Crisis Mangement by ERMS
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Crisis Mangement by ERMS

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    Crisis Mangement by ERMS Crisis Mangement by ERMS Document Transcript

    • Crisis Management - Preparing for the Unexpected by Dennis Hamilton, FBCI (Hon) Most corporate management groups are ill prepared or more likely, unprepared to effectively deal with major crisis situations including; destructive fire, bombing, natural disasters, pandemic outbreak, terrorism or willful acts of destruction. Nor are the majority of companies fully equipped to deal with the problems these events can cause – serious injuries or loss of life, threat to the organization’s brand image and/or operational disruption. The alternative of course, is to be prepared with procedures in place that allow immediate and positive action to be taken in response to any crisis. But how does a company establish such procedures? How does it prepare for an eventuality that some may believe will never happen? What about the cost and the time involved? Which crises should we prepare a formal plan for? This document provides a structure to answer fundamental and sometimes complex questions being asked throughout an organization -- triggered by Enterprise Risk Management, Business Continuity or by regulators and the Board of Directors. What, Who and How … In broad terms, Crisis Management is a matter of facing up to the threat -- recognizing the potential for a crisis and working to forestall it. It is reacting quickly and effectively to any crisis once it occurs. There are several principal elements in facing up to the threat... starting with a clear understanding of what Crisis Management is and does. Crisis Management is a systematic response to unexpected events that threaten the people, image and operating continuity of the organization. Its basis is a team of selected managers, professionals, company first-responders and general staff who are trained before-the-fact in: a) the analysis and assessment of threats, … today, it is estimated that b) the development and implementation of alternative less than 30% of all responses, organizations in North c) the orderly communication of information and decisions America possess a Crisis to those involved and, Management Program that would actually work. d) managing the crisis from the beginning to its conclusion. Copyright CRPC 2009 all rights reserved
    • What would be more important than a set of standard operating procedures to support an organization in a crisis situation? Yet today, it is estimated that less than 30% of all organizations in North America possess a Crisis Management Program that would actually work. The most commonly asked questions by company directors and management are: What is Crisis Management? What can hurt our organization? How probable is it? What is a Crisis Management program comprised of? Who should be responsible and who should participate? What policies, rules and standards are required to make it effective? What tools are at our disposal to support the process itself? Possessing a Crisis Response capability is: Ensuring the organization’s number one priority is the safety and well-being of its employees. Having qualified and trained teams prepared to respond to and manage any disaster or crisis situation. Immediately addressing the concerns of employees and their families, shareholders, suppliers and customers. Managing the chaotic and stressful first 72 hours of a crisis. Having a co-ordinated response to the creativity of the news media and managing rumors and speculation. Having the most qualified and experienced personnel providing the organization’s response. Applying an in-crisis process that maintains focus, ensures key stakeholders are kept informed and provides a coordinated response. Copyright CRPC 2009 all rights reserved
    • Why Do We Really Need Crisis Management? 1. Save Lives/Reduce Injuries – Crisis Management fails when its primary objective, that of saving lives and reducing serious injuries, is not achieved but could have been if there had not been a failure to respond. The lost trust of other employees, the punctuating critism of the media, the negative reaction of Customers and the permanent change in an organization’s culture literally places the organization’s long term survival at risk. Perception, rumor, speculation and assumptions cannot be controlled or managed after the fact; its simply too late. 2. Reduce the Liability - Directors and Officers of a company are personally at risk for the action or inaction of their corporation. However it is not as well known that senior managers, agents and sometimes employees can also be at risk. When there is a catastrophic loss due to a disaster, it is possible that individuals, other than Directors and Officers will be held personally liable if actions that should have been taken were not. Persons who act for organizations are in a position of trust with that organization. They manage and protect it in the best interests of the shareholders, who are owners of the organization. If the responsible persons breach the duty of trust, they may be liable to the shareholders of the organization. 3. Minimize Any Negative Reaction - As history has proven, when an organization experiences a major crisis or physical disaster, the hasty reactions by external parties can cause more immediate and permanent harm than the event itself. A fire, bombing or natural disaster has an obvious and abrupt impact on an organization’s ability to perform. Often, shareholders and customers react in a manner that best protects their investment or source of supply - without consideration for the affected organization. These actions can prevent the organization from effectively recovering from a crisis. 4. Safeguard the Company’s Assets - At the outset of a crisis most of the company assets could be at risk. Product, facilities, equipment and people can all be threatened by a disaster situation. Without existing emergency response plans that have been tested, the chaotic atmosphere and stressful conditions will prevent an organized and immediate response. The losses that could be suffered will increase substantially with every passing hour. Only the immediate actions of the organization can minimize the loss or inaccessibility of corporate assets. 5. Minimize Financial Losses - Only a small portion of potential financial losses can be protected through insurance. The loss of immediate sales, temporary loss of production capacity, inability to provide services or the disruption of distribution capability may all be minor when compared to the permanent loss of market share through lost customers and weakened product and service loyalty. Copyright CRPC 2009 all rights reserved
    • Insurance may cover the short term impact of a disaster but unless the organization has formal Crisis Management and Crisis Response programs in place, the problem will require more than a short-term solution. There are many other reasons why a formal Crisis Management Program is required within every organization, but to net it out, actual survival may be at risk. Crisis Management - It is your organization’s overall capability to respond to: a destructive fire bomb threat a strike a technology failure the damaging actions of a disgruntled a natural disaster employee product contamination denial of access by the authorities terrorism kidnapping an environmental mishap extortion a Pandemic Where the probability of any one crisis event ocurring (such as those listed above) is not necessarily high, the probability of some sort of a crisis event ocurring is a sure thing. What does a crisis response capability deliver? Protection of company officers, senior management and directors from legal action on the part of employees, shareholders or customers from questionable due diligence. Peace of mind; knowing your management team can effectively respond in a crisis situation. A unique marketing opportunity showcasing your organization’s ability to maintain customer service levels, regardless of the situation. An advantage and competitive edge by ensuring your customer base that there will be no interruption in service or supply. The ability to minimize aggressive actions from your competitors. Possible reduction of insurance coverage and therefore premium reductions. A reduction in the loss of company assets. Maintainence of marketshare and market value by calming investors and individual shareholders at the onset of a disaster. It is no use saying, 'We are doing our best.' You have got to succeed in doing what is necessary. - Winston Churchill - Copyright CRPC 2009 all rights reserved
    • The Benefits: Five Principal Advantages The benefits that can accrue from having a Crisis Management Organization (CMO) in place are many: Lives could be saved and the psychological impact on victims and other stakeholders can be minimized through knowledgeable decisive actions focused on the highest Crisis Management priority; ‘to prevent serious injury and loss of life’. Losses can be lowered by being ready for an emergency with pre-planned, management approved policies and procedures. It’s not well known but most of the issues raised in an emergency situation can be addressed in advance. Risk is reduced by using crisis-readiness and pre-event response planning workshops to identify potential danger areas and to implement precautionary measures. In short, to have a better plan than the would-be attackers, thus to harden the target. Response is faster, more precise and more effective when automated Crisis Management and Emergency Management services are utilized by the Crisis Management Organization. Action is more effective when the company has available a multi-discipline management team trained in threat assessment, crisis decision making and communications. Crisis Management in the past was considered by many as unnecessary, or often regarded as required but not a priority. These views remain common but are rapidly changing as more and more senior executives and company directors understand the benefits and savings that can be achieved through an effective Crisis Management Program. Executives and directors agree that they must have at least a minimum level of understanding of crisis response planning as well as the level of need within their own organization. They must know how well their organization will respond and how well the management team will handle the situation. Understanding … Crisis Management, Emergency Response, Business Continuity Planning and Technology Recovery Planning … will allow management to determine the level of need within the organization and to establish priorities of concern and actions required. Copyright CRPC 2009 all rights reserved
    • The Crisis Management Organization For this purpose the term ‘crisis’ denotes a serious unexpected event or assault that threatens the assets of an organization. ‘Assets’ in turn, are taken as being the safety of its people, its internal and external image, its financial health and its ability to carry on business in a normal manner. When a crisis occurs, major problems may stem from the effects of the threat itself (surprise and fear) and from having little time in which to make decisions (stress and panic). This underscores the need to have in place a Crisis Management Program that will give the company the capability to respond under pressure in a manner calculated to safeguard the lives of its people and to protect the welfare of the business. The watchword of Crisis Management is ‘preparedness through pre-planning’ and involves: Anticipating and dealing in advance with most of the issues involved in emergency situations (although each incident will differ from all others, the same general characteristics can be expected). Taking preventative measures both for protection and as deterrents (a would be attacker confronted by evidence of preparedness, may be encouraged to go in search of an easier target, a fully tested and operating fire suppression system could prevent the destruction of your building). However, in the event that preventive measures fail and an incident occurs, having a Crisis Management Program can reduce the fear and uncertainty of the situation while ensuring that time and effort are used effectively. In fact, preparedness can deny an attacker precious time they count on for the success of their plan. But even so, the organization should place emphasis on effective preventative security to avoid the need for activating the Crisis Management Program. Structure and Operation Based on the experiences of many organizations and the "Things are only impossible until they're not." expertise of ERMS, a Crisis Management Organization ~ Jean-Luc Picard ~ should be comprised of four levels of responsibility: 1. Crisis Management Team (CMT) - This is the organization’s senior executive team which has ultimate responsibility for corporate decisions relating to: crisis management, its role, structure, method of operation and in-crisis decision making. 2. Crisis Response Team (CRT) – A team of senior personnel from key ‘utility groups’ within the organization who have the skills and professional discipline to effectively respond to and manage a crisis situation. In its pre-event mode, the CRT is responsible for evaluating policy options and in conjunction with the Decision Making Authority, formulating corporate crisis management policies. Should an incident occur, the Crisis Response Team assumes responsibility for operational response and control of the crisis; continuous assessment of the threat and within the parameters of its charter, for directing all crisis management activities. Copyright CRPC 2009 all rights reserved
    • 3. Emergency, Contingency and Recovery Teams - These are the various emergency, contingency and recovery teams within an organization that have an assigned mandate to respond to manage specific threats or events that could impact the organization. Examples of Operational Contingency and Recovery Teams are: Salvage Operations, Business Continuity, Technology Recovery, Call Center Recovery, Staff Relocation and External Notification. 4. Local Management Teams - Depending on the nature of the incident, other smaller company locations may be directly or indirectly affected. Local Management Teams are responsible for carrying out corporate policy and operational recovery as it affects them and as directed by the Crisis Response Team or possibly the organization’s Crisis Management Team. Crisis Management is an acceptance that risks do exist and that organizations must be prepared to respond to threatening events; to be proactive. Performing corporate salvage operations after the fact is not considered a preferred or viable alternative. “There is nothing so strong or safe in an emergency of life as the simple truth” ~ Charles Dickens ~ Copyright CRPC 2009 all rights reserved