Financial Crisis Management in the United Nations

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Introduction

A crisis can be defined as the perception of an abnormal situation that is beyond the capability of the business and its scope to deal with. Under these situations, the reputation, operation, and safety of the organization are threatened. A crisis can be caused by among other things, natural disasters (floods, fire, earthquakes, and other disasters), terrorism, industrial action, failure by a third party, or mismanagement of money. Most crises are usually very devastating especially when they happen so suddenly in a manner that everybody is caught unawares. When this happens, there should be a well-structured strategy or plan to effectively focus and deal with the crisis. (Birkland and Nath, 2000)

Dimensions of a crisis

Behavior and ethics
Victims and operations
Professional solutions and lessons to be learned
Trust and /or credibility of the organization to handle the crisis

This research study will investigate the current state of financial crisis management in the United Nations and how the authorities are dealing with the issue under the old and recently developed policies and frameworks. The financial crisis is a common phenomenon in today’s society and organizations. By utilizing the concept of public relations various strategies, frameworks, theories, and policies have been developed to contain and manage a financial crisis. (Birkland and Nath, 2000)

There are also risks associated with the emergence of a crisis depending on the type of crisis involved. The most significant ones are the development of chaos, nuisance, and financial bankruptcy, and also to some extent, it causes legal penalties and other manifestations which at times requires effective public relations administration.

A financial crisis can be described as a situation that occurs when money demand by the customers or the public rises beyond the relativity of money supply by the same organization such as a bank or any other financial institution. Research reveals that the causes of the United Nations financial crisis may have resulted through the following

Over-investment and borrowing.
Large current account deficits.
The larger magnitude of foreign debt.
Bursting of asset price bubble.
Corruption, mismanagement.
Liquidation of as company.
High cost and low cost financial economies.

Financial crisis at the UN

Due to a lack of commitment by member states to contribute funds to the United Nations, the international body has been experiencing a financial crisis since the beginning of the last decade. Countries such as the United States have been able to push through their agendas in terms of policies implementations in the UN with very minimal financial support. This has resulted in the overstretching of the Union’s budget over the last few years.

Poor relations between the US and EU have also impacted more force on the financial crisis at the international body. With increased cases of international crises and other conflicts such as the war in Israel, the financial crisis is expected to pose a challenge. However, there have been stringent measures to ensure that the financial crisis is contained and sorted out to have the organization processes continue smoothly (Werth, 1994).

At this global level, the UN has made new international public relations as well financial-enhancing transparency strategies to strengthen crisis management within international institutions. This has been done through the development of codes of conduct to practice economic systems and provide guidelines to manage crises. The UN through its development-oriented strategies has not been able to entirely deal with the financial problems it experienced especially in the last decade. Economic efficiency, in turn, and another financial liberalization has improved at the global body since the commitment of countries to settle their debts. However, with soar US-UN and UN-EU relations, the organization is finding it difficult to address the issue adequately.

Figure1. UN debts, expenditure, and deficits.

YEAR	Deficits (%)	Regular budget $million	Debts $million	Expenditures $million
1986	37	725	199	3200
1987	22	725	221	34
1988	19	878	200	35
1989	20	909	212	3590
1990	19	1005	242	3675
1991	15	1134	234	3708
1992	10	1234	222	4005
1993	12	1267	203	4678
1994	16	1344	219	5430
1995	17	1590	276	6622
1996	11	1621	209	6943
1997	9	1700	257	7034

UN being a global body, not a state has no official definition of crisis but utilizes its public relations strategies to define such occurrences as emergencies to be addressed and not real issues. The U.S laws, standards, etc for example are used by the institution to reference its operations. How the U.S responds to individual crises differs from what is usually done in any other country mainly because of its strategic approach to issues.

The UN, on the other hand, is not a free actor but its ability to solve its internal crisis in addition to other rising global crises depends on the ability of the member states to contribute financially, emotionally, and physically committed to the course of the entire crisis. Currency crises and banking crises are examples of crises that fall in this category not only in the UN but also in other states and organizations.

Crisis management process In the UN

Crisis management is usually taken as a normal operational management issue which is usually on the end of urgency. It also means that the organization should be able to use the already existing policies and structures within the organization to deal with the crisis. Early identification of the signs of a crisis helps a lot to trigger any countermeasures that will reduce the impacts of the crisis on the organization. A good framework for managing a financial crisis within an organization is to involve other organizations that are affected and improve the already existing communication channels to enable all stakeholders to understand and accept is normal and usually happens top any company at any given time (Hooghiemstra, 2000)

The proposed framework for UN crisis management is the adoption of the three processes commonly referred to as ‘STOP’ ;( strategic, tactical, and operational) which are considered to be purely public relation strategies. In the UK for example, the framework has been referred to as the ‘Gold, Silver and Bronze control framework’ and it has been used to solve issues of crisis such as the Iraq crisis in recent years. The frame entails the use of the model below when a crisis is recognized and noticed. The best framework for handling immediate financial crisis in the UN which are considered public relations strategies include the following; Investigations, Access restriction, Details confirmation, Issuing public statements via media, Considerations of options, tackling the crisis

There have been recent developments taken by the United Nations to address its internal crisis through public relations. In September 2004 the United Nations circulated an organizational draft that outlined some regulations that it will itself adopt to contain any financial crisis. It also needed its member states to adopt the same to build on their financial structures especially in developing countries. In the same year in November, the headquarters developed study lessons to allow its governing, authorities to learn to cope up with the number of increasing crises not only in the organization but also in other developing states.

The imitative dubbed, the ‘Contact Group’ included members from Russia. America, Britain, and Japan The initiative came up with recommendations such as; a clear definition of tasks and responsibilities for crisis management committees, preventive measures, pre-planning techniques, crisis outcomes which were regarded as public relations exercises since it was known by the member countries (Helter, 1992).

How it could have been managed

Crisis communication could have been utilized by the UN in solving its financial crisis; this concept entails the better part of crisis management. This is because it spells out the organization’s reputation to not only the stakeholders but also to the general public. The media can either attack or protect the image of the organization. During the occurrence of crisis media response and handling of the matter affects the ability of the organization to ultimately respond to the crisis.

Every move must be anticipated immediately to keep the organization’s crisis response quick. Compelling and crafting statements are possible ways of handling communication crises. The management can also pass drafted messages that outline the crisis. It will also help in identifying and cooperating with other parties that can assist in alleviating the crisis and this can only be done by using the following crisis management processes.

Strategic processes

The strategic process involves the involvement of all the stakeholders including the board of management, public relations office, and the crisis management team. The team will develop suitable strategies to analyze the crisis to contain it. To do this, a crisis management plan is to be put in place and should include the following tips; identifying the people involve and dedication of duties to them, drafting a process for decision making, ways of involving the management, developing a crisis center, and other levels of control in the authority limits.

Preparedness

Crisis management preparedness issues should be reported to the stakeholders to allow for scrutiny and performance evaluation. Crisis management issues should be made part and parcel of the usual strategic planning processes for the institution. The UN for example has drafted policies to curb any financial crisis in the giant institution. Because of its vulnerability to crises, the institution has had a crisis preparedness policy that will see any financial crisis sorted out before it explodes. The conflicts in Sudan, Iraq, and Somalia, etc are unplanned and have overstretched the resources of the institution. To resolve such conflicts, the UN needs to spend a lot of money making it susceptible to the financial crisis.

Response

The most important feature of crisis management is a good media campaign to iron out key information that the public needs to know about the public. Effective and theoretical media relations should be developed and implemented in place to tackle any expected and unexpected crisis in the organization. The main limitation with utilizing the media as a means of conveying key messages to its customers is that it can damage the image of the company through the spreading of rumors and propaganda about the real state of the crisis and the expected effect

Recovery

The activation of systems that manage and oversee crisis issues is triggered when good response systems are in place. These systems may include the utilization of recovery committees and recovery organizations. In most cases, the government or the necessary authorities are responsible for sorting out financial issues. For the UN, such organizations could be the Security Council members; the US, France, and England. The chip in financial assistance and also solicit funds from member states to contribute and pay their due that is being owed by the nation’s body.

At the recovery stage, the organization slowly returns to normality, especially if it has implemented the correct crisis management plan and an effective crisis control strategy. The UN, in the last few years, has been able to effectively contain its financial crisis and is slowly recovering mainly because of international commitment and improved cooperation in the world. Recovery systems involve the resolving of any issues that may include the settling of external debt by those concerned. This is achieved through mutual discussions and round table discussions especially if there are any conflicts involved.

Conclusion

The financial crisis in any institution such as the United Nations is common but through effective control mechanisms, it can easily be dealt with using the already existing legislation and frameworks. For every successful response to a financial crisis, there is a good management and response strategy behind it. These strategies are outlined through the formation of a crisis management team, crisis management planning, prevention and control processes, recovery process, and the eventual containing of the crisis. The most important factor that should be paid more attention is the public perception of the company situation.

Reference

Birkland, T and Nath R (2000) Business and public dimensions in disaster management Journal of Public Policy, 20 part 3 Pp 270-300.

Helter, M. (1992) Taming the beast: riding out a financial crisis Financial Marketing Quarterly, Vol.3 Issue 9, pp. 33 – 67.

Hooghiemstra, R (2000) corporate communication and impression management – new Perspectives why companies engage in corporate social reporting Journal, 27(1/2): 50-62.

Parker, G. (1995) Risk Management Problems and Solutions, McGraw – Hill, New York

Tyson, C. and Sherman, B. (1996) Crisis Management Manual, Tandem Press, New Zealand.

UN Finance. UN Finance Policy Framework. Web.

Werth, R. (1994). Protecting the needs of special event security: Security Management Journal, pp. 366.

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