The Frequency and Cost of Corporate Crises

Abstract:     
This paper sheds light on the pattern and consequences of crises experienced by corporate Australia during the last decade. Crises are defined here as a single incident or issue with consequences that threaten the organisation's viability; thus, this study observes 55 corporate crises in Australia between 1990 and 2001. Half were operational crises; the prevalence of extortion and product recall made wholesale and retail trade the most crisis-prone industry. In Australia, over a quarter of companies affected by crisis did not survive. Direct costs typically exceed $10 million, with a quarter costing over $100 million. Because many crises are due to systemic deficiencies in industries or companies, their causes are often apparent (at least in hindsight).

Number of Pages in PDF File: 12

Accepted Paper Series