Types of Crisis

Types of Crisis
"Crises are part of life. Everybody has to face them, and it
doesn't make any difference what the crisis is." Jack
Nicklaus
Crisis :- An unstable or crucial time or state of affairs in which a decisive

change is impending. More loosely, it is a term meaning "a testing time" or an
"emergency event". A crisis implies a situation where time is short and an
effective decision has to be taken immediately. The crisis perpetuates a sense of a
lack of control throughout the business worsening the whole situation. Thus crisis
management needs to be rapid and effective with the required flexibility to the
plans made to meet further shocks.
Types of Crisis
1. Financial Crisis - Financial Crisis occurs when the business is hit with
the crisis financially. Such a crisis arises when the business incurs losses
over considerable periods of time or when due to lack of accountability
loses consumers’ trust among other situations. Financial issues such as
bankruptcy, revenue losses, inflation or sudden change of trend in the
market can cause the financial crisis in an organization.
 For example - Kingfisher Airlines, Sahara, Punjab national bank etc .

 Before facing financial crisis I will make some pre plans for future so
it would be helpful during crisis. Adding on at crisis we have to make
a clear and better communication to internal as well as external
public. This crisis is handled by mobilizing requisite funds as a short
term solution and in taking major financial decisions such as
restructuring, changing business operations, etc as long term
solutions.
2. Technological Crisis - Technological crisis arises as a result of

failure in technology. Problems in the overall systems lead to technological
crisis. Breakdown of machine, corrupted software and so on give rise to
technological crisis. The usual means of management would include
primarily mitigating the losses and stopping the effects of the failure from
affecting more people or elements.
 For example- Bhopal gas tragedy
 At a fixed interval we should have examine all the machines and
electrical appliances for their betterment. If any problem occur
either it is small or big do not ignore it for further big loss. And the
most important thing communication wouldn’t got break at any time.
Before crisis occur or after crisis it would be very important to make
clear communication plan for public that they don’t get panic. It
would be better if we had a crisis management team.
3. Natural crisis - Natural crisis takes place because of the occurrence of

natural phenomena such as earthquake, volcano, floods, storms or any
other act of nature. Damages caused by these calamities are classified as a
natural crisis. Natural crisis are not in the hands of anyone. These crisis can
be on large scale. Tornadoes, Earthquakes, Hurricanes, Landslides,
Tsunamis, Flood, Drought all result in natural disaster.
 Example - The power of Jaiprakash associates at Nathpa in himachal

Pradesh was devastated by flood.
 The crisis management steps include evacuating the area and taking
mitigating actions as precautions such as building Earthquake resistant
buildings, preparing evacuation plans, etc beforehand. We have to give the
employees a proper training regarding natural disaster by which risk of loss
would be minimized because these are not in the hands of anyone.
4. Confrontation Crisis- These types of crisis happen when a group of

people or an individual have certain demands and they fight against the
organization, institute or government to make them accept their demands
and fulfill their expectations. The common methods confrontation crises
are boycotts, strikes, blockade or occupation of a workplace, picketing
outside the organization, giving an ultimatum to the people in authority,
destroying the property of the organization. There is no cooked way to deal
with such situations. However, taking the help of police and law might help
to deal with confrontation crisis.
 Example- Rainbow/PUSH’s (People United to Serve Humanity) boycott of

Nike
 I will make a weekly conversation with the employers and trying to make a
good relation with them so they easily share their problems without any
hesitation and fair dealing with all. Companies have to learn to not only
communicate effectively in the social media age, but to truly listen to the
social chatter and respond in the way that align with both brand and
customer expectations.
5. Workplace Violence - These types of crisis happen very frequently

among the labor class of the organization. When employees of an
organization fight within the premises of the organization and disturb the
work – environment is called workplace violence. It is a crisis which has long
term influence and also disturbs the mental health of employees within an
organization and it should be dealt with harshly. Such a type of crisis arises
when employees are indulged in violent acts such as beating employees,
superiors in the office premises itself.
 Example: 1982 Chicago Tylenol murders, Procter and gamble’s logo

controversy
 Calmly dealing with the situation. We have to monitor every department
horizontally as well as vertically. Try to make a healthy environment t for
the employees that they would easily share if anything went wrong to
them.
6. Crisis of organizational misdeed- Organizations face crisis of

organizational misdeeds when management indulges in deliberate acts of
illegality like accepting bribes, passing on confidential information and so
on. Crises occur when management takes actions it knows will harm or
place stakeholders at risk for harm without adequate precautions.
Crises of skewed management values- Crises of skewed

management values are caused when managers favor short-term economic gain
and neglect broader social values and stakeholders other than investors. This
state of lopsided values is rooted in the classical business creed that focuses on
the interests of stockholders and tends to disregard the interests of its other
stakeholders such as customers, employees, and the community.
Example: Sears sacrifices customer trust
Crises of deception
In an organization, when thousands of people work together, it becomes difficult
to keep the important information secret. A crisis of deception can prove to be
outlandish for an organization. A person from the organization itself
misrepresents the information about the organization with the intent of causing
harm to the organization. These situations can be handled by discussing the
matter with the legal practitioner and taking the required steps to mitigate the
damage.
 Example: Dow Corning’s silicone-gel breast implant

 It is important for the organization to work closely with its attorneys and
communications consultants to help manage through a difficult situation.
Crises of management misconduct

Some crises are caused not only by skewed values and deception but deliberate
amorality and illegality. Changing company culture is the best way to address
organizational crises because these problems are typically caused by employees
who neglect customer needs. Embracing an organizational culture that's
dedicated to customer success can reduce the chances of encountering an
internal crisis. Additionally, backing this type of environment should result in the
hiring of employees who are closely aligned with your company's values.
Pooja Agnihotri
MA- APR 4th Semester

Types of Crisis

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Types of Crisis

"Crises are part of life. Everybody has to face them, and it

doesn't make any difference what the crisis is." Jack

Crisis :- An unstable or crucial time or state of affairs in which a decisive

 For example - Kingfisher Airlines, Sahara, Punjab national bank etc .

2. Technological Crisis - Technological crisis arises as a result of

3. Natural crisis - Natural crisis takes place because of the occurrence of

 Example - The power of Jaiprakash associates at Nathpa in himachal

4. Confrontation Crisis- These types of crisis happen when a group of

 Example- Rainbow/PUSH’s (People United to Serve Humanity) boycott of

5. Workplace Violence - These types of crisis happen very frequently

 Example: 1982 Chicago Tylenol murders, Procter and gamble’s logo

6. Crisis of organizational misdeed- Organizations face crisis of

Crises of skewed management values- Crises of skewed

Example: Sears sacrifices customer trust

 Example: Dow Corning’s silicone-gel breast implant

Crises of management misconduct

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