Research Paper, 6 pages (1400 words)

Crisis management paper

Financial andhealthinsurance crisis is a threat to the development of a country. Financial crisis results from loss of value of assets or institutions or assets while health insurance crisis occurs as a result of lack of health insurance cover of citizens of a country. Crises are usually difficult to predict and can cause devastating effects on an organization or nation. Every organization should have a response plan that will be used to tackle crisis. Crisis has three characteristics that make it difficult to tackle it.

The first characteristic of crisis is the short time that is needed to come up with a plan to counter it. The second one is that crisis comes as a surprise, at the time when it is least expected. The third characteristic is the threat that crisis poses to the survival of the organization or country. Examples of financial and health insurance crises include inflation, loss of value of currency, recession and natural disasters. Risk assessment Risk assessment is the identification of risks that have the potential to cause future financial crisis to an organization, and looks for possible ways of neutralizing them.

Risk assessment also involves analyzing the measures that are currently being taken to reduce the impact of potential future threats to an organization and their effectiveness. Such threats may include rising inflation levels, currency devaluation, poor performance in stock markets and future political instability. The benefit of risk assessment is formulation of a plan to counter these threats prior to their occurrence. This makes it easier for organizations to handle crisis and minimizes the level of panic among stakeholders in the organization.

Panic results in stock markets, having high stock volatility, due to fears by investors. It also helps identify appropriate controls and makes organizations appreciate benefits of risks. Emergency response plans Since crises occur abruptly and the time to counter it is limited, it is important to come up with emergency response plans. Such plans explain the plan of action when crisis occurs and it is easier for employees or other stakeholders in a business to know how to react in such cases. Emergency response plans also help in coordination of efforts to control the crisis.

This is due to use of command centers which are essential parts of emergency response plans. The use of emergency response plans enables people to know what to do in crisis situations and minimizes panic among stakeholders of the organization since people are able to make rational decisions as guided by the plans (Lewis, 2006). Command center. The command center is the central place in which crisis management efforts are coordinated. A functional command center should be able to perform functions that relate to crisis management .

There are three basic functions of a command center, which illustrate its importance. The first function is intelligence andcommunication. The command center should be able to gather intelligence and information about the crisis and communicate effectively with all stakeholders in the organization. This ensures that everyone has full information about the crisis. The second function is control and command. The command center should be able to control and direct the appropriate response to the crisis. This eliminates duplication of efforts and increases efficiency in dealing with the crisis.

The third function of the command center is documentation and coordination. It should coordinate the response to the crisis and record steps taken which is important, for reference in future crisis situations. Development of crisis management team The crisis management team should be made up of people with the relevant crisis management skills. These skills are in accordance with the different departments in an organization (Katz, 2003). The members of this team have very few opportunities to gain real life experience in dealing with crises within organizations.

Due to this fact, there is need for alternative means of acquiring crisis management skills. Alternative means include simulations to help team members be conversant with the crisisenvironment. These simulations should be backed by adequate training and proper tools needed to face the crisis. Role of departments Every organization has different departments that are headed by a departmental manager. When tackling crisis, it is important to involve all departments since they are all part of the organization. There is no department that can survive on its own and they all rely on each other.

Failurein one department affects the whole organization. Each department has its role to play in the management of the conflict. Their roles, in such cases is to provide insights on the effects and possible remedies to the crisis, from their point of view. For example, the role of the HR department is to give insights on the human side of crises faced. The role of thefinancedepartment is to show the effects and possible solutions of the crisis, from the financial point of view. This may include the monetary impact of the crisis to the organization and possible costs of solving the crisis.

Each department should provide its own contingency plan of dealing with the crisis. This is because crises have different impacts to different departments. It is theresponsibilityof each department to come up with plans which address the unique needs of the departments in case of a conflict. Emergency situations. Emergency situations are instances when threats to the survival of the organization occur unpredictably, and require a short time to make decisions on how to neutralize that threat. These situations can occur in spite of presence of mechanisms to counter them.

Such situations require decisions to be made speedily in order to minimize the effects of the threat to the organization. The best way of dealing with an emergency situation is prior preparation. This is done through risk assessment which enables the threat to be foreseen and appropriate counter measures formulated. The formation of an emergency plan would help everyone to know how to react in times of crisis. Evacuation plan Sometimes when crisis occurs, it affects the activities of the organization adversely and there is need to formulate an evacuation plan.

This is the plan that the organization uses to disengage itself from the crisis. Evacuations vary in nature and some can take a few months or several years to implement, depending on the organizational policy and the impact of the threat. Such plans may include sale of the business, restructuring, closure of branches and others. It is essential that someone should control evacuation, in order to ensure that the evacuation process does not conflict with thegoalsof the organization. There should be clear communication among all stakeholders in order to avoid deviation from the plan and duplication of efforts (Stuart, 2001).

The evacuation plan should also be consistent with short and long term goals of the organization. For example, in a crisis where a company’s shares are losing value, the evacuation plan may involve offering Initial Public Offerings, liquidation of the company, further investment in its operations, re-branding of the company, among others. These plans are effective in preventing collapse of industries and countries’ economies. This is because they help the organization or country mitigate the effects of the crisis. Dealing with the media.

In a crisis situation, it is important for the organization to be aware of the legal position when handling the media. Depending on the situation, sometimes it is advisable to give as little information to the media as possible, during the initial stages, especially if such information will adversely affect the organization. Information can be delayed until an emergency plan of action is formed. The reason for withholding the information, for a while, is to prevent panic among stakeholders of a business which might result in further damage to the operations of the organization, such as irrational dumping of its shares.

It is also advisable to have one official spokesman for the organization during this period, to handle the flow information to the media, in order to avoid contradictions among the management of the organization. Conclusion. Crisis is a situation that every organization faces during its lifetime. Since crises are unavoidable, it is important to come up with an emergency plan that will dictate what the personnel will do in time of crisis. Every department has a role to play in crisis management since none can function without the others.

The management has an obligation to teach the personnel what to do in times of crisis and evacuation plans, during the crisis. This will minimize panic among stakeholders of the organization, since preparation is the best defense against crisis. References Katz, D. S. (2003). Executive’s guide to personal security. New York: John Wiley and Sons. Lewis, G. W. (2006). Organizational crisis management: The human factor. Washington: CRC Press. Stuart, D. (2001). Managing financial crisis. Washington: WileyDefault.

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