What types of business crises are you at risk for? Is your data backed up? Does your business disproportionately depend on a few key clients? How much financial runway do you have before you're in trouble?
Understanding the different types of crises that can happen is the first step to identifying the types of crises that are most likely to happen to you. And once you know your risks, you can then work to reduce and prepare for them. So, Here are five types of business crises.
Review this list with your crisis team and assess your own company's risks. The first category is natural disasters and epidemics. Natural disasters can wreak havoc on your equipment or your building, and potentially your employees' lives. Outbreaks of illness or disease can quickly incapacitate your workforce.
Examples of natural disasters are hurricanes and tsunamis, tornadoes, floods, earthquakes, wildfires, and droughts. Consider your geographic location and the likelihood that you may face a natural disaster or epidemic. What safety or insurance measures do you have in place? The second type of crisis is financial.
Financial crises are events that may be catastrophic to your company's finances or the vital resources that you need to run the business. A few examples of financial crises include strikes or labor unrest, losing a major client or supplier, market crashes, lawsuits, bankruptcy, or even losing important leaders on your team. Ask yourself and your crisis team what factors could threaten your company's financial viability. What and who do you depend on for the company to function and sustain itself?
Third is technological crises. Technological crises are caused by human errors in developing or using technology. Or, they happen when a system that your company depends on breaks down. Technological crises have a high risk of harming the public or the environment, and they're often caused by mistakes made by the company.
Some examples include phishing, hacking, or cyber attacks, mishandling of sensitive data, critical equipment or software failures, industrial accidents, and product defects or recalls. Take a close look at what technologies you use and create. What protocols and training do you have in place to prevent accidents and mistakes? What technology systems do you rely on to run smoothly?
The fourth type of crisis is organizational misdeeds. Organizational misdeeds describe when management's actions have a significant negative impact on the public or business. Crises caused by organizational misdeeds include management misconduct, which occurs when management engages in illegal behavior such as accepting bribes, embezzlement, sexual harassment, discrimination, or other corporate crimes.
This also covers crises of deception, which happens when management intentionally withholds or misrepresents information to the public. Carefully consider the power structures and code of conduct you have in place at your company. Is there a safe way for employees to report illegal or unethical behavior about managers? Finally, the last type of crisis is workplace violence and acts of malevolence. Examples of workplace violence and acts of malevolence include physical fights, workplace shootings, kidnappings, acts of terrorism, product tampering, or malicious rumors.
Consider the levels of tension that exist between employees or the company and the public. Does the political landscape or nature of your work make you a potential target of an act of malevolence? Crises can appear in a variety of forms. Don't leave your business vulnerable to them. Ask yourself, what could go wrong?
Be proactive about assessing your risk factors and then work to reduce and prepare for them. It's better to look ahead and take action rather than look back and regret inaction.