Understanding crisis management

© Continuity and Resilience – Copyright 2013

UNDERSTANDING CRISIS

MANAGEMENT

Dhiraj Lal

Executive Director, Continuity and Resilience

[email protected] - +971-52-9263933, +971-56-6902060


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)


AGENDA

• What is a crisis

• Terminology

• Criticality of crisis management

• Crisis Management Frameworks

• Crisis Communications

© Continuity and Resilience – Copyright

2013


•An inherently abnormal, unstable and complex situation that represents a threat to the strategic objectives, reputation or existence of an organisation

PAS 200:2011 Crisis Management Guidance

and Good Practice.

•A national or international situation where there is a threat to priority, values, interests or goals

NATO

•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

UK Department for Business Innovation and

Skills (BIS)

•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

Seeger, M.W., Sell now, T.L., & Ulmer, R.R. (2003)

Crisis- some definitions


Are you prepared for these!


Some Crisis situations

ProtestsAssault - of a staff

or visitorSexual

harassmentCriminal activity

Health emergency

Fire or explosion Accident Bomb threat

Natural disaster (flood,

earthquake, etc.)VIP visit Power outage

And many, many more!


Food for thought

7

In your personal life, have you everfaced a sudden and unexpectedsituation which threatens to derail yourplans?


Have you ever….

8

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?


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


Financial ImpactCompanies that did not have a crisis plan performed poorly over time


Coming out stronger

Companies that had a crisis plan showed an increase in price share after an event


Need for Crisis Management


Classification of a crisis

Natural

Accidental

Manmade

• May or may not

be predictable

• Could have a pattern

• Likely to have high

negative consequences

• Emotionally hazardous


Natural Crises

FloodsEarthquake

Wildfire

Tsunami

Volcanic

eruptions

Tornadoes

Heat/ Cold

waves

Droughts

Blizzards/ Storms

Hailstorms

Cyclones

• More

predictable

than others

• Intensity

can vary

• Cascade

effect


Manmade Crises• Riots, Confrontations

• Strikes

• Workplace violence

• Misdeeds, fraud

• Rumours, Sabotage

• Sexual Harassment

• Slander, Reputational issues


Accidental Crises

• Fire

• Building collapse

• Explosions

• Leakage of hazardous

chemicals

• Damage to life and

property


Real Life Crisis

17


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.

Some Other Real Life Crises


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


Crisis Management

• Proactively identification

• Preparation

• Effective response

• Restoring business as usual

• Plugging gaps which triggered the

crisis

• Incorporating learning outcomes

20


What are we dealing with?• Complex and dynamic systems

• Emerging risk and human actions

• Uncertainties – challenges of managing

the unknown or unexpected

21

Our only hope is widely embraced in the concept of ― Resilience‖

Resilience is the capability

of a social system

Focuses on expected and unexpected disturbances

It is mission oriented and an applied

science


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.


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 attention23


Crisis Management Perspective

A range of emotions:

Denial Anger Panic Anxiety

“This could not have

happened.”

“How could this have

happened?”

“How could somebody

do that?”

Panic

prevents reason and

logical thinking

“How do I tackle

this situation?”

“Will I be able to

get out of it?”


Strategies


Crisis Management Stages

DetectionPreparation

and Prevention

Containment and Damage

Control

Business Recovery

Learning


The Publicly Available Specification (PAS)

was sponsored by the UK Cabinet Office,

to support top managers in executing

their Crisis Management responsibilities.

27


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

PAS 200:2011 – Contents


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

PAS 200 summary


• The diagnosis helps in assessing company‗sstate, define the symptoms of the problem andfeatures of the potential crisis.

• Diagnosis helps management in fixing thresholdfor showing the uncomplimentary resultsdetermining crisis situation appearance.

• The earlier crisis is diagnosed, the fasterparticular anti-crisis means are chosen and theloss is smaller.

30

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.

31

Preparation and Prevention


• 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

32

Containment & Damage Control


• 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.

33

Business Recovery


• Describes techniques and processes for

evaluating the organization‘s

preparedness and capability.

Lessons Learned and Evaluation

Evaluation TrainingExercise Design

Coordination

Awareness


Planning and Preparation

SITE CRISIS RESPONSE PLANPOLICY AND LEADERSHIP CRISIS MANAGEMENT PLAN

Provides foundation, framework for

action

Provides structure, mechanisms for

operational response

Provides roles, responsibilities for

staff for coordinated response to

more frequently occurring incidents

TRAININGCRISIS RESPONSE TEAM COMMUNICATION

Site level response personnel Foundation of any crisis planning,

implementation, management and

recovery effort

Maintains preparedness and helps in

knowing what to do is crucial


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


Crisis Command

Crisis Leader/

Crisis Coordinator

Liaison Officer

First Aid CoordinatorStaff

Coordinator Safety Operations Officer

District Crisis

Response Team

Documents

OfficerStaff family Liaison

Other Support

Personnel

Crisis Recovery

Coordinator


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 all activities and

coordinates information from all

sources.

• Communication centres may be set

up within or away from CMC


Crisis LeadershipTactical and operational level teams. Look at issues such as:

Crisis Management

Tools

Practical management of

crisis

The differing roles of the

team and the leader

Creating a cohesive and

motivated team

The critical issues of

decision making and timeliness

Decision support tools to support the crisis leader

Understanding relationships and stress in crisis teams


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

Typical team composition

•Crisis Leader

•Facility management

•Legal department

•Risk management

• Information technology

•Human resources

•Financial services

•Corporate security

•Public relations/ communications


Crisis Leader - Competences

41

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


Crisis Communications

42


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


Communicating in a crisis

Communications Strategy

Issues Management

Risk Communication

Stakeholder Engagement

Formal and Informal

Communication Structures

Communication Guidelines

Communication Methods

Barriers to Communication

Consistency in Communication

Discusses internal and stakeholder

communications, but also includes outline

guidance on preparing to communicate

with the media and the general public.


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

An expression of concern for

the impact that the

situation has on

stakeholders

A sincere apology and

accepting responsibility

A commitment to address

causes


Know your audience

How to communicate

• Employee

• Investors/board members

• Customers

• Opinion leaders in your

community

• Elected officials

• Media/press


Time

Sympathize

5Ws Content

Availability

is of the essence -be quick and try to make the initial response within the first hour

Provide some expression of concern for what has happened

What happened?

Where did it happen?

When did it happen?

Who was involved?

Why did it happen?

One point contact

Make public safety the number one priority

Tell if and when the spokespersons of the company, will be available to address

Holding Statement

Do not have multiple spokespersons, this could lead to contradictions


Using social media to get the newsPros 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

Cons

Limited space, Inaccurate

information, Potential lack of journalistic integrity, Citizen

journalists putting themselves in harm’s

way to get story

Social Media & CM


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.


Successful Crisis ManagementMattel

• Mattel Inc., the toy maker, has been plagued withmore than 28 product recalls and in Summer of 2007,amongst problems with exports from China, facedtwo product recalls in two weeks.

• The company "did everything it could to get itsmessage out, earning high marks from consumersand retailers.

• Though upset by the situation, they wereappreciative of the company's response.

• At Mattel, just after the 7 a.m. recall announcementby federal officials, a public relations staff of 16 wasset to call reporters at the 40 biggest media outlets.

• They told each to check their e-mail for a newsrelease outlining the recalls, invited them to ateleconference call with executives and scheduled TVappearances or phone conversations with Mattel'schief executive.

• The Mattel CEO Robert Eckert did 14 TV interviews ona Tuesday in August and about 20 calls withindividual reporters. By the week's end, Mattel hadresponded to more than 300 media inquiries in theU.S. alone."


Successful Crisis ManagementPepsi

• 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.


Unsuccessful Crisis ManagementExxon

• 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.


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