Understanding crisis management


Published on

Published in: Business, Technology

Understanding crisis management

  1. 1. UNDERSTANDING CRISIS MANAGEMENT Dhiraj Lal Executive Director, Continuity and Resilience dhiraj@continuityandresilience.com - +971-52-9263933, +971-56-6902060 © Continuity and Resilience – Copyright 2013
  2. 2. Introduction to Dhiraj Lal • Professional Certifications • Fellow of the British Computer Society (FBCS) • Member of the Business Continuity Institute (MBCI) • Certified Business Continuity Professional (CBCP) • Certified Information Security Auditor (CISA) • ITIL Foundation and Six Sigma Certified • BS 25999 Lead Auditor • BSI‘s First Technical Expert on BS 25999 in Asia • Prior Corporate Appointments • American Express • Citibank NA • Standard Chartered Bank • Agilent Technologies (HP promoted) © Continuity and Resilience – Copyright 2013
  3. 3. AGENDA • What is a crisis • Terminology • Criticality of crisis management • Crisis Management Frameworks • Crisis Communications © Continuity and Resilience – Copyright 2013 © Continuity and Resilience – Copyright 2013
  4. 4. Crisis- some definitions PAS 200:2011 Crisis Management Guidance and Good Practice. • An inherently abnormal, unstable and complex situation that represents a threat to the strategic objectives, reputation or existence of an organisation NATO • A national or international situation where there is a threat to priority, values, interests or goals UK Department for Business Innovation and Skills (BIS) • An abnormal situation, or even perception, which is beyond the scope of everyday business and which threatens the operation, safety, and reputation of an organisation Seeger, M.W., Sell now, T.L., & Ulmer, R.R. (2003) © Continuity and Resilience – Copyright 2013 • A specific, unexpected, and non‐routine event or series of events that create high levels of uncertainty and threaten or are perceived to threaten an organisation‘s high priority goals 4
  5. 5. Are you prepared for these! © Continuity and Resilience – Copyright 2013 5
  6. 6. Some Crisis situations Protests Assault - of a staff or visitor Sexual harassment Criminal activity Health emergency Fire or explosion Accident Bomb threat Natural disaster (flood, earthquake, etc.) VIP visit Power outage And many, many more! © Continuity and Resilience – Copyright 2013 6
  7. 7. Food for thought In your personal life, have you ever faced a sudden and unexpected situation which threatens to derail your plans? © Continuity and Resilience – Copyright 2013 7
  8. 8. Have you ever….  Lost your wallet? Including credit cards, driving license etc?  Lost your phone (& the phone directory)?  Not had internet access when you badly needed it?  Been locked out of your house or your car?  Had a flat tyre when you had some place to go urgently ? Could we call any of the situations above as a crisis? © Continuity and Resilience – Copyright 2013 8
  9. 9. Possible impact of a Crisis • Lost reputation • Regulatory violations • Injury, loss of life • Loss of customer/stakeholder confidence • Re-work, damage control, frustration • Lost revenues and re-work costs • Business interruption costs © Continuity and Resilience – Copyright 2013
  10. 10. Financial Impact Companies that did not have a crisis plan performed poorly over time © Continuity and Resilience – Copyright 2013 10
  11. 11. Coming out stronger Companies that had a crisis plan showed an increase in price share after an event © Continuity and Resilience – Copyright 2013 11
  12. 12. Need for Crisis Management © Continuity and Resilience – Copyright 2013 12
  13. 13. Classification of a crisis • May or may not Natural Manmade be predictable • Could have a pattern • Likely to have high Accidental negative consequences • Emotionally hazardous © Continuity and Resilience – Copyright 2013 13
  14. 14. Natural Crises Earthquake • More Floods Volcanic eruptions Wildfire predictable than others Tsunami Tornadoes • Intensity Heat/ Cold waves Blizzards/ Storms Hailstorms can vary • Cascade Droughts Cyclones © Continuity and Resilience – Copyright 2013 effect 14
  15. 15. Manmade Crises • Riots, Confrontations • Strikes • Workplace violence • Misdeeds, fraud • Rumours, Sabotage • Sexual Harassment • Slander, Reputational issues © Continuity and Resilience – Copyright 2013 15
  16. 16. Accidental Crises • Fire • Building collapse • Explosions • Leakage of hazardous chemicals • Damage to life and property © Continuity and Resilience – Copyright 2013 16
  17. 17. Real Life Crisis © Continuity and Resilience – Copyright 2013 17
  18. 18. Some Other Real Life Crises Event Overview Titanic In 1912, the Titanic, a Trans-Atlantic ship on its maiden voyage, hit an iceberg and sank. Though some people escaped by lifeboats, there were still 1,502 people killed. Chernobyl disaster In 1986, reactor number four at the Chernobyl Nuclear Power Plant located in the Soviet Union near Pripyat in Ukraine exploded. Large areas in Ukraine, Belarus, and Russia were badly contaminated, resulting in the evacuation and resettlement of over 336,000 people. Exxon Valdez oil spill In 1989, the Exxon Valdez oil tanker ran aground, spilling 250,000 barrels, an amount equal to more than 10 million gallons, of oil into Alaska's Prince William Sound. Efforts to contain the spill were slow and Exxon's response was even slower. Halifax Explosion In 1917, in the harbor of Halifax in the Canadian province of Nova Scotia, the Mont Blanc, a French munitions ship, explodes 20 minutes after colliding with another vessel. The massive explosion killed more than 1,800 people, injured another 9,000--including blinding 200--and destroyed almost the entire north end of the city of Halifax, including more than 1,600 homes. Banqiao Dam Collapse In 1975, catastrophic dam failure in western Henan province, China, caused by a typhoon (tropical cyclone) caused more than 150,000 casualties, making it one of the deadliest typhoon disasters in history. Bradford City Stadium Fire In 1985, the worst fire disaster in the history of British football occurred during a league match in front of record numbers of spectators killing 56 and injuring at least 265. © Continuity and Resilience – Copyright 2013 18
  19. 19. What can we do differently? Minimize impact by preventing crisis situations from arising Plan response and recovery activities. Rehearse and keep the organization prepared if crisis situations arise. Deal with the crisis in the shortest time possible, and so minimize impact CRISIS MANAGEMENT © Continuity and Resilience – Copyright 2013 19
  20. 20. Crisis Management • Proactively identification • Preparation • Effective response • Restoring business as usual • Plugging gaps which triggered the crisis • Incorporating learning outcomes © Continuity and Resilience – Copyright 2013 20
  21. 21. What are we dealing with? • Complex and dynamic systems • Emerging risk and human actions • Uncertainties – challenges of managing the unknown or unexpected Our only hope is widely embraced in the concept of ― Resilience‖ Resilience is the capability of a social system © Continuity and Resilience – Copyright 2013 Focuses on expected and unexpected disturbances It is mission oriented and an applied science 21
  22. 22. Planning helps in: • Preparing crisis plans in advance and ensuring that an organization is appropriately prepared for a crisis. • Rehearsing a crisis plan by crisis management teams via a simulated scenario to use as a drill. • Indicating how quickly each function should be performed as the first hours after a crisis breaks are the most crucial. • Preparing crisis communication statement for external and internal stakeholders. • Including information and guidance in the contingency plan pertaining to short-term consequences and long-term effects to help decision makers. © Continuity and Resilience – Copyright 2013 22
  23. 23. Common features of a crisis • Situation materializes unexpectedly • Quick decisions required • Less time at hand • High pressure situation • Urgency of information seeker • Interruption to routine business • Difficulty in communication • Attracts outside attention © Continuity and Resilience – Copyright 2013 23
  24. 24. Crisis Management Perspective A range of emotions: Denial “This could not have happened.” © Continuity and Resilience – Copyright 2013 Anger Panic Anxiety “How could this have happened?” Panic prevents reason and “How do I tackle this situation?” “How could somebody do that?” logical thinking “Will I be able to get out of it?” 24
  25. 25. Strategies © Continuity and Resilience – Copyright 2013 25
  26. 26. Crisis Management Stages Detection Preparation and Prevention © Continuity and Resilience – Copyright 2013 Containment and Damage Control Business Recovery Learning 26
  27. 27. The Publicly Available Specification (PAS) was sponsored by the UK Cabinet Office, to support top managers in executing their Crisis Management responsibilities. © Continuity and Resilience – Copyright 2013 27
  28. 28. PAS 200:2011 – Contents 1 Scope 2 Terms and definitions 3 Understanding crises 4 Developing crisis management capability 5 Planning and preparing for crisis response and recovery 6 Communication in a crisis 7 Evaluating crisis management capability © Continuity and Resilience – Copyright 2013 28
  29. 29. PAS 200 summary Development and maintenance of crisis management capability Emphasizes inclusion in the organization‘s governance & strategy review processes Prepares procedures for a coherent crisis management and BCM response Helps in implementing horizon scanning and internal systems-based analysis disciplines Addresses core communication needs of staff and key stakeholders Focuses on all the elements of an organization‘s crisis management capability © Continuity and Resilience – Copyright 2013
  30. 30. Preparation and Prevention • The diagnosis helps in assessing company‗s state, define the symptoms of the problem and features of the potential crisis. • Diagnosis helps management in fixing threshold for showing the uncomplimentary results determining crisis situation appearance. • The earlier crisis is diagnosed, the faster particular anti-crisis means are chosen and the loss is smaller. © Continuity and Resilience – Copyright 2013 30
  31. 31. Preparation and Prevention • Pre crisis preparation involves planning and creation of structures to deliver a crisis response. • Implementation of a programme of training and exercising. • It is during this stage that crisis handlers begin preparing for or averting the crisis that had been foreshadowed in the signal detection stage. © Continuity and Resilience – Copyright 2013 31
  32. 32. Containment & Damage Control • The goal is to limit the reputational, financial, safety, and other threats to firm survival. • Bring the crisis to an end as quickly as possible to limit the negative publicity to the organization • Early containment of Crisis helps to move into the business recovery phase. • Corrective & preventive actions to preclude the recurrence similar crisis situation and business recovery actions to restore public confidence © Continuity and Resilience – Copyright 2013 32
  33. 33. Business Recovery • Post crisis focus should be on rebuilding, which can be time-consuming and expensive. • Organization has to make adequate financial arrangements beforehand, should there be a threat of any such crisis occurring. • All damages and losses should be accounted for in detail, with photographs and/or video proof maintained along with them. • Having an effective crisis management plan helps the organization or the entity get back to normal without losing too much time or money. • Once the crisis has passed, it is very important to review the effectiveness of the crisis management plan to correct any shortcomings. © Continuity and Resilience – Copyright 2013 33
  34. 34. Lessons Learned and Evaluation • Describes techniques and processes for evaluating the organization‘s preparedness and capability. Evaluation Training Awareness © Continuity and Resilience – Copyright 2013 Exercise Design Coordination
  35. 35. Planning and Preparation SITE CRISIS RESPONSE PLAN POLICY AND LEADERSHIP CRISIS MANAGEMENT PLAN Provides foundation, framework for action Provides structure, mechanisms for Provides roles, responsibilities for operational response staff for coordinated response to more frequently occurring incidents CRISIS RESPONSE TEAM Site level response personnel COMMUNICATION TRAINING Foundation of any crisis planning, Maintains preparedness and helps in implementation, management and knowing what to do is crucial recovery effort © Continuity and Resilience – Copyright 2013 35
  36. 36. Crisis Management Plan • The step by step plan procedures should address; • Assignment of responsibility to staff members • Special needs of affected individuals • Notification of local emergency services • List of emergency telephone numbers • Provisions to shelter people inside the site or identification of evacuation assembly areas outside of the site • Evacuation plans if it‘s necessary to leave the site and aarrangements for transportation • Protection of valuable records © Continuity and Resilience – Copyright 2013 36
  37. 37. Crisis Command Crisis Leader/ Crisis Coordinator Liaison Officer First Aid Coordinator Staff Coordinator Safety Staff family Liaison Operations Officer Documents Officer District Crisis Response Team Other Support Personnel Crisis Recovery Coordinator © Continuity and Resilience – Copyright 2013 37
  38. 38. Crisis Management Centre • The Crisis Management Centres (CMC) helps in management of crisis and acts as a hub. • The duties and responsibilities of CMC involve setting direction. • CMC controls coordinates all activities information from and all sources. • Communication centres may be set up within or away from CMC © Continuity and Resilience – Copyright 2013 38
  39. 39. Crisis Leadership Tactical and operational level teams. Look at issues such as: Crisis Management Tools Understanding relationships and stress in crisis teams Decision support tools to support the crisis leader The critical issues of decision making and timeliness © Continuity and Resilience – Copyright 2013 Practical management of crisis The differing roles of the team and the leader Creating a cohesive and motivated team
  40. 40. Crisis Management Team Key roles • Executive/CEO– responsibility & authority • Team leader (may be CEO)– keep team updated and focused • Spokesperson– public relations, central source of information, communications, rumour control • Legal representative– legal guidance & implications of actions • Researchers– gather facts & compile information for position statements © Continuity and Resilience – Copyright 2013 Typical team composition • Crisis Leader • Facility management • Legal department • Risk management • Information technology • Human resources • Financial services • Corporate security • Public relations/ communications 40
  41. 41. Crisis Leader - Competences Critical competencies required of a good crisis leader are : • Ability to lead a team of experts • Crisis communication expertise • Well connected and motivational • Courageous and decisive • Good Listener • Awareness and good general knowledge • Emotional but mentally strong • Integrative thinker © Continuity and Resilience – Copyright 2013 41
  42. 42. Crisis Communications © Continuity and Resilience – Copyright 2013 42
  43. 43. Lack of communication could • Lead to a perception that the company is callous or guilty • Damage company reputation resulting in bad press • Loss of stakeholder confidence, including key investors • Loss of customers as they move across to competitors • Loss of staff confidence in their own organisations resulting in de-motivation • Negative impact on the bottom line © Continuity and Resilience – Copyright 2013 43
  44. 44. Communicating in a crisis Discusses internal and stakeholder communications, but also includes outline guidance on preparing to communicate with the media and the general public. Communications Strategy Communication Guidelines Communication Methods Issues Management Formal and Informal Communication Structures Barriers to Communication Risk Communication Stakeholder Engagement Consistency in Communication © Continuity and Resilience – Copyright 2013 44
  45. 45. Crisis Management messages • The foundation of any crisis response is the message that is communicated. • When a crisis hits, the first thing you do is figure out what the facts are • Among the messages that are invariably part of any good crisis response: A succinct explanation of what went wrong © Continuity and Resilience – Copyright 2013 An expression of concern for the impact that the situation has on stakeholders A sincere apology and accepting responsibility A commitment to address causes 45
  46. 46. How to communicate Know your audience • Employee • Investors/board members • Customers • Opinion leaders in your community • Elected officials • Media/press © Continuity and Resilience – Copyright 2013 46
  47. 47. Holding Statement Time One point contact Sympathize is of the essence be quick and try to make the initial response within the first hour Availability 5Ws Provide some expression What happened? of concern Where did it happen? for what When did it happen? has happened Who was involved? Why did it happen? © Continuity and Resilience – Copyright 2013 Content Make public safety the number one priority Tell if and when the spokespers ons of the company, will be available to address Do not have multiple spokespersons, this could lead to contradictions 47
  48. 48. Social Media & CM Using social media to get the news Pros and cons of Social Media news and Crisis reporting Pros Immediacy, Anyone can report news, News is dissipated quickly, Cell Phones can reach virtually anywhere © Continuity and Resilience – Copyright 2013 Cons Limited space, Inaccurate information, Potential lack of journalistic integrity, Citizen journalists putting themselves in harm’s way to get story 48
  49. 49. Successful Crisis Management Tylenol (Johnson and Johnson) • In the fall of 1982, a murderer added 65 milligrams of cyanide to some Tylenol capsules on store shelves, killing seven people, including three in one family. • Johnson & Johnson recalled and destroyed 31 million capsules at a cost of $100 million. • The affable CEO, James Burke, appeared in television ads and at news conferences informing consumers of the company's actions. • Tamper-resistant packaging was rapidly introduced, and Tylenol sales swiftly bounced back to near pre-crisis levels. • When another bottle of tainted Tylenol was discovered in a store, it took only a matter of minutes for the manufacturer to issue a nationwide warning that people should not use the medication in its capsule form. © Continuity and Resilience – Copyright 2013 49
  50. 50. Successful Crisis Management Mattel • • • • • • Mattel Inc., the toy maker, has been plagued with more than 28 product recalls and in Summer of 2007, amongst problems with exports from China, faced two product recalls in two weeks. The company "did everything it could to get its message out, earning high marks from consumers and retailers. Though upset by the situation, they were appreciative of the company's response. At Mattel, just after the 7 a.m. recall announcement by federal officials, a public relations staff of 16 was set to call reporters at the 40 biggest media outlets. They told each to check their e-mail for a news release outlining the recalls, invited them to a teleconference call with executives and scheduled TV appearances or phone conversations with Mattel's chief executive. The Mattel CEO Robert Eckert did 14 TV interviews on a Tuesday in August and about 20 calls with individual reporters. By the week's end, Mattel had responded to more than 300 media inquiries in the U.S. alone." © Continuity and Resilience – Copyright 2013 50
  51. 51. Successful Crisis Management Pepsi • The Pepsi Corporation faced a crisis in 1993 which started with claims of syringes being found in cans of diet Pepsi. • Pepsi urged stores not to remove the product from shelves while it had the cans and the situation investigated. • This led to an arrest, which Pepsi made public and then followed with their first video news release, showing the production process to demonstrate that such tampering was impossible within their factories. • A second video news release displayed the man arrested. • A third video news release showed surveillance from a convenience store where a woman was caught replicating the tampering incident. • The company simultaneously publicly worked with the FDA during the crisis. • The corporation was completely open with the public throughout, and every employee of Pepsi was kept aware of the details. • This made public communications effective throughout the crisis. • After the crisis had been resolved, the corporation ran a series of special campaigns designed to thank the public for standing by the corporation, along with coupons for further compensation. This case served as a design for how to handle other crisis situations. © Continuity and Resilience – Copyright 2013 51
  52. 52. Unsuccessful Crisis Management Exxon • On March 24, 1989, a tanker belonging to the Exxon Corporation ran aground in the Prince William Sound in Alaska. • The Exxon Valdez spilled millions of gallons of crude oil into the waters off Valdez, killing thousands of fish, fowl, and sea otters. • Hundreds of miles of coastline were polluted and salmon spawning runs disrupted; numerous fishermen, especially Native Americans, lost their livelihoods. • Exxon, by contrast, did not react quickly in terms of dealing with the media and the public; the CEO, Lawrence Rawl, did not become an active part of the public relations effort and actually shunned public involvement; • The company had neither a communication plan nor a communication team in place to handle the event—in fact, the company did not appoint a public relations manager to its management team until 1993, 4 years after the incident; • Exxon established its media center in Valdez, a location too small and too remote to handle the onslaught of media attention; and the company acted defensively in its response to its publics, even laying blame, at times, on other groups such as the Coast Guard. • These responses also happened within days of the incident. © Continuity and Resilience – Copyright 2013 52
  53. 53. Thank you!!  Address Continuity and Resilience, a division of CORE MANAGEMENT CONSULTING PO Box 127557, Abu Dhabi, UAE  Phone +971 2 8152831  Fax +971 2 8152888  Email dhiraj@continuityandresilience.com pb@continuityandresilience.com  Address Continuity and Resilience CORE Integrated Management Systems Pvt. Ltd. Level 15, Eros Corporate Towers, Nehru Place, New Delhi 110 019 India  Phone +91 11 4105 5534  Fax +91 11 4105 5535  Email info@continuityandresilience.com www.continuityandresilience.com © Continuity and Resilience – Copyright 2013