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…)
