|Type of paper:||Critical thinking|
|Categories:||Risk management Crisis management|
The main differences between crisis and risk management exist in numerous factors that affect and threaten an organization regarding nature and engagement. Both crisis and risk management stem from the best practices of a sound corporate structure. The two are often interconnected, and they offer viable support to better governance of an institution making sure that there is stability in the course of the business within a competitive advantage. Pearson and Clair (1998) explained a crisis as an incidence with low-probability and high impact that can threaten the feasibility of an organization often categorized by lack of clear cause, effect and means of resolution and with the belief that every decision should be made swiftly to avoid further damage. From this understanding then crisis management is the process of identifying and averting the organizational crises. Mun (2010) defined risk management as the activity of identifying potential risks in advance with the goal of taking precautionary actions that will either reduce or curb the risk through analysis. The process of risk management has to be a systematic procedure for comprehending, evaluating and addressing the probable risks as a way of maximizing the chances of achieving the set objectives.
The Role of the National Response Framework and the National Incident Management System
The National Response Framework is part of the National Preparedness System, and it offers a doctrine that guides the country on how to build, sustain and deliver the response to disasters and emergency (Homeland Security, 2013). National Response Framework uses the risk management approach in dealing with disasters and emergency across the country. It works by describing the particular authorities and best practices that can manage incidences ranging from serious to catastrophic natural disasters or large-scale terrorist attacks. Though the primary goal of National Response Framework is to assess and control threats before they occur, it also offers a platform for crisis management because it has in place best individuals and practices that deal with the sudden emergency situations. National Incident Management System, on the other hand, is a comprehensive and national approach to crisis management. National Incident Management System offers a framework and approach enabling the government and other sectors to work together when responding to, recovering from and mitigating the effects of crises regardless of the cause, size, and complexity. Therefore, the National Incident Management System is a response system that aligns with crisis management.
Crisis Management as Part of Risk Management
Crisis management is a part of risk management mainly because the crisis is a risk that was unforeseen and that was not averted in the early stages before it developed into a crisis. Pearson and Clair (1998) gave numerous examples of organizational crises, and these include bribery, information sabotage, sexual harassment, security breach, product tampering and natural disaster destroying the corporate information base among other. All these are potential risks before they happen because every institution is always aware that such factors threaten their operation. Risk management forms the backbone of any organizational entity making sure that there are regular and rigid systems in place to counter any unexpected threat. However, this does not mean that it completely protects the organization from the known threats. As a result, the institutions must always establish a crisis management framework that will help in case the predetermined threat gets out of hand. A crisis is an incidence caused by risk, and crisis management is the reactive process of dealing with the risk that got out of hand. For example, technical failure is addressed by crisis management, and it can arise without prior notification. When setting the IT department, one of the protocols often put in place is a risk management system that will help in identifying the potential risks in advance. Therefore, crisis management is always part of risk management.
Crises Faced by Organizations
One of the crises faced by organizations today is cyberattacks. A cyber attack refers to an offensive maneuver by computer hackers targeting to damage or destroy computer information systems. Many organizations today are facing constant threats from cyber attacks that target their data such as financial information which could jeopardize their operations and customer relations. The widespread of data security breaches have renewed the focus of crisis preparedness and the system of response to protect the intellectual properties and data. The other crisis faced by the organization is the personnel crisis. Personnel crisis refers to when there is individual misconduct and unethical activities by the organizational members. These can include sexual harassment and discrimination among others. Such malpractices, especially when the executive members commit them often reveal the organization, and they can ruin the public image of the company. Personnel crisis can happen in subtle manners that can easily be ignored, but still, they are a threat to the overall operations of the organization. Cyber attacks are the most important to be prepared for mainly because technology today plays an integral role in the lives of millions of people across the world and that means anyone can easily have access to the organizational information system. Such data can be used to tarnish the company's image or sold to the competitors who will then use it to gain competitive advantage.
Homeland Security. (2013). National Response Framework (pp. 1-54). https://www.fema.gov/media-library-data/20130726-1914-25045-1246/final_national_response_framework_20130501.pdf.
Mun, J. (2010). Modeling Risk: Applying Monte Carlo Risk Simulation, Strategic Real Options, Stochastic Forecasting, and Portfolio Optimization (2nd ed.). Somerset: Wiley Finance.
Pearson, C., & Clair, J. (1998). Reframing Crisis Management. The Academy Of Management Review, 23(1), 59. doi: 10.2307/259099
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