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Crisis Management & Business Action Planning

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Why are crises inevitable? How can a manager manage a crisis after failure has already occurred? How can a general framework for crisis management apply to particular organizations? Why is having a framework for crisis management situations essential?

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Many have blamed former Fed Chairman Allen Greenspan for the housing recession which took place recently. Watchers have noted that it was during Greenspan's tenure at the Fed that the seeds were sown for the housing and easy bubble that contributed to the financial crisis. Greenspan, however, defended his record stating that financial crises are all different but have one fundamental nature, and this is human nature; and unless someone can find a way to change human nature, we will always have another financial crisis. In essence this paper discusses the notion of crisis management and the implementation of a business plan of action when a financial crisis occurs.

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Extra Info: regarding "crisis management":

According to Wang (2009) organizations are threatened by business crises that may be prevented or lessened if critical knowledge is identified in advance; the role of this paper is to enhance the understanding of the role of knowledge management (KM) playing in affecting organizational performance during crises. According to this author, KM plays an important role in crisis management and second, organizations have different knowledge needs that require the application of different KM strategies at different phases of a business crisis to achieve the best results; finally, the experience handling crises makes organizations consider their incompetence and thus leads to the generation of organization-wide learning initiatives which facilitate knowledge acquisition, sharing and institutionalization. According to this author, practical implications - the proposed knowledge centered crisis management framework can be used by organizations as guidelines to develop their KM strategies based on their concerns during business crises. In addition, according to Paraskevas (2006) in a study in which data was collected through 17 indepth interviews involved in crisis response (e.g. regarding complexity theory perspective) the analysis identified weaknesses in the chain's crisis response and complexity theory provided a good theoretical foundation of the proposals to overcome them; practical implications include organizations should redefine the role of crisis management plans and crisis management teams, and, an effective crisis response should be viewed as a living (co-evolving) system within the organization. According to this author, by adopting complexity principles the organization can make this system far more effective.

According to Crisis Management (2010) what is usually called 'crisis management' should best be understood as part of a broad continuum of activities as follows:

1) Planning: to have organization in the best position to react to, and recover from, an emergency;
2) Incident response: the processes that you have put into place to ensure your institution reacts properly and orderly to an incident, including; evacuation after a called-in bomb threat; denial of entry to suspicious persons; and callling for medical help when a child is injured in your school.

According to Crisis Management (2010) there are two elements of planning that are unique to managing a crisis: creating escalation rules for your employees, and creating a crisis team. In addition, according to this site, creating escalation rules for your employees is an essential element in crisis prevention, detection, and control because this means that you train your employees to bring matters to the attention of more senior personnel for their analysis and handling as soon as possible, preferably before they become critical; in short the ...

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