Today’s businesses face innumerable exposures. Cyber attacks, natural disasters, data breaches, publicized issues regarding employment practices and other organizational crises are not only common, they can permanently damage a company.
In fact, if handled incorrectly, a crisis can potentially harm people and property, damage your reputation, interrupt business operations, affect profitability or even devalue your organization as a whole. To prepare for and respond to a crisis, organizations need to create a crisis management plan that outlines the policies and procedures your business will follow when emergency situations arise.
When creating a crisis management plan, consider the following best practices:
- Perform a risk assessment—When creating a plan, it’s important to assess risks specific to your business. During your risk assessment, work with your organization’s leadership team and other key stakeholders to identify potential threats and vulnerabilities. Such threats can include public relations issues or product recalls.
- Determine the business impact of common risks—After you’ve performed a risk assessment, it’s important to understand how any threats could impact your business. To accomplish this, consider conducting a business impact analysis (BIA). BIAs can help you identify the operational and financial impact of a crisis, whether it be lost sales, increased expenses or regulatory fines. By predicating the consequences of a threat, your businesses will be able to focus its recovery efforts more effectively.
- Identify potential responses—Once you’ve identified your business’s unique risks and their potential impact, you can then evaluate how you will respond to each threat. When planning your responses to individual crises, think critically about the resources you will need to resolve each issue. For example, responding to a product recall may require a response team, a recall plan, an internal product recall team and legal counsel.
These initial steps are critical as you build your own crisis management plan and must be well documented to promote employee training and education. Also, review crisis management plans on a regular basis to account for any organizational changes or new threats.
In addition to having a plan in place, the right insurance policy can help mitigate the damage of a crisis. Contact ProAction Insurance today to learn which insurance policy will suit your business needs.