There are plenty of definitions for a crisis. For this entry, the definition reflects key points found in the various discussions of what constitutes a crisis. A crisis is defined here as a significant threat to operations that can have negative consequences if not handled properly. In crisis management, the threat is the potential damage a crisis can inflict on an organization, its stakeholders, and an industry.
A crisis can create three related threats:
- public safety
- financial loss
- reputation loss
Some crises, such as industrial accidents and product harm, can result in injuries and even loss of lives. Crises can create financial loss by disrupting operations, creating a loss of market share/purchase intentions, or spawning lawsuits related to the crisis. As Dilenschneider (2000) noted in The Corporate Communications Bible, all crises threaten to tarnish an organization’s reputation. A crisis reflects poorly on an organization and will damage a reputation to some degree. Clearly these three threats are interrelated. Injuries or deaths will result in financial and reputation loss while reputations have a financial impact on organizations.
Effective crisis management handles the threats sequentially. The primary concern in a crisis has to be public safety. A failure to address public safety intensifies the damage from a crisis. Reputation and financial concerns are considered after public safety has been remedied. Ultimately, crisis management is designed to protect an organization and its stakeholders from threats and/or reduce the impact felt by threats
