Doing business in a crisis
If your business were to encounter a crisis that threatened its future right now, how would you respond? Would you be struck with panic, or calmly carry out a well-formulated plan to minimise the impact and recover from the events? If your answer is the former, it may be time to revisit your approach to crisis management.
Whatever shape and size they come in, all businesses will face threats and disruption at one point or another. The key to longevity is knowing what to in a crisis, and have the right plans and business insurance in place to deal with it.
In today's volatile and fast-moving business world, external crises are becoming an increasingly common threat.
The growing risk of external crises
Businesses must contend with a variety of risks at all times, stemming from sources that are both within their control and outside of it. According to Carlos Ghosn, the CEO of Nissan, crises can be separated into two distinct groups.
"There are two kinds of crises: first there are internal crises that arise because a company has not been managed well, and then there are external crises," he said in an interview with McKinsey and Company. "I think we need to be more prepared for external crises, where it's not the strategy of the company that is in question, it's the ability of leaders to figure out how to adapt that strategy."
External crises include events such as natural disasters, crime, market shifts and economic downturn, and can result in serious disruption to a business. Mr Ghosn says that with external crises becoming increasingly common threats, it's essential for organisations to be prepared for the unexpected.
"We are going to have a lot more of these external crises because we are living in such a volatile world – an age when everything is leveraged and technology moves fast. You can be rocked by something that originated completely outside your area," he explained.
Tips for effective crisis management
So how can you ensure your business is able to thrive in spite of a crisis? This resilience is built though a number of factors. For instance, online magazine The One Brief states that crises often happen because companies haven't properly analysed and planned for risk, and also fail to respond appropriately to negative events.
Consequently, developing a careful risk management plan ahead of time is vital. This also means getting thorough insurance not just for typical areas such as professional indemnity, fire and perils and buildings, but business interruption cover as well. In addition, it's important that you understand what to do when a crisis strikes, which includes taking steps to minimise further damage and contacting your broker to make an insurance claim.