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1 Copyright © 2005 InBev – All rights reserved
Crisis Planning and Preparation at Labatt Brewing Co. Ltd.
Terrance M. Dowhanick, Ph.D.!nBev North America Quality Compliance303 Richmond StreetLondon, OntarioN6B 2H8
Food Safety: Full Circle. Third Annual One Day Symposium, Sept 21, 2006
2
Are you prepared?
Coca-Cola. Great product, great reputation and, even more important, invaluable trademark. Which happens to be in your hands at the moment.
You’re two hours into a possible product recall amid feverish speculation that the product has been contaminated. As a member of the crisis management team, you’re trying to leave your office for a high level emergency meeting, when suddenly you collide with a reporter who promptly waves a microphone in your face.
“Would you drink a Coke right now?” He demands.
3
What company can afford headlines like this...
…’The Food Standards Agency (FSA), the British government's food watchdog, has ordered the recall and says salmonella is unacceptable at any level and Cadbury should have notified them earlier when the bacterium was found in their products.’
…’Cadbury Schweppes apparently delayed informing health authorities for five months that minute traces of salmonella had been found at one of its UK chocolate factories.’
…’Cadbury said the withdrawal was a "precautionary measure“’…
…’the incident is an unmitigated disaster in terms of public relations.’
4
And It’s Not Just Companies At Risk….
GM: The cover-up17.sep.06The Independent (UK)Geoffrey Leanhttp://news.independent.co.uk/environment/article1604094.ece
…Britain's official food safety watchdog has privately told supermarkets that it will not stop them selling an illegal GM rice to the public. Documents seen by this newspaper show that the Food Standards Agency assured major manufacturers and retailers 10 days ago that it would not make them withdraw the rice - at the same time as it was telling the public it should not be allowed to go on sale…..
…Last night, Peter Ainsworth, the shadow Environment Secretary, described the agency's conduct as "a massive scandal" and said it "smelt of a cover-up". He said he would be asking for an official investigation into whether the agency had broken the law….
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What’s the impact on thebottom line?
Ford cars and trucks Cost: $400 million
Bridgestone/Firestone tires, Cost: $356 million
Intel motherboards, Cost: $253 million
General Mills cereals, Cost: $125 million
Tylenol, Cost: $100 million
Perrier sparkling water, Cost: $70 million
Ford Pinto, Cost: $65 million
Coca-Cola, Cost: $60 million
Fisher-Price PowerWheels, Cost: $30 million
Hudson Food Inc. meat prods.Cost: $28 million
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Planning allows us the best opportunity to influence the consequences before they’re imposed on us.
Emergence
Emergence
Interpretation
Interpretation
Positioning
Positioning
Resolution
Resolution
Prepare and plan
7
What’s a Crisis?
A crisis is when:
An incident or issue causes normal, day-to-day operation to cease or be altered dramatically;
The incident or issue actually threatens – or is perceived to threaten – one or more of the following:- lives- social/community well-being- economic stability- environmental balance
Intense scrutiny demands action
In the extreme, reputation is compromised
8
Crisis Terms and Definitions
Crisis Management is the timely implementation of a planned process of crisis operations to effectively bring the incident under control
- utilization of sustained communication to generate stakeholder understanding
- application of disaster recovery procedures to allow the organization to function at some level of efficiency
- post-issue/incident reputation restoration communication.
9
Crisis Terms and Definitions
Crisis Operations is the timely implementation of a planned and tested technical response to bring the crisis under control as quickly as possible with the least amount of loss internally or externally. This may involve a specially-trained emergency response team.
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Crisis Terms and Definitions
Crisis Communication is the implementation of a planned process to effectively inform all stakeholders with relevant information during the life of the crisis in a manner that is timely, honest, credible, caring, and socially responsible.
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Crisis Terms and Definitions
Disaster Recovery is the implementation of a planned process to restore or apply alternative systems and services in order that the organization can effectively meet stakeholder expectations.
12
Crisis Terms and Definitions
Reputation Restoration is the development and implementation of a planned process to demonstrate and communicate the organization’s commitment to responsible, ethical behaviour to regain over time stakeholder confidence, trust and support.
13
Crisis Terms and Definitions
Risk Management is the process of assessing vulnerabilities and exposures and arranging appropriate safeguards and liability/insurance coverage.
14
Incident-Driven• ammonia/
caustic leak• product
contamination• wildcat strike
Incident-Driven• ammonia/
caustic leak• product
contamination• wildcat strike
Issue-Driven• responsible use• perception vs. reality• regulatory issues
•(US Bioterrorism Act)• personnel issues/strike
Issue-Driven• responsible use• perception vs. reality• regulatory issues
•(US Bioterrorism Act)• personnel issues/strike
Two types of Crises
Inaction by management/company drives two types of crises:
15
More crises now because...
Consumer expectations for high quality products and processes
Lack of tolerance; high skepticism; distrust
Environmental sensitivities
“Instant” media e.g. scientific and technical reporting, comparisons of related disasters after the fact, shortened timelines for credible response
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more serious
Perception
of Event
less serious
Time
Perceptual Gap
Public Perception (second reality)
“Operation” Perception (first reality)
Cost to correct & organizational impact increases with time
Cost to correct & organizational impact increases with time
Managing the Perceptual Gap
17
Managing the Perceptual Gap
Credible communication is key to keeping reality as factual as possible
technical experience
fact-based decision making
quantifiable/verifiable data
data/evidence gathering
18
Unprepared Management Behavior in a Crisis
Disbelief
Frustration
Self-Protection
“Flight/Fight” Option
Siege Mentality
Short-Term Focus
Lack of technical data credibility
19
Media Response in a Crisis
Instant initial coverage
Rapid “live eye”
Antagonists Agenda
Witnesses/survivors
“Piecing”: Fact and fantasy
Linkages
Reporters interviewing reporters
“Experts” found
20
Public Reaction to a Crisis Over Time
Lack of credible info/data/analysisLack of credible info/data/analysisCuriosity
Concern
Anxiety
Fear/Anger
Revenge/Avenge
_______________________Line of Tolerance
21
Government(s) Reaction to Crisis
Political positioning/posturing (e.g. Dawson College/gun registry)
Regulatory scrutiny
Depending on severity/impact, potential intervention
Possible ongoing visibility on the political level
Longer-term, potential regulatory change or inhibiting legislation (e.g. 9/11/Bioterrorism Laws/US import regulations)
22
Managing the Crisis
Coordination = Contain and Control
Managing a crisis requires:
- superb communication coordination of a number of stakeholders
- control throughout the crisis and knowing which people must get involved
- understanding your stakeholders, the information and facts they require, the appropriate time to provide the information and who from the company should be providing it
23
Managing the crisis
…and, most important, having a plan that’s been tested over and over again
24
Role of Crisis Management Team
Coordinates all people needed to resolve the issue/incident. Determines necessary resources.
Coordinates and manages the flow of information and facts to the various stakeholders
Acts as a central resource of all information and facts pertaining to the incident
Makes the necessary decisions based on the facts provided
Maintains the documentation related to the crisis
25
• Team Leader (Zone President)• On-site Coordinator• Information Tracker• Communication Coordinator• Employee/Family Liaison
• Team Leader• On-site Coordinator• Information Tracker• Communication Coordinator• Employee/Family Liaison
Others as determined by team leader:• Public Affairs• Legal• Risk Management• People (commercial and supply chain)• Finance• Commercial• Distribution• Procurement• Brewery Operations• Quality Compliance• Environment, Health & Safety
North America Zone Crisis Management Team
Site Crisis Management Team(includes breweries, QQT, LNO, King Street)
• Team Leader (Regional Director)• Sales Coordinator• On-site Coordinator• Information Tracker• Communication Coordinator
Others as determined by team leader:• Public Affairs• Legal• Risk Management• People (commercial and supply chain)• Finance• Commercial• Distribution• Procurement• Brewery Operations• Quality Compliance • Environment, Health & Safety
Commercial Crisis Management Team(includes Ontario, Quebec, West, Atlantic)
Types of Crisis to be managed:on-site injury or death, theft, operational failures, product tampering, product recall, major supplier interruption, local or regional boycott, incident at Labatt-sponsored public event, issues involving government compliance or regulations
Types of Crisis to be managed:consumer illness or death, national boycott, kidnapping, major computer failure, embezzlement, seriousdamage to site operations
Others as determined by team leader:• Public Affairs• Legal• Risk Management• People (commercial and supply chain)• Finance• Commercial• Distribution• Procurement• Brewery Operations• Quality Compliance• Environment, Health & Safety
• Team Leader (Regional Directors)• Information Tracker• Communication Coordinator• Sales Coordinator
Crisis Management Team for “Partner” RelationshipsTypes of Crisis to be managed:recalls & withdrawals with partners, partner sponsorships, product tampering, brand integrity, customer/consumer relations,corporate reputation, sales, promotional activities
Others as determined by team leader:Public Affairs, LegalRisk Management, People(commercial and supply chain)Distribution, Brewery OperationsEnvironment, Health & Safety
• Legal Coordinator• Quality Compliance Coordinator• Procurement Coordinator• Finance Coordinator
26
Managing the Crisis: Standard process – 7 Steps
#1. Follow specific procedures for:
Bomb Threat: call police, evacuate, call Risk Management
Hostage Taking: call police, evacuate, call Risk Management
Kidnapping: get details, don’t make deals, call Risk Management
Extortion: get details, don’t make deals, call Risk Management
Environmental: involve government authorities
Health and Safety: involve government authorities
Product Recall: follow recall procedures/ involve government authorities
27
#2. First Alert:
Get control immediately!
Determine off-site emergency services needed
Obtain all available information to decide nature of crisis
Determine necessary resources: people and equipment
Begin coordination of communication and getting the facts
Managing the Crisis: Standard process
28
Managing the Crisis: Standard process
#3. Get the Facts:
On-site coordinator provides known facts to team
Team determines what’s missing; what’s needed and when will it be received
Team determines “who needs to know;” “who wants to know”
Team leader begins coordination of roles
29
#4. Convene the Crisis Management Team:
Team leader begins to evaluate:
Nature and extent of incident?
Time it occurred and discovered?
Names and status of people involved?
Consequences and likely consequences?
What’s being done now, by whom? Additional resources required?
Managing the Crisis: Standard process
30
#4. Convene the Crisis Management Team:
When will more information be available?
Who already knows about the incident – what do they know?
Have security, switchboard, customer service been notified?
Does everyone on the team know what they are to do next? Who are your stakeholders?
Managing the Crisis: Standard process
31
#5. Manage the flow of information:
Determine who needs to know; who wants to know
Continuously update information; verify facts; update stakeholders
Maintain contact with government, emergency authorities
Always track the flow of information
Managing the Crisis: Standard process
32
#6. Manage the Crisis to Resolution:
Remember: it’s not over until it’s over
Continue monitoring situation
Provide ongoing updates to various stakeholders
Determine what is needed to restore reputation andensure follow through
Managing the Crisis: Standard process
33
#7. Reporting:
Learn from your experience!
Determine level of preparedness and act on deficiencies
Evaluate risk management and possible vulnerabilities. Address the issues
Ensure overall reporting is complete
Managing the Crisis: Standard process
34
Measures of Success
Demonstrated care and compassion to employees and consumers/customers
Acts quickly and diligently. Is able to contain the incident.
In control and does/is perceived as doing everything possible to manage the incident
Timely, appropriate & consistent responses to all stakeholders
Credible, honest & socially responsible
35
Measures of Success
Fact-based decision making
Actions build stakeholder confidence, trust and support
Corporate reputation/image is not put at risk
Company does/is perceived as providing all necessary resources to control the incident
Does/ is seen as working collaboratively with government authorities
36
Measures of Success
Today’s reality:
The way you manage your crisis is a
reflection of the way you manage your business.
37
Y2K – The Potential Crisis of the Millennium
Began risk assessments and contingency planning in 1998
- Completely cross-functional
1999- Rolled out contingency plans
- Trained on-site and corporate crisis teams (bench-top simulations & presentations, on-camera simulations)
- Developed and conducted full-scale crisis simulations prior to 9/9/99
- Modified and finalized plans based on simulation learnings
- Experienced Y2K without problems
38
Pre & Post Y2K Crisis Simulations
Continued with updated training sessions & full-scale crisis simulations at breweries
- Product Recalls
- On-site accidents
- On-site deaths
- Off-site incidences
Simulations involved- Local actors
- Local Emergency Response Teams
- Local Press
39
Anatomy of a Crisis Simulation
Components of a Crisis Simulation- Technical
QA verification Fact gathering Prove/disprove
- Regulatory Police/Fire Department/Ambulatory Services CFIA Environmental
- Media/Public Affairs Press Radio Television
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Anatomy of a Crisis Simulation
Scripted simulations prepared months in advance
Actors briefed on roles on day prior to simulation
Public Affairs ran control center
Risk Management audited Crisis Center
Quality Compliance audited key players on location
Duration: 4-6 hr
41
Anatomy of a Crisis Simulation
Post-simulation wrap –up immediately followed with full participation of all actors, external services, corporate auditors and brewery /corporate employees involved
- Actors impressions on how they were treated
- Regulators impressions on how on-site brewery personnel handled the situation
- Risk auditor impressions of how crisis center managed the crisis
- Quality Compliance auditor impression of how personnel handled actors & regulatory staff
- Written report within 30 days with key recommendations for follow-up
42 Copyright © 2005 InBev – All rights reserved
Crisis Planning and Preparation at Labatt Brewing Co. Ltd.
Terrance M. Dowhanick, Ph.D.!nBev North America Quality Compliance303 Richmond StreetLondon, OntarioN6B 2H8
Food Safety: Full Circle. Third Annual One Day Symposium, Sept 21, 2006
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