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Sample Coursework 5

MIT 398: Crisis Communication

Midterm Assignment

Feb 21, 2021

  1. The Mitigation Process

“The best way to manage a crisis is to prevent one” -Timothy Coombs

A crisis is any form of situation that is very sudden causing a disruption in a work environment affecting stakeholders or the organization in general. This unexpected situation can be major or minor depending on the impact it can cause on the company and its components. The process of dealing with this crisis and trying to solve it is what we call crisis management. This might or might not be successful depending on how impactful it is but trying to resolve the issue before it even happens is a very important thing to keep in mind. This is because when a crisis happens in an organization, there is a chance that the crisis can lead to major damage resulting in lawsuits and bankruptcy. Now if the company used preventative measures to reduce the chance of occurrence of the situations, it will change everything and the company would not have to suffer.

When Timothy Coombs said “The best way to manage a crisis is to prevent one”, he is referring to an organizational crisis preventative method that can mitigate the chance of an organization being affected majorly by sudden events. This includes doing research and finding potential problems in relation to the company and stakeholders, then solving them before they become a crisis for the company. This is referred to as a crisis sensing mechanism, which in other words is searching for information about potential risk and then analyzing it to see if it can happen to the organization and if it does, what can be done to prevent it. This process involves researching risks from inside and outside the company and identifying them, and after that seeing which one will cause the highest damage and lowest damage. This helps the company see what they are dealing with, in terms of the occurrence and also the magnitude. If a potentially high risk is identified and it would mean the company would lose its money if it happened, then immediate action will prevent or reduce the damage.

  1. A Stakeholder Approach to Risk Management

The word risk refers to the probability of the occurrence of a certain unexpected situation or event. In other words, it refers to potential threats to the organization and/or stakeholders. What makes it different from an issue is the fact that it refers to things that may or may not happen while the issue is for the past(things that happened). In relation to this, we have Risk management, which is all about the pre-crisis management of risks. In other words, it is the process of minimizing or controlling the occurrence of risks.

Risk management has various steps of processes (sometimes three or five). Even though people use different ways to describe them, I will use the five-step process to explain how it works as follows. These steps are, Identifying, Analyzing, Evaluating, Treating, and Monitoring. The first step when it comes to managing risk is Identifying it. The team responsible for the process needs to identify the type of risk the company (organization) is facing or will face in the future. This can be a strategic risk, operational risk, or market. Risk and so on. The team needs to identify the types and collect the data either manually or digitally. The next step is to Analyze the risk, which involves identifying the probability of the occurrence of each risk and its consequences. This involves researching on how likely each risk is, if a risk is unlikely to happen then there is no need to apply preventative measures. Identifying this also helps which risk to prioritize and give immediate action to. The team also needs to see how much damage each risk will cause whether it is financially or time-wise.

The third step is to evaluate each risk, meaning to rank each one of them by its severity. Risks will be named as high risks (if they will have maximum damage for example) or low risks (risks with little likelihood). After identifying the types of risks that need priority treating the risk is the next step to follow. This is the response stage where the team will lay out a plan to solve the high risks. This is when the risk mitigation plans and preventative measures are laid out. The fifth and last stage is monitoring and reviewing each risk stage. In this stage when the risks are monitored, tracked, and also reviewed according to the gathered data from the previous stages. Some risks cannot be solved once and determine continuous attention hence this step is important. The last stage helps make sure each risk has been handled carefully so that the company or the stakeholders would not have to suffer the consequences and lose money or time. These steps might be compressed into different stages by several scholars but the idea is the same. It starts with identifying and recognizing the problems, then ranking, and at the end solving them followed by tracking each risk.

Risk management is one of the key factors that can be used in crisis prevention processes. Risk management involves identifying potential risks that may or may not happen which means it helps figure out and protect the company. This process can definitely help a sudden crisis from happening and escalating hence crisis prevention. For example, a company might face a financial crisis which is very common. This can happen when a business loses its value and the company is not able to pay off its debt. One scenario in this example can be the fact that one of the company’s clients that make up the highest revenue ends their contract. So in this case if the company can not find a replacement or come up with a way to replace the revenue then they will face financial difficulties. The crisis is a financial crisis while the risk can be the possibility of losing a client with the highest revenue. If the company used risk management methods, it would be able to identify this before the risk became a crisis. In this case, bad management can lead to the financial crisis being a bigger crisis which can finally lead to the shutting down of the company leading to the firing of several employees. If it is handled the right way, the company will not have to lose a penny but they will also have a lot to gain which is safety and reassurance.

In conclusion, risk management is one of the most important aspects in an organization’s existence and can save one from a lot of problems. Even though it is very beneficial, bad risk management will not only fail to save the organization from the crisis but in many cases, it will also lead to a full crisis creating bigger problems. This can happen due to ineffective assessment of risks, failure to analyze the crisis, or poor governance. It is important to not only perform risk management processes but also carry out each step carefully to prevent a worse problem from happening (full crisis).

Resources

  • Britton, C. (n.d.). 3 crisis management case studies we can learn from. Retrieved February 21, 2021, from https://www.rockdovesolutions.com/blog/3-crisis-management-case-studies-we-can-learn-from
  • Ndlela, M. (n.d.). VitalSource bookshelf Online. Retrieved February 21, 2021, from https://online.vitalsource.com/#/books/9783319972565/cfi/6/12!/4/8/4@0:54.9
  • Ingrid HorvathIngrid Horvath P. (2020, December 10). Five steps of risk Management PROCESS: Effective risk management process. Retrieved February 21, 2021, from https://www.invensislearning.com/blog/risk-management-process-steps/
  • Kloosterman, V. (2018, June 26). What are the 5 risk management process steps? Retrieved February 21, 2021, from https://continuingprofessionaldevelopment.org/risk-management-steps-in-risk-management-process/
  • Fontanella, C. (n.d.). 5 types of CRISIS your company could face (and protect against). Retrieved February 21, 2021, from https://blog.hubspot.com/service/types-of-crisis
  • Six ways Companies Mismanage risk. (2014, August 01). Retrieved February 21, 2021, from https://hbr.org/2009/03/six-ways-companies-mismanage-risk
  • 5 common risk management failures. (2020, April 17). Retrieved February 21, 2021, from https://www.corporatecomplianceinsights.com/5-common-risk-management-failures/