How has globalization contributed to an increase in crisis events? How should companies decrease these risks in order to prevent a crisis from occurring within their organization?
The processes of globalization are concerned with the systems, sectors, countries etc. being connected, which can no doubt advance the development of the communities. However, according to the OECD (2011) this interconnectedness and interdependence lead to the global economy being more vulnerable to economic shocks and crises. Thus, local problems with the globalization become the global ones. One of the evident examples on how globalization contributed to the crisis events is the financial crisis, when the resilience of one financial system is highly dependent on others. In order to prevent the crisis the companies should take into consideration new systemic risks, ensure proper risk-management system and diversify the dependency on others (especially regarding the strategic resources).
Why should crisis management be part of an organization’s strategic planning process?
As the crisis management is a key element of the organisation’s resilience to disruption, being especially relevant when fast and effective responses are required, information is contradictory or limited, reputation is challenged etc. (Cockram & Van Den Heuvel, 2012), it should be embedded into the strategic planning process. Moreover, the proper estimation of the risks is to be considered while working out the corporate strategy, as disruptions may be extremely costly directly and indirectly for the company.
How can effective crisis communication aid in management of a crisis? How does social media impact a crisis?
Crisis is the event which challenges a company’s reputation or competency, impacting stakeholders within and outside of a company. Crisis communication is one of the techniques to mitigate this. Now companies have come to recognize crisis communications capabilities as a vital part of their risk management and business continuity strategies (Weiner, 2006) in order to leave stakeholders satisfied and with a favourable impression, and as a post-crisis reaction – to renew the confidence in a company. Social media increases the speed of information flow about the crisis, and could act as a tool of the crisis communication strategy, reaching different target groups and showing more “human approach”.
Define organizational learning within the context of crisis management. How can this learning take place within the four areas of the crisis management framework?
As Crandall and Spillan (2009) state the organizational learning involves activities of reflecting the lessons learned from the crisis, with the emphasis being paid on improving current operational problems and preventing the future ones. They put this stage as the final one within the framework of the crisis management. As after the crisis ends, the organization needs time to evaluate what has occurred.
What are the key elements that organizations must do in order to create a culture that supports ethical conduct and decision-making?
The main approach of dealing with that is to ensure the proper corporate governance system, where the corporate culture is a special concern. Diversity within the company could provoke the elaboration of the ethical conduct and decision-making. Another aspect lies at the organizational hierarchy, which should encourage ideas from the bottom.
Crandall, W., & Spillan, J. (2009). Crisis Management in the New Strategy Landscape. J. A. Parnell (Ed.). SAGE.
Cockram, D., & Van Den Heuvel, C. (2012). CRISIS MANAGEMENT – What is it and how is it delivered? Retrieved from http://www.bcifiles.com/CrisisManagementMarch2012.pdf
Weiner, D. (2006). CRISIS COMMUNICATIONS: MANAGING CORPORATE REPUTATION IN THE COURT OF PUBLIC OPINION. Ivey Business Journal. Retrieved from http://iveybusinessjournal.com/topics/the-workplace/crisis-communications-managing-corporate-reputation-in-the-court-of-public-opinion#.Upni1dJdXuo
OECD Reviews of Risk Management Policies. Future Global Shocks. (2011). OECDpublishing. Retrieved from http://www.oecd.org/governance/48256382.pdf