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Preparing for evil.
Ian I Mitroff1, Murat C Alpaslan
1Annenberg School for Communication, University of Southern California, Los Angeles, USA.
Harvard Business Review
|April 12, 2003
Summary
Proactive crisis preparedness, focusing on prevention rather than reaction, leads to better financial performance and longevity for businesses. Companies should systematically plan for diverse threats, including those outside their industry.
Area of Science:
- Business Management
- Risk Management
- Organizational Resilience
Background:
- Many companies lack comprehensive crisis preparedness, with research indicating 75% of Fortune 500 firms only prepare for past crises.
- Underpreparedness negatively impacts financial performance, reputation, and long-term business survival.
Purpose of the Study:
- To investigate effective strategies for enhancing corporate crisis preparedness.
- To identify systematic approaches that improve a company's ability to handle unforeseen disasters.
Main Methods:
- Analysis of 20 years of research on crisis management in Fortune 500 companies.
- Categorization of man-made disasters into accidental and deliberate types.
- Examination of proactive threat assessment and focused implementation strategies.
Main Results:
- Crisis-prepared companies demonstrate superior financial outcomes, enhanced reputations, and greater business longevity.
- Systematic planning, including considering cross-industry threats and external input, is crucial.
- Focused, random implementation (e.g., facility checks) enhances overall readiness and reduces systemic risk.
Conclusions:
- Effective crisis management prioritizes prevention over post-disaster containment.
- A systematic, broad-thinking yet narrowly-implemented approach is key to building robust crisis readiness.
- Companies should move beyond cost-benefit analyses for disaster management, focusing on proactive resilience.