Class #3 Flashcards
Definition of a “crisis”
Unstable condition involving an impending, abrupt or significant change that requires urgent attention and action to protect 4 basic categories
4 basic categories (definition of a crisis)
♠ Life - your employees + the public
♠ Assets
♠ Operations
♠ Reputation
Crisis Management is the overall strategy and tactical responses of business to:
Recognize and respond effectively, efficiently and comprehensively to actualized threats.
What does recognition include in crisis management?
Pro-active measures to detect events that actually occur
Crisis Management teams operate…
at all levels of the business.
Crisis Management hierarchy
- Incident response team - personnel response
- Functional response crisis team - site & functional
- Theatre response team
- Corporate crisis MGT team
- Executive Crisis Management Team
Trigger Points
Events that cause the team to be activated – need to consider triggers very carefully – otherwise senior management may appear uninterested / uncaring – think of BP Gulf disaster / Head of Bears Stern playing in bridge tournament as firm was collapsing
Two important notes on Trigger Points
- not to base all trigger points on dollars – e.g. trigger may be when the frequency reaches a pre-determined level.
- to avoid organizational reluctance to report incidents – avoid compensation schemes that penalize reporting
Ideal Crisis Response Process should include the following steps
- Crisis identification
- Fact finding
- Risk assessment
- Crisis team activation
- Communication to Stakeholders (PR)
- Event Control and Resolution
- Post incident review
- Plan maintenance, training and preparation
Business Continuity Plans
Those activities, programs, system developed and implemented prior to an incident – used to mitigate, respond to and cover supply chain disruptions, disasters and emergencies
After addressing immediate concerns / needs – rescue / medical attention / shelter / protection (think international events or looters), ________________________________ is key to resuming operations
Restoring communications
Critical that business implement a monitoring program evaluating plans, procedures and capabilities through:
- Periodic review
- Testing
- Use post-incident reports, you try to learn from them - why the milk spilled?
Testing and Adjustment of Plans - Goals
- Determining whether or not crisis response process works and how it can be improved.
- Testing capacity
- Reducing time to accomplish a process
- Increasing awareness and knowledge among employees about risk management plan
- Incorporating lessons learned from previous tests and actual incidents
Discuss Examples in crisis management
- Nokia vs. Erikson
- Boeing
- Toyota
- Ford
Steps to take in supply-chain risk management (10)
- Improve demand planning - work with customers to avoid being “blindsided” by changes in demand – again Ford Example
- Work with suppliers to create contingency plans
- Diversify sourcing - reduces risk of catastrophic supply chain failure
- Extend insurance coverages when possible
- Use large 3rd party logistics provider
- Model and optimize inventories on a disaggregated basis - not using one shipping company.
- Increase product component standardization – think of Apollo 13 carbon dioxide problem – square and round filters
- Create centralized product data management system
- Raise visibility along extended supply chain
- Monitor specific warning signs (political instability…)
Using large 3rd party logistics provider (steps to take in supply-chain risk management)
Typically larger organizations have greater “up to date” knowledge of conditions – e.g. which ports are closed or are experiencing delays which might cause need to divert shipments to another port and then transported to manufacturing plant.
Fundamental risk management process
(1) Understand risk environment
(2) Identify and assess current risk
(3) Quantify and prioritize risk
(4) Develop risk handling technique
(5) Implement plan
(6) Continually monitor effectiveness.
