According to the Security Management glossary, crisis management is the application of strategies designed to help an organization deal with a sudden and significant negative event.
A crisis can occur as a result of an unpredictable event or as an unforeseeable consequence of some event that had been considered a potential risk. In either case, crises almost invariably require that decisions be made quickly to limit damage to the organization. For that reason, one of the first actions in crisis management planning is to identify an individual to serve as crisis manager.
Other crisis management best practices include:
>> Planning in detail for responses to as many potential crises as possible.
>> Establishing monitoring systems and practices to detect early warning signals of any foreseeable crisis.
>> Establishing and training a crisis management team or selecting an external crisis management firm with a proven track record in your business area.
>> Involving as many stakeholders as possible in all planning and action stages.
The field of crisis management is generally considered to have originated with Johnson & Johnson’s handling of a situation in 1982, when cyanide-laced Tylenol killed seven people in the Chicago area. The company immediately recalled all Tylenol capsules in the country and offered free product in tamper-proof packaging. As a result of the company’s swift and effective response, the effect to shareholders was minimized and the brand recovered and flourished.
I know what you’re thinking right about now: Why is he talking about crisis management? I’ve been in the mortgage industry for over 15 years now, and the reaction of lenders and vendors alike to any change continues to astonish me. In the mortgage industry any change is treated like a crisis and everybody quickly goes into crisis management mode.
I ask myself time and time again: Why does this happen? For example, TRID is not a crisis. It is a big change, but it’s not a crisis. Long after the TRID deadline people will still need mortgages and lenders will be there to originate them. Nobody is going to die over this as was mentioned with the Tylenol crisis of the early 1980s. Everything will be just fine, trust me.
And after TRID there will be another regulation that spooks everyone. Here’s my advise: Instead of going into crisis mode, I hope the industry will choose to innovate instead. Use these new rules to genuinely improve the mortgage business.
About The Author
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at email@example.com.