On this page, we discuss capabilities and patterns for managing crisis. The appalling events in Manhatten and elsewhere - sensemaking in crisis. The foot and mouth crisis illustrates some important distinctions - between primary and secondary and between real, perceived and formal. [our approach - consultancy services] [routes into crisis: the scale of failure] [no crisis on January 1st?] [failure becoming visible] [management overloaded by events] [when to declare a crisis] [recommendations] [risk broker] [risk management]    [home] [contact]

crisis management: containing failure from understanding  ... " … It's not the large things that  send a man to the  madhouse, …  No, it's the continuing series of small tragedies  that send a man to the madhouse …  not the death of his love but a shoelace that snaps  with no time left … "  [Charles Bukowski, The Shoelace]  ... to action Plan for contingency - and a well-managed response. Defence is important - but don't just play defensive. Develop capability to respond to unforeseen events.   Crisis management is important in business, social policy, international politics, public health and various other domains.  Individuals can suffer crisis in their physical health, psychological well-being and family relationships. People sometimes provoke crisis as a way of forcing change.  Is that crazy or what? NATURE NOTE Today I disturbed an ants' nest in my garden. In secords, ants were hurrying everywhere, carrying eggs to safety. MAXIM Never hand over a fire in the heat of the day.

Crisis and Sensemaking veryard projects > programme management > crisis management > sensemaking

Simple polarization appears to help us cope -- but ultimately reduces our ability to engage adequately with the world.

Against the background of the appalling events in Manhattan and Washington, there is a predictable narrowing of vision and sense-making.  Someone posted a message to the Complex-M list (supposedly a forum for complexity thinking) in starkly political language. He spoke of "terrible resolve", "coalescing of people", "focus sharply defined", and "we can unite in that objective".  At the same time, there have been some real surprises - for those whose receptiveness to surprise has not already been overwhelmed.

Most people have difficulty tolerating complexity at the best of times.  In times of great crisis, even this level of tolerance is reduced. There is a vital role for wise counsel, and we have a duty to foster this if we can.

Two stages of crisis - primary and secondary

Three orders of crisis - real, perceived and formal

Sometimes people deny that there is a crisis.  A company on the verge of bankruptcy may claim to be perfectly solvent, a company facing allegations or threats of product contamination may claim that there is no real risk.  Or the crisis remains undetected - like an undiagnosed cancer.

Sometimes people are too quick to claim that there is a crisis.  They perceive one or two incidents, and imagine the worst.  Or they predict a crisis, as a motivator for action.  (When the crisis doesn't materialize - consider for example the widely predicted Year 2000 meltdown - then this might be thought to justify all the effort that went into avoiding the crisis - or then again it might not.)

Sometimes a perceived crisis can cause a real crisis - like a run on a bank, or a stock price adjustment.

Sometimes Goverments or companies are much too quick to declare that the situation is back to normal.  This is because policies and rules, or expectations of proper conduct, on which normal governance depends, may be suspended during a crisis.  Junior officials can get away with all sorts of things that wouldn't normally be authorized - and use the crisis as an excuse.

At the other extreme, a formal crisis can continue for years, in a kind of stalemate, while people get on with their lives.  Think of the Lebanon, Cyprus, Northern Ireland, the Balkans, ... the list is far too long.

	Disaster	A major accident or other event, preventing normal business and demanding an immediate response.
	Slide	A gradually worsening situation, in which normal business is becoming increasingly difficult.
	Swarm	A large number of small failures occurring at the same time, causing normal defences and responses to be overloaded.

Failure.  Crisis and catastrophe are examples of the dialectical principle of quantity becoming quality.  In other words, when something reaches a certain size, it become different in kind.  Crisis refers to some scale of failure.  Failure represents a mismatch between intention and (perceived) outcome.

The threshold of crisis.  This is the point at which normal operations and capabilities are overloaded - will vary according to the resilience of the organization. Resilience is a particular kind of capability, dependent upon resources and resourcefulness, and is closely related to resistance.

One reason for justifiable concern was in the possible aggregate effect of lots of multiple failures - the swarm effect. Let's look at an example.

Local failures are handled within normal operations

Supply chain failures including temporary or permanent loss of a supplier Transport failures. Goods or customers cannot reach stores.  Transport network Extreme weather conditions Equipment failures e.g. refrigerators Infrastructure failures e.g. power cuts

Product recalls Demand fluctuations e.g. Christmas Staff shortages e.g. flu epidemic Strikes and protests affecting supplies e.g. agricultural imports

In a typical organization, we can identify a number of existing mechanisms, mostly informal and undocumented, that cope with such disruptions. Many of these disruptions are typically handled locally and ad hoc.

Any unusual event (such as Year 2000) may cause multiple occurrences of local failures

Widespread or systemic supply chain failures National disruption in transport network Global equipment failures e.g. all fridges in all stores National infrastructure failures e.g. power cuts

Floods of product recalls Exceptionally high demand fluctuations  millennium mega-party customer hoarding  and in an extreme scenario, possibly leading to   Customer panic Massive staff absence

In other words, although systems may fail at any time, Year 2000 could have caused a swarm of failures, overwhelming normal operational responses and management capability.

If more than one of these events occurs simultaneously, the existing crisis management capability will be seriously overloaded.  But it's not just Year 2000 that can trigger a swarm of failures.

An important part of general planning is to check that you have the management capability to cope with a swarm of failures.

Scaleability of response.  If one fridge breaks down, then the store manager phones the support hotline. If a thousand fridges break down at the same time, then it is neither necessary nor sufficient for a thousand store managers to phone the support hotline. In other words, you cannot just multiply the response by a thousand.   This raises the question: how to define the threshold for a coordinated response. How many fridges makes a crisis: ten fridges, fifty fridges? When does fridge repair become a responsibility of the crisis management team? When an organization is under pressure, it may become more vulnerable to crisis. Just as people are more prone to disease when they are tired, stressed or miserable, so the resilience of organizations may be reduced by various temporary factors as well as by permanent weakness.

It is also expected that some systems will fail on February 29th 2000, because many software engineers seem to have misunderstood the rules about leap years.

However, unless a computer system fails spectacularly, we don't always detect it straightaway. If software failure results in data being lost or corrupted, or in normal security controls being bypassed, this may not be detected for some time.
 

Your computer system failure Supplier computer system failure Third party system failure

Process errors increase Fraud increase Loss of control

	Existing management capability seriously overloaded.
	Crisis events also affect major competitors. Competitors race for restoration of normal business.
	Urgent demands on the same scarce resources (such as equipment suppliers or backup power supplies).
	Local ad hoc responses insufficient. A coordinated and planned response will be required.
	Considerable media attention. For a large organization, broadcast media may provide the most effective way to communicate rapidly with customers and staff. Integrated PR response required.

normal operations Isolated or intermittent failures. Under normal management control. Majority of customer and shareholder expectations are still achievable.

crisis Widespread and increasing failures. Local management losing control of situation. Normal business rules, budgets and incentive schemes suspended. Public relations goes into overdrive.

what we're looking for Firstly, we're looking for a good match between the shape of the Risk Landscape and the spread of resources devoted to anticipating various categories of risk, contingency, crisis and disaster. Second, there is a proper balance between insurance costs (which you spend whether something bad happens or not) and contingent costs (which you spend only if something bad happens).  This itself represents a risk-choice for the enterprise, which modifies the Risk Landscape. Thirdly, there is the question of the capability of the enterprise to enact its contingency, crisis or disaster plans.  Are the management skills and information systems and other prerequisites in place?  Does this capability need to be tested and regularly exercised? Fourth, how do exercises or real emergencies provide learning and feedback? Fifthly, there is the question of managing contingency, crisis and disaster across the enterprise boundaries - where we get into issues of the component-based business and trust. Finally, we expect that the overall Risk landscape with all contingency, crisis and disaster plans in place represents a real improvement over the risk landscape with none of these.  If this is not the case, then the plans are worthless.

pitfalls include ... Dumping costs and risks into an uncontrolled bucket called "contingency".  Treating contingency plans as a backstop for inadequate management. Producing fancy documents with no substance behind them.  (Contingency plans that have never been exercised, and probably won't work when they're needed.) Contingency plans that introduce more risk than they address. Contingency plans that fail to reflect the actual relationships between multiple businesses, with conflicting stakeholders and objectives. our consultancy offerings include ... Assessment and evaluation of your current situation and plans. Roadmap for developing more robust systems and capabilities. Templates for risk assessment and contingency plans. Project management

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Acknowledgements

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