Whenever systems break down unexpectedly, crises can arise. If the initial breakdown is not managed effectively, crises can spread over space and time to threaten not only the effective function but also the existence of the system itself. In this sense, “crisis management” involves planning for, coping with, and recovering from the impacts of unexpected events. As the scope, scale, and complexity of the systems that organize contemporary society increase, crisis management becomes increasingly critical in order to sustain everyday life.
Crisis management is relatively young, having emerged as a field of practice and a field of academic research in the late 1980s following a succession of high-profile and deadly system breakdowns (including the Bhopal gas leak, the nuclear accident in Chernobyl, the explosion of the Challenger space shuttle, and the Exxon Valdez oil spill). More recently, the crises associated with events as diverse as rogue traders, disease outbreaks, computer malfunctions, and terrorist attacks have led to the establishment of variety of subdisciplines, including business continuity management, disaster recovery, operational risk management, and enterprise risk management. In all of these cases, and in everyday personal situations, crises are “associated with urgent, high-stakes challenges in which the outcomes can vary widely … [depending] on the actions taken by those involved,” as stated in the Encyclopedia of Leadership.
As of this writing, the most prominent highstakes challenges currently include the financial and economic crisis that originated in the real estate market in the United States in 2008, continues to have dramatic impacts in the Eurozone, and has recently snared JPMorganChase in scandal; the political crises associated with the Arab Spring, including most recently the tragic civil unrest in Syria; and the looming ecological crisis associated with climate change, which amplified the damage done to coastal cities and towns in the northeastern United States by recent weather events, typified by Hurricane Sandy.
Effective action in response to crisis situations such as these requires art as well as science. Perhaps the most iconic image of the scientific management of crisis is the control center with digital screens along the walls displaying maps, graphs, and charts, with analysts sitting at computer terminals and commanding officers barking out orders. Such settings do exist, and they depend on a variety of networks and embedded technological systems, including everything from the information-gathering and surveillance systems that feed data into the system, to the IT infrastructures that provide a platform for those systems, to the dashboard-style decision support systems that enable leaders to make individual and collective decisions. In addition to these concepts and resources, creativity and imagination are required in order to deal with unexpected events. Within large businesses, the military, and civil defense organizations, it has become standard practice to include artists, writers, and other creative professionals in scenario planning and war-gaming exercises for the purely tactical reason that they are able to view systems holistically, imagine alternative causal chains, and thereby identify previously unseen sources of vulnerability as well as resilience.
In order to describe and understand why some systems—and indeed, some people—appear more resilient to unexpected events than others, scholars draw on a range of academic disciplines. Computer scientists are developing ever more robust network architecture and backup systems. Natural scientists are working to better understand Earth systems to mitigate natural hazards. Social scientists are developing new ways to model risk and to understand how and why social systems break down in ways that lead to crises, as well as how to avoid these breakdowns or mitigate their consequences. Business management disciplines have formalized new approaches to maintaining operational continuity in the face of disruptions, whether they affect a single enterprise or threaten an entire industry sector, city, or region.
Within this context, the concept of “global risk management” signals a recognition that some potential crises can be addressed only through engagement across the boundaries of individual firms or industrial sectors, and across the divides between governments and the private sector. To this end, in 2006, the World Economic Forum (WEF) began issuing an annual Global Risk Report, outlining potential sources of common risk. For example, the WEF’s 2007 report highlighted 23 global risks arranged in five categories: economic (e.g., “oil price shock,” “excessive indebtedness,” etc.), environmental (e.g., climate change or natural disasters), geopolitical (e.g., international terrorism), societal (e.g., pandemics or “liability regimes”) and technological (e.g., failure of “critical information infrastructure,” and nanotechnology). In 2011, the Organisation for Economic Co-operation and Development (OECD) released its Future Global Shocks report, addressing the risk of extreme events that produce continent spanning disruptions. The authors note that, especially in the wake of the 2008 financial crisis, risk management has come to focus on “drivers of vulnerability that tightly weave interconnections between commercial supply chains, technological systems and investment vehicles underlying the global economy,” and that “unanticipated events such as natural disasters, failures in key technical systems or malicious attacks could disrupt these complex systems and produce shocks that propagate around the world.” Furthermore, the report argues that “knowledge management tools, modeling and data arrays” are making it easier to anticipate and respond to these new cascading risks.