Management Notes

Reference Notes for Management

Crisis Management is Better than Risk Management. Explain.

The management of crisis and the management of risk are both crucial components of organizational resilience, but neither is better than the other. There are several differences between crisis management and risk management, and both are intended to address different aspects of potential threats and uncertainties faced by organizations.

Let’s take a look at them in more detail.

Risk Management

In risk management, organizations identify, assess, and mitigate risks that could negatively impact their objectives in a proactive and systematic manner. As part of it, potential risks are analyzed, their probability is determined, their potential impact is determined, and strategies are developed for managing or mitigating them.

As part of risk management, the organization strives to reduce the probability of risks occurring and their negative impact.

The following are key aspects of risk management:

key aspects of risk management

Identification of risks:

Identifying and understanding potential risks that might affect the organization. This process involves conducting risk assessments, reviewing historical data, reviewing industry trends, and taking into account external factors.

Risk Assessment:

In risk assessments, the probability and severity of impacts are evaluated, as well as the likelihood and impact of occurrence. Risk assessments can help prioritize risks and determine resources required to mitigate them.

Risk Mitigation:

The process of mitigating risks by developing strategies and measures that involve implementing preventive measures, establishing safeguards, implementing controls, with insurance and contracts being some of the ways to accomplish this.

Risk Monitoring:

Regularly monitoring and reviewing risks helps detect emerging risks, evaluate the effectiveness of risk mitigation measures, and make adjustments to risk management strategies to ensure they remain within acceptable limits.

Risk Response:

A risk response strategy involves defining actions to be taken if a risk materializes, for example implementing contingency plans, initiating crisis response procedures, or implementing business continuity plans.

Risk Communication:

Communicating risks and risk management strategies to stakeholders. As a result of effective communication, stakeholders are aware of potential risks, understand the organization’s risk management approach, and can take necessary actions to protect their interests.

Crisis Management

An organization’s crisis management approach, on the other hand, focuses on handling and resolving sudden and unexpected events that threaten its reputation, operations, or stakeholders.

The goal of crisis management is to reduce the impact of a crisis, protect an organization’s reputation, and facilitate recovery by implementing a structured and coordinated response.

The following are key aspects of crisis management:

key aspects of crisis management

Crisis Planning:

An effective crisis management plan outlines roles, responsibilities, and procedures that should be followed should a crisis occur. A crisis plan includes strategies for communicating effectively, engaging stakeholders, allocating resources, and making decisions.

Crisis Response:

An individual is responsible for activating the crisis management plan, coordinating the response efforts, gathering information, and making critical decisions under pressure when faced with a crisis.

Crisis Communication:

A crisis communication plan includes timely and transparent communication with stakeholders. The goal is to provide accurate information, address concerns, manage public perception, and protect an organization’s reputation during a crisis. Communicating effectively with stakeholders helps maintain their trust in the organization.

Crisis Recovery:

A crisis recovery plan is developed to help the organization recover from the crisis and restore normal operations. In order to prevent future crises, it is imperative to assess and mitigate the immediate and long-term impacts of a crisis, repair relationships with stakeholders, and implement necessary changes.

Post-Crisis Evaluation:

The post-crisis evaluation process identifies strengths, weaknesses, and areas for improvement by conducting an in-depth evaluation of the crisis management response. Organizations benefit from post-crisis evaluations, update crisis management plans, and improve future crisis preparedness.

Comparing Crisis Management and Risk Management

In spite of the fact that crisis management and risk management are both essential components of organizational resilience, they serve different functions and address different aspects of potential threats and uncertainties.

It is a proactive and ongoing process of identifying risks and mitigating them before they become crises. By identifying vulnerabilities, implementing preventive measures, and developing contingency plans, it aims to prevent or minimize risk occurrences and impacts.

Organizations use risk management to assess potential risks, make informed decisions, allocate resources efficiently, and establish a culture of risk awareness and mitigation.

The crisis management process, on the other hand, involves responding rapidly to an unforeseen event that poses a significant threat to the organization when it occurs.

As part of crisis management, organizations deal with immediate and short-term impacts, protect their reputations, and ensure business continuity.

Organizational resilience depends on both risk management and crisis management, and they complement each other in several ways:

Comparing Crisis Management and Risk Management


Crisis management and risk management are interconnected. Organizations can minimize the likelihood of crises by identifying and addressing potential risks in advance. By doing so, organizations can minimize the likelihood of crises occurring.

Risk assessments and mitigation strategies developed through the risk management process inform crisis management plans and procedures.


The purpose of risk management is to continuously assess and manage risks as part of daily operations. On the other hand, crisis management is activated during a crisis.

Essentially, risk management focuses on preventing and preparing, while crisis management focuses on responding and recovering.


In risk management, data, metrics, and established protocols are used to analyze, evaluate, and manage risks. In crisis management, on the other hand, unexpected and rapidly evolving situations require an agile and flexible approach to handling them.

It involves a more calculated and methodical approach to identifying and addressing risks. When faced with uncertainty, it often involves quick decision-making, effective communication, and adaptability.


The scope of risk management includes all the risks an organization faces, such as financial, operational, strategic, and compliance risks. Crisis management, on the other hand, focuses specifically on managing crises that have already occurred or are imminent.

It takes a holistic view of potential threats and vulnerabilities across an organization. There are specific events that pose immediate risks and require immediate action that are dealt with in this category.

A critical component of organizational resilience is crisis management. Both are essential components and should be viewed as complementary processes.

As opposed to crisis management, which deals with reactive response and recovery from unexpected events, risk management focuses on proactive identification and mitigation of potential risks.

Organizations must utilize both processes to anticipate and mitigate risks, respond to crises effectively, protect stakeholders, and ensure long-term success and sustainability.

To build a robust framework for organizational resilience, organizations should integrate and align their risk management and crisis management efforts.

Bijisha Prasain

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