The Frequency and Cost of Corporate Crises
University of Melbourne - Department of Finance; Financial Research Network (FIRN)
Journal of Contingencies and Crisis Management, Vol. 12, pp. 2-13, March 2004
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: 12Accepted Paper Series
Date posted: March 14, 2004
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