Crisis and risk management

At the onset of the crisis stage the Northern Rock Crisis was triggered and aggravated by the business model of the company which relied on attaining 77 percent of the funds from the wholesale money lenders while only 23 percent from the personal savings in the bank . This resulted in the limited liquidity of funds available to run the high risk business model which was further aggravated by the inadequacy of the company insurance to cover the retail run which in turn effected the retail banking operations of the business as well p

The third stage of the crisis legitimization depicts that the situation and the crisis of the company leaked out and was aired on the BBC television network , in the face of which the company was unable to effectively management the [public relations . Aside form these the management of the company was restructured while the search for a low risk model was made to sustain the company along with the use of turnaround strategies

The process of crisis management entails that corporate decision makers pay attention to the necessity for turnaround strategies within the planning process . Whilst turnaround management has been widely discussed in the literature relating to strategic management it has , of yet , been largely restricted to the marketing and financial elements of the company 's activities and has focused on the development of contingency plans rather than organizational change (Smith and Sipika 1993 . Smith and Sipika highlighted a model for post crisis management with the phases pertaining to the defensive phase the consolidation phase and the offensive phase . These also incorporated the turnaround strategies for the company

In the defensive phase the company insufficiently managed the stress the unpredicted liquidity crisis at the company . The FSA assigned a crisis decision unit to the company which reported that...