managing risk

Why crisis management is important for your business

Whether it’s a natural disaster, a burglary, or a financial situation you can no longer manage, any business can be hit by a crisis. Whatever the reason, a business should have a crisis management plan in place to help protect it from unexpected events with potentially damaging consequences.


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What is a crisis?

A crisis is any event with the potential to disrupt your business, negatively impact employees and stakeholders, damage your reputation, or impact your finances. A business crisis is generally comprised of three factors:

  • An internal or external threat to the business.
  • The element of surprise.
  • Limited decision making time.

When a crisis happens, people need to think and act fast. That’s why crisis management is critical.


What is a crisis management plan?

A crisis management plan outlines how your business will respond to a crisis. Designed to remove spur-of-the-moment decision making, either during or immediately after a crisis, it can help mitigate any damage caused by the event while ensuring business operations are restored as quickly as possible.


Why you should create a crisis management plan

Peace of mind

A crisis management plan offers business owners the peace of mind that comes with knowing that –  should something happen to compromise the business – there’s a plan in place to manage it.

No last-minute scrambling

A plan means you’ll know what needs to be done and when. This can save time, money and your reputation in the long run.

No wrong words

We’ve all seen business owners or their representatives stumble over words when reporting on a crisis. We may have even wondered why they didn’t have a media crisis management plan in place. Don’t let that be you.

Quick response times

During a crisis, a business needs to respond quickly. With a crisis plan in place, you can reduce the response time and in turn any impact on your business, employees and customers.

Protect your reputation

A crisis management plan can help protect your business's reputation, as your response to a crisis may impact how the public views your business. When you have a crisis plan, you show your business to be proactive, accountable and committed to dealing with the crisis in a timely manner.

Minimise legal and financial liabilities

With a clear plan, your business can act to reduce the risk of potential litigation, fines or other legal consequences resulting from a crisis.


How to create a crisis management plan

Assemble a crisis management team

Start by putting together a team of people responsible for managing any crisis. The team should include people from across your business, and each person should understand their role and responsibilities during a crisis.

If you’re a smaller business or sole trader, you can either be responsible for managing a crisis yourself or you may prefer to outsource all or some parts. The main thing is to plan ahead.

Create a contact list

Create a contact list of key people who need to respond to a crisis situation and make sure everyone knows who they are. Depending on your business and the situation, this may include suppliers, customers and other critical stakeholders.

Identify potential crises

Identify potential risks that may impact your business. These could include natural disasters, fire, burglary, or any other situation with the potential to significantly impact your business. If you’ve already done a Business Impact Analysis, BIA, save time by starting there.

Assess the risks and impact

Once you’ve identified potential crises, assess their likely scope and severity. Consider the chances of them happening, the potential impact on your business, and what resources and skills will be needed to respond to the crisis. 

Develop a crisis response plan

Based on your risk assessments (like those above), a crisis response plan can be developed to outline exactly how your business will respond to a crisis. Include activating emergency procedures, communicating with employees, stakeholders and customers, working with emergency services and implementing a Business Continuity Plan (if you have one).

Develop a communication plan

A communication plan outlines how your business will communicate with employees, stakeholders, customers and the media during a crisis.

Monitor, maintain and review regularly

Monitor the plan and keep it updated, especially in conjunction with the crisis management team – people move on from jobs – contact details and your communication plan.

Post-crisis review and evaluation

Reviewing the crisis management plan after the crisis allows you to assess your response and identify areas where you can improve.

Creating a crisis management plan long before the need arises can help protect your business from unforeseen events that may otherwise prove damaging. By anticipating potential risks, you can prepare and potentially minimise impacts and get back to business as usual quickly.

The right business insurance also helps you prepare for unplanned events, so get a quote online or contact us today


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Insurance issued by AAI Limited ABN 48 005 297 807 trading as GIO. Read the Product Disclosure Statement before buying this insurance. The Target Market Determination is also available. This advice has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it. This information is intended to be of a general nature only. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.