Analyze potential risks

With your group, brainstorm the costs for each risk you've identified. Consider everything that might go wrong, and assess the costs if it should. A risk analysis measures more than just costs in terms of money. Determine costs in terms of human health and safety, and other important factors such as ability to meet customers' demands, ability for employees to work and communicate efficiently, and the company's reputation.

Prioritize those that are most pressing, and deal with them first.

Come up with a crisis or contingency plan. Having selected a key what-if scenario and analyzed possible consequences, brainstorm the kinds of decisions that will have to be made. In the event of a natural disaster, employees may have to be evacuated. Second- or third- shift employees might have to be notified. If a problem arises getting a product to market, additional staff may have to be hired quickly, alternative methods of transportation might have to be lined up, or management may have to answer phones. In the event of an impending strike by transportation workers, you might decide to call in a team of employees who drive minivans to bring some people to work and arrange for some people to work from home.

As you go through this exercise, start to consider who should be making these decisions.

Explore the crisis plan's possible side effects. Perform a reality check on your plan by brainstorming possible side effects.

For example, when a chain of auto-repair shops wanted to boost sagging sales, management offered mechanics sales incentives. The more work they brought in, the bigger bonus they'd make. Unfortunately, some of the mechanics began recommending unnecessary repairs. Customers complained that they were being ripped off, and the chain's reputation suffered. Similarly, a factory offered incentives for every defective product turned in, but it soon turned out that some workers were deliberately damaging products in order to receive the awards. And when a pizza company promised to deliver their "pizza in 30 minutes or it's free," speeding drivers caused car accidents.

You don't have to cover every eventuality, but thinking things through carefully can help prevent problems.

Form a crisis-management team

The outcome of the crisis depends on the performance of the people making the decisions. The better prepared they are, the better the crisis will be handled.

Determine who on your team will

• be involved in handling each aspect of the crisis
• make what kinds of decisions
• notify authorities within the company
• notify employees, government agencies, media, and so forth
• decide if employees should stay home
• decide to evacuate a building
• decide to hire temporary personnel in the event of an unexpected business rush

Once these decisions have been made, make sure that every person on the team has a back-up in case they are unavailable.

Create and distribute a list of all phone numbers, e-mail addresses, and ways to reach critical team players. Have people put the list on their computers, in their mobile-phone address books, on wireless communicators, and in their home office . . . wherever anyone on the team could possibly need access to it.

Form a crisis network. Identify both formal and informal networks within the organization. Who are key players you may need to rely on in a crisis? Make it a point to establish relationships that you don't already have. When a crisis comes, it's a lot easier to handle if you already know all the players.