Crisis Management: Prevention, Diagnosis and Intervention

Brief Summary of the Article 

The article is mainly based on the ever-changing environment of business today. Many businesses have a dynamic nature due to change in certain aspects such as policies, market trends, consumer trends, and competition among others. Many companies have different mechanisms that they can use to scan the environment. Some of the aspects that can be scanned in the environment include competitive advantage, business strengths, weaknesses, threats, and opportunities among others. With the environment scanning, it is still possible to find a situation where the crisis has occurred in the organization. Once a crisis occurs, it is imperative for any organization that wishes to succeed to take corrective actions (Crisis Management: Prevention, Diagnosis and Intervention). 

Corrective actions in the face of the crisis in a business can be accomplished through proper management. Management involves a multistep procedure where the crisis is first defined. After definition, the proper analysis is carried out to identify the nature of the crisis and any possible solutions in mitigating it. Another critical part of dealing with a crisis involves its presentations. The anatomy of a crisis is normally presented schematically. A scheme is created where various tenets are described chronologically to ensure that the problem is properly broken down. After definition and presentation, the article goes ahead to outline the preventive interventions and measures vital in dealing with the crisis. The article concludes by asserting that communication, especially with the stakeholders is instrumental in planning for the diagnosis, prevention, and intervention techniques with regards to the crisis. 

Identify the Three Types of Companies in the Article 

The three main types of companies that have been identified in the article include partnership, corporations, and liability companies. Each company has its way of managing risks as postulated by the author. The risk management strategies or approaches can either be classified as preventive or intervention measure. The preventive measure is mainly focused on creating mechanisms in the organization that ensure that the business is crisis-free. On the other hand, the intervention strategy is mainly focused on taking corrective steps once a major crisis has hit an organization. The partnership business described takes a risk management approach that is mainly focused on avoidance of risk. The business deliberately refuses or shows reluctance in joining any business that might expose the organization to an undue risk. The risk is classified as preventive risks because it is primarily concerned with ensuring that the business avoids any risk prospect. 

The second company described is the corporations which are mainly concerned with risk mitigation. Mitigation of risk means the reduction. The reason, (2016) asserted that it is also concerned with the reducing the effects that are caused by the risk. In principal classification, this risk falls under intervention, because it is focused on taking corrective measures against risks that have already had an effect on the organization. The third class of companies that are described in the article is the liability companies. The method used in risk management for this type of business as described in the article is the transfer of risks. In such cases, organizations are obliged to transfer the risks from their organizations by issuing premium payments in exchange for protection against losses. The classification of this management of risk approach is still an intervention one because it occurs once the risk has already had its effect on the business. 

The reactive risk management strategy involves a scenario where the action is taken once a crisis has occurred. It involves investigation of the crisis and further taking measurements to ensure that similar events do not occur in the future. On the other hand, the proactive risk management identifies the risks earlier before the actual happening of the crisis. It is true to assert that the risk markedly changes when events are addressed proactively as opposed to the reactive manner. A proactive response to risks ensures that the organization remains at all times cognizant of crucial factors affecting the business such as technological changes, competition, deregulation, and increased public concern. It is an adaptive and a flexible risk management strategy that mainly focuses on improving the current situation of business through the use of experience. It is a better method because it prevents harm from happening as opposed to a reactive measure which capitalizes on a crisis to take corrective actions. 

Different Types of Leadership Approaches 

While the autocratic leadership approach allows the leaders and managers to make decisions on their own, the participative leadership attempts to welcome the input of different shareholders in coming up with a result ( Sethuraman & Suresh, 2014). The transactional leader focuses their approach on rewards and punishment as a way of inducing performance while the transformational leader depends much on the levels of communication in a bid to increase their chances of achieving the organizational goals. The human resource (HR) department has an important role in ensuring risks and crisis events are mitigated in an organization. First, it is imperative that they determine the nature of the risks that have potentially faced an organization. According to Artto & Kahkonen, (2013), they should then form a relation basis for decision making that will ensure that the risks are reduced. Finally, they should plan on taking proactive measures in mitigating future risks. 

Ethical Ways of Mitigating Risks 

Reducing and preventing risks in organizations must adhere to the tenets of ethics. All stakeholders must be involved in the procedure as a gesture of goodwill and also depict that the organization appreciates the input of every individual. Another important factor is to consider practical implications to all executive leaders in the organization. 

References 

“ Crisis Management: Prevention, Diagnosis and Intervention” by Toby J. Kash and John R. Darling (SNHU Library online)  http://ezproxy.snhu.edu/login?url=http://search.proquest.com/docview/226915167?accountid=3783   

Sethuraman, K., & Suresh, J. (2014). Effective leadership styles. International Business Research , 7 (9), 165. 

Reason, J. (2016). Managing the risks of organizational accidents . Routledge. 

Artto, K. A., & Kahkonen, K. (2013). Managing risks in projects . Routledge.