A business crisis is an event, or a series of events, that causes major disturbance for a business. A crisis typically occurs suddenly and poses intense difficulty or danger for the business, usually in a situation where time is short and decisions have to be taken quickly.
Many different types of business crisis exist, including:
- Natural disasters - these are typically unpreventable environmental crises. For example, flooding due to heavy rains or wind damage following storms.
- Technological disasters - these can include IT system failures, corrupt software, faulty hardware, or malevolent cyber attacks. They typically affect access to critical resources such as data, or employees' ability to work effectively.
- Accidental disasters - these usually happen unintentionally. Common examples include fires, gas leaks, power cuts, etc
Other examples of potential business disasters are:
- Theft or vandalism - theft of computer equipment could prove devastating. Similarly, vandalism of machinery or vehicles could be costly and pose health and safety risks.
- Power cut - loss of power could have serious consequences. Would you be able to operate without IT or telecoms systems, key machinery or equipment?
- Fuel shortages - temporary shortages in fuel supply could prevent staff from getting to work and affect your ability to make and receive deliveries.
- Restricted access to premises - how would your business function if you couldn't access your workplace (for example, due to a gas leak)?
- Loss or illness of key staff - how would your business cope if a key member of staff were to leave or was incapacitated by illness?
- Outbreak of disease or infection - an outbreak of an infectious disease among your staff, in your premises or among livestock could present serious health and safety risks.
- Terrorist attack - consider the risks to your employees and business operations from a terrorist strike, either where you are located or where you and your employees travel.
- Crises affecting suppliers - how would you source alternative supplies?
- Crises affecting customers - will insurance or customer guarantees offset a client's inability to take your goods or services?
- Crises affecting your business' reputation - how would you cope, for example, in the event of a product recall or a social media post gone wrong?
Read more about the different types of crisis.
Although some of these scenarios may seem unlikely, it's still wise to consider them. Advance planning is key to overcoming crises. See how to carry out a business impact analysis.
The process of managing and dealing with crises is known as crisis management. It involves dealing with threats before, during, and after they have occurred, focusing on minimising the damage and enabling the business to recover quickly. Crisis management can be especially important in the area of public relations.
Find out how to minimise the potential impact of crises.