Incident vs Crisis - What's the Difference?

Written by Bryan Hurcombe | Mar 25, 2025 4:31:06 PM

Effective incident and crisis management is essential for any organisation. While incidents are disruptive events that require swift action to prevent further impact, crises demand a more strategic approach as they can pose serious threats to an organisation’s operations, reputation, and long-term stability.

In the fast-moving world of UK financial services, operational disruptions are a fact of life. From system outages to supplier failures, every firm faces its fair share of challenges. But when do these challenges move from being an incident to becoming a crisis - and why does that distinction really matter?

Understanding and recognising the key differences between an incident and a crisis is essential. It affects how we respond, who gets involved, how regulators are engaged, and how the organisation is perceived by customers, markets, and stakeholders.

Why Is This Distinction So Important?

For firms operating in a regulated industry such as financial services, misjudging the nature of a disruption can have far-reaching consequences.

1. Regulatory Expectations & Reporting:

The FCA and PRA expect prompt, transparent reporting of material disruptions. Misclassifying a crisis as a routine incident can lead to delays in notification, breaches of Principles for Businesses (particularly Principle 11), and subsequent enforcement action. With operational resilience rules coming into full effect by 31 March 2025, firms must not only identify disruptions but also show they have escalated and managed them in line with their impact tolerances and resilience strategies.

2. Right People, Right Response:

Incidents can often be handled at a functional or operational level. But crises require cross-functional coordination, executive involvement, and often activation of the Crisis Management Team (CMT). Misclassifying a crisis means you risk delay in mobilising the right resources, resulting in poor situational awareness, fragmented decision-making, and avoidable harm to customers and systems.

3. Customer Trust & Market Confidence:

In the digital age, trust is easily lost and hard to regain. Even a short-lived service disruption can damage customer confidence if not communicated clearly and resolved promptly. A crisis demands proactive, well-managed communication. Understanding when you’ve crossed that threshold allows you to get ahead of the narrative rather than chasing it.

4. Scrutiny & Accountability:

Crises attract external attention: regulators, the media, customers, partners, and sometimes investors. Actions taken during a crisis will be scrutinised - not just in the moment, but retrospectively. A well-documented, structured crisis response can serve as vital evidence of good governance and operational resilience. It can also shape the outcome of audits, reviews, and potential regulatory investigations.

5. Learning & Resilience Maturity:

Crisis events, when correctly identified, offer a rare opportunity to test assumptions, uncover weaknesses, and strengthen organisational resilience. They reveal gaps not just in systems and processes, but also in leadership, communication, decision-making, and governance. Recognising a crisis for what it is ensures you capture these lessons and evolve.

So, What's the Difference?

	Incident	Crisis
Predictability	Generally foreseeable, though the exact timing, type, and impact may vary.	Crises are often rare, unique events or situations. While some may be anticipated, their timing and full impact are usually unpredictable.
Onset	Incidents may occur suddenly with little or no warning, or they may develop gradually due to a loss of control or progressive failure.	Crises can arise unexpectedly or evolve from an incident that was not contained, poorly managed, or escalated to a point requiring a crisis-level response, often with reputational consequences.
Urgency	Managing an incident typically demands swift action to prevent escalation or reduce its impact.	A crisis always requires urgent attention due to its potentially severe consequences. Given its heightened visibility, it often exerts significant pressure on the organisation.
Impact	While incidents may require substantial resources to manage, they rarely threaten the organisation’s survival or inflict lasting reputational damage. The impacts are usually local or affect only a part of the organisation.	Crises can impact the entire organisation, crossing organisational, geographical, and sectoral boundaries. Due to their complexity and uncertainty, assessing their long-term effects can be challenging.
Scrutiny	If an incident is handled swiftly and effectively - minimising impact and restoring normal operations - it is unlikely to attract significant media attention.	Crises are likely to face significant scrutiny and attention from various interested parties, including the public, users of products and services, specific groups such as regulators, shareholders, or industry bodies, and the media - including social media.

Conclusion

In a tightly regulated and high-trust sector like financial services, the distinction between an incident and a crisis is more than operational - it’s strategic. It shapes how you respond, how you’re perceived, and how you perform under pressure. Firms that understand this distinction, and embed it into their response frameworks, are the ones that will thrive in an age of accountability and resilience.

How DCR Partners Can Help

At DCR Partners, we’ve been in the crisis management game for years, and we’ve helped organisations of all shapes and sizes navigate the trickiest situations imaginable. What sets us apart? It’s our multi-year approach, our bespoke training programs, and our commitment to real-world readiness. We know that a one-size-fits-all solution doesn’t work for crises, so we tailor our approach to your business.

If you’d like to learn more about how we can support you in all aspects of crisis management, please don't hesitate to get in touch.

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