Crisis Management Plan

Crisis Management Plan: Why You Need It & How to Create One

69% of leaders have experienced at least one crisis in the past five years. The average number among them is actually three crises during that period.

And yet, until crisis strikes, many companies are hesitant about allocating the necessary resources and time for developing a comprehensive and relevant crisis management plan.

And that can have disastrous consequences.

Without an effective crisis management plan, businesses can sustain much bigger losses than they would otherwise, prolonging the recovery time and wasting precious time that could be used to execute a prepared action plan. 

But what is a crisis management plan, anyway? How can you create one for your company? And do you really need it?

Let’s explore these and other important questions below. 

What is a Crisis and Why Plan for One? 

In business terms, a crisis is an event or a series of events that cause significant disruption to operations, finances, or other integral aspects of running a company.

Because a crisis usually comes unexpectedly and with a lot of urgency, it requires a business to make decisions quickly. But at the same time, those decisions have to be carefully considered and based on minimizing the situation’s risks.

As you can see, that’s a scenario that has poor outcomes built-in if you don’t have some plan for dealing with it.

Sure, it’s impossible to predict the future or know what will go wrong, but having any sort of plan that estimates the more likely crises can be a huge game-changer that can even determine whether the company survives or not.

Because of that, planning for a crisis is not something that’s good to have when there’s enough time and resources; it’s something that has to be dealt with right now because tomorrow might already be too late. 

In my program, Managing Happiness, you can join a group of like minded peers that can help you learn to see the bigger picture in your business and how to deal with complex and stressful situations in the best way possible. 

By learning to think clearly during difficult situations, and developing habits of a time-efficient entrepreneur that will give you the time to think long-term, you’ll become a much better leader that not only deals with crises as they happen but prepares for them in advance. 

After all, the effort you put into developing an effective way to deal with a crisis is not just about being cautious. It’s about ensuring that the good run you’re enjoying now won’t be nullified by an unforeseen event and that your company will be covered no matter what. 

Crisis Stages

When looking for a way to mitigate risks related to crises, you must first understand the stages that a crisis typically goes through. This way, you can adjust your crisis management plan to shorten the most damaging stages or avoid them altogether.

Let’s explore the four stages below.


First, you have the pre-crisis stage, which is when the crisis hasn’t actually happened yet, but the events that are going to set it off are already in motion.

The problem with the pre-crisis stage is that although the signs are usually there, spotting the crisis early is a challenging task. Many companies only discover the signs of the problem when evaluating it after it has already finished.

However, if you can establish a crisis management plan, you can also consider the pre-crisis scenarios and set a process for monitoring whether those signs start appearing.


Next comes the crisis itself, which is a time when it starts impacting your business. Even companies without a crisis management plan usually notice the problem at this point, but they are usually too late to take any meaningful steps to manage it.

Meanwhile, if you have a plan in place, this is the time when you would execute it and try to make the best decisions for minimizing the damage. When you have a plan, you can get ahead of the situation and ensure that once the crisis reaches its peak, you will at least be in the best position possible given the circumstances.

The Peak

At some point, the crisis will reach its peak, and its effects and sheer scope will become evident. It’s also the time when companies will usually start seeing the real impact that the crisis had on their operations and whether the strategy they employed worked.

If you have a crisis management plan, this can be the moment when you can breathe a sigh of relief. Since you were prepared, you know the damage could have been much worse, and you lived through the situation with a process that will help you make a faster recovery.


Finally, once the crisis is over, your goal is to return to normal operations and recover the losses as soon as possible.

A comprehensive crisis management plan allows you to minimize the damage and will help you recover faster, which can provide a massive advantage if the competition was also affected but weren’t prepared as well.

Ideally, you want to spend as little time in the crisis mode and have as much time for preparations (pre-crisis) and recovery (post-crisis) as possible.

In other words, if you can spot the crisis early and prepare for it, you will probably deal with it quicker, suffer fewer losses, and can come out on the other side ready to tackle the opportunities that arise from the situation.

How to Create a Crisis Management Plan: Step-by-Step

How to Create a Crisis Management Plan

Now that we’ve looked at the stages that a typical crisis goes through, we need to figure out how to develop a plan that helps you prepare for them.

And the good news is that developing a crisis management plan can be broken down into actionable steps, each building on the previous one to help you make the right choices for your company.

Identify the Biggest Risks

Crises can come in many different forms. Depending on the type of company you operate, its size, and the overall market, the risks will significantly differ. 

Because of that, you can’t use cookie-cutter approaches when developing a good crisis management plan as well. Instead, you must look within your company and identify what the unique crisis risks might be in your situation.

For instance, if a lot of your day-to-day operations involve digital technology, security from cyberattacks might be one of the top crisis risks you’d consider.

Since most companies rely on a good public image for maintaining profits and company stability, you need to prepare for a scenario where public relations efforts go wrong, creating a snowball effect and severely damaging your company’s reputation.

Whatever the biggest crises might be for your company, you need to identify those risks and lay out how they could occur. That way, you can start preparing a crisis management plan for dealing with them and learn to spot the signs of when they are more likely to happen.

Think of the Right Contingency

Crisis management is about having an effective approach to dealing with various situations that could negatively affect your business.

So, once you have a list of the most likely and/or most damaging risks that your company could face, you need to figure out the specific actions you will need to take in case those scenarios do occur. 

And that doesn’t just mean coming up with a plan. 

It also means putting the right resources in place for those actions to be possible once they become necessary. When you’re in the middle of a crisis, you won’t have time to figure out which people you need to work on the solution, what they need to have, and creating your response from scratch.

For instance, you could use a customer support outsourcing service to deal with an onslaught of requests when your customers are frustrated about an issue. This can help reduce the negative reactions and help you earn the trust of your customers in the future. 

Build Out the Action Plans

You will need to build a plan for each crisis you might encounter. And that means laying out the exact steps you would take when something goes wrong.

Remember, when a crisis comes, every minute or hour you waste will only deepen the problem. Meanwhile, if you can react quickly, that can change the tide and help you minimize the losses.

Since different types of crises can concern various areas of your business, it’s essential to consult with the departments or team members that are more familiar with the matter.

That way, you can think about the intricate details that must be part of any good crisis management plan. Things like compliance requirements, press release drafts, resource allocation, and anything else that might be relevant. 

Regularly Update the Plan

A good crisis management plan is only as effective as it is relevant. And even if you develop a comprehensive plan that considers the various challenges that might arise, it will become much less relevant as time passes, since new variables and changing conditions will make it obsolete sooner or later.

The only way to tackle that issue is to regularly come back to your crisis management plans and look for ways to update them. 

As you go through crises and see the issues from a new angle, you will get much better at recognizing how to handle them more effectively as well. And when the next crisis strikes, that’s really as much as you can hope for. 

Final Words

Crisis management is not an exciting thing to work on, especially when things are going well. But at the same time, it can be an indispensable resource when a crisis happens, and you need to find a solution quickly.

What do you think are the most critical aspects of putting together a crisis management plan? Share your experiences in the comments below!

I’m a serial entrepreneur and I write about things I have learned along the way. I’m passionate about helping entrepreneurs and executives to find success and harmony in business and in life.

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