Crisis management has always been an important facet of business. In this age of social media, however, crisis situations have become more difficult to deal with than ever before. News spreads quicker. Rumours surface more easily. Managing these situations requires greater finesse and expertise.

One of the key crisis management issues can be when to speak up and when to remain silent.

“Increasing media scrutiny, global news coverage and the growing popularity of social media mean that corporate reputations can be damaged quickly,” says Winky Moon, who manages and advises on public regulatory affairs and corporate social responsibility issues.

“The majority of the multinationals and well-known listed companies in Hong Kong have crisis management teams, which usually consist of the management team together with communications and legal professionals to handle any unexpected situations. To Chinese corporations, however, crisis management is a new concept,” she says.

Moon says companies need frameworks for dealing with potentially sticky situations. “For consumer brands, a social-media-crisis manual should be developed to cope with an impending crisis. Social-media-monitoring tools, and an understanding of when to speak out and when to stay silent, is also very important to contain a social media crisis,” she says.

As crises can take many forms, crisis management can be difficult to define. Creating precise guidelines on how to manage crises can be a challenge. But organisations that don’t have crisis management strategies in place are at risk.

The Richard Ivey School of Business, which teaches exclusively through case studies, has more than 340 cases related to crisis management on file. Dr Janet De Silva, dean of Ivey Asia, says: “Crisis management is how an organisation and its leaders deal with a major event that threatens to harm the organisation, its stakeholders or the general public. It is an integral capability requirement for all leaders – be they in the private or public sector.”

Corporate crises can be the result of a number of factors. Some come from an organisation’s own failings, but many strike like a bolt from the blue and happen without warning.
“Earthquakes in Japan, the global financial crisis, the BP oil spill and the Costa cruise ship incident are all examples of the prevalence of crises, and therefore the need for leaders and boards to be prepared and ready to respond with professionalism, urgency and transparency,” De Silva says.

“An integral part of leadership is leading through difficult times and leading through crisis situations. Business schools have a responsibility to incorporate the practice of crisis management into their programmes.”

The trend, De Silva believes, is that these types of crises occur regularly. But with social media and global connectivity, firms now have limited time to respond. Failing to respond in a timely fashion, meanwhile, can cause a loss of confidence and potential harm to an organisation and its stakeholders. The general public can also feel the effects.

Not all companies have expertise in crisis management, so they call on the services of public relations (PR) firms to provide damage control when something unexpected happens that they are unprepared to deal with.

Paul Hicks, CEO of Hong Kong-based public relations firm GHCAsia, says that PR professionals should have the skills to help out clients in crisis situations. “We wouldn’t necessarily expect anyone to have had experience in handling a crisis, but we would expect staff to be able to take a structured and analytical approach to potential crises that might occur and to be able to put a simple contingency plan in place,” he says.

“Crisis communication, more than anything, is about having a clear line of communication and a decision-making process in place which can be activated at short notice.”

While few MBA programmes offer specific courses in crisis management, the topic is usually covered in other classes across the curriculum.

“When it comes to the expectations of companies recruiting MBA graduates, Ivey’s grads are highly sought-after for their leadership capabilities and, as mentioned, crisis management is an integral leadership capability today,” De Silva says. “Our effectiveness in developing capable, sought-after leaders is proven by our high rankings in career placement for graduates, where we have a 98 per cent job-placement record.”