5.7 Crisis management (HL)

Question 1

Crisis management?

Answer 1

Refers to the strategies, systematic steps and efforts by the organization to limit the damage from a sudden crisis (threat to damage the organization). Involves:
● Assessment of risks based on probability and costs
● Setting priorities
● List of control measures existent and needed, with focus more on preventive and detective, rather than the corrective and follow-up controls.

-AND ACTUAL RESPONSE TO A REAL CRISIS!! (that is if a risk materialises)

Question 2

Factors affecting the quality of crisis management?

Answer 2

• Transparency (for most stakeholders) and —
• Communication
• Speed
• Control (to prevent further damage)

Question 3

Contingency planning?

Answer 3

Contingency planning is about being prepared, should the crisis occur for real. It Attempts to put in place (written) procedures to deal with a crisis, and involves:

• developing different scenarios (and planning control measures).
• assessment of risks

Question 4

Limitation of contingency planning?

Answer 4

Members of crisis management team, who are responsible for contingency planning may neglect some scenarios
Risks may be subjectively assessed

Question 5

Components of contingency planning?

Answer 5

● Devising different scenarios
● Devising the lists of control measures (alert systems etc) (including preventive, detective but with the focus on corrective and follow-up controls)
● Appointing persons responsible for each control measure and action
● Actions to be taken
● Training conducted and needed

Question 6

The term contingency?

Answer 6

A future event or circumstance which is possible but cannot be predicted with certainty.

Question 7

Quantifiable risk

Answer 7

Financially measurable risk

Question 8

Advantages of contingency planning

Answer 8

-Time (if risk materialises, you have better speed)
-cost (more cost effective procedures etc. were planned in advance, planning higher costs for risks of high probability or magnitude )
- Risks are assessed by probability and magnitude, and are planned to be addressed in accordance to policy, priorities. (e.g. totally or partially prevented or reduced/minimised
- Safety - safety of employees or customers are meaningfully ensured

Question 9

Disadvantages of contingency planning

Answer 9

-Time (needs time to prepare)
-Cost (preparation may be costly and risks may never materialise, which means that the competitors without these costs may be in a better better position to lower prices)
- Risks (may not be correctly assessed by probability and magnitude, or not addressed in accordance of policy or priorities)
- Safety - (may give false sense of safety, when there are flows and may cause higher disruptions).

Question 10

Types of controls

Answer 10

Preventive

Detective

Corrective

Question 11

What type of control is a video cam, which is hidden?

Answer 11

Detective

Question 12

Which type of control is dismissal of a thief from work?

Answer 12

Corrective
preventive

Question 13

What type of control is a video cam, a warning of which is given on the entrance?

Answer 13

Preventive

(may be subsequently used as detective or corrective as well)