

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