Crisis Management How would you cope?

What disasters could your house face?

Possible disasters

Business Disasters

If you were a terrorist, what business areas would you threaten?physical securitydocument securitypersonnel securityhardware securitytelecommunications securitysoftware security

So what is Risk Analysis?

So what is risk analysis?Risk Analysis has been defined as:

"a formal process of determining risks and developing a plan to deal with them"

Risks do not arise all by themselves. A risk is normally a product of two factors:

threats (something could go wrong) and vulnerabilities (the information system/s used by the business will allow things to do wrong).

Threats & vulnerabilitiesThreats includeDeliberate manipulation of information Impersonation of a legitimate userUntrained or poorly trained staff

Vulnerabilities include: - Poor website or network design (e.g. which can allow "hackers" into a system or web site) - Poor recruitment procedures

Stages of Risk analysisRisk Analyst's need to identify.The potential cost of the loss of dataThe probability of problem occurringThe cost of measures to protectThe inconvenience to staff security measures are useless if everyone bypasses them!You need to know this!

Disaster Avoidance.

What can a business do to avoid the following disasters?Fire in buildingPower supply breakdownVirus infectionTheft of equipmentTheft of customer data

Think of a HQ of a city bank to set the context for your answers

So why should anyone bother with disaster management?

Effects can be catastrophic90% of businesses who suffer major loss of data go out of business within 2 years

43% go out of business almost immediately

In the UK, company and directors may be prosecuted by the Health & Safety Executive

In financial and insurance sectors, customer may well sue

More recent crisis?2008

Can you think of any businesses that have had to deal with a crisis recently?JJB Sports results: 72 store closures, 800 job losses, adjusted operating profits down 28% at 34.3m. Ikea, the Swedish retail chain, warned that the housing downturn is hitting sales of its flat-pack furniture and said it is scaling back some of its expansion plans

What other types of crisis might a business face?Hostile takeoverFaulty/dangerous productsEnvironmental disasterMajor customer withdrawingordersPhysical destruction e.g. bombing / earthquakes / Physical destruction e.g. bombing / earthquakes / firesStrikes by workforce

What areas of a business could a crisis affect?Marketing: public image under threat PRAd campaignsPromotions to increase sales Personnel: Leadership style crisis usually requires direct authoritarian leadership;

internal and external communication that is rapid and direct; external communication that is informative and truthful.

Training

RecruitmentOperations: particularly if JITStorage/warehousingMachineryFinance: ad campaigns; environment clean up; compensation

Can crisis be avoided?Companies can have contingency plans established in order for staff to know how to deal with a crisis when it occurs!

Contingency Plan contentA list of the most critical business functions;A list of the facilitieshardware, software, data, personnel and other equipment necessary to support those functionsA Back-up procedureA method for getting in touch with all key personnelA Recovery procedure Education and training of personnel involved in implementing the planRegular drills to test the effectiveness of the plan

Contingency PlanningThe very nature of this unit reflects that businesses have to be able to respond to change and change can be unpredictableWhat is contingency planning?The process by which organisations try to prepare for unexpected and potentially disastrous eventsWhat is crisis management?The manner in which an organisation responds to an unexpected and potentially disastrous event

BUSS4.8 Planning for ChangeA CRISIS RARELY GOES AS PLANNED!What steps can a restaurant take to avoid a crisis?What are the costs to a business?Can a crisis be avoided?How important is it to limit any damage?

Contingency PlansValueSense of securityLimits damageSpeeds up recovery processInforms staff trainingPreventative measures can be part of CSRLimitationsCostly and time consumingIncluding opportunity costNeeds reviewingLack of predictabilityBUSS4.8 Planning for ChangeFifa has a contingency plan in case South Africa is not ready for the World Cup.Should there be a Contingency plan in case London is not ready for the 2012 Olympics?

Contingency PlanCadburys testing out of date

Cadburys withdraws products made in China

Cadburys is fined

In each case:Identify the cause of each eventIdentify the potential threatWhat actions could have been taken to prevent these events?Rank each event on a scale of 1 10 in terms of seriousness to the future success of Cadburys. Justify your answerBUSS4.8 Planning for Change

How would you cope?

Group work In twos or threes

You will be given a crisis to decide on a contingency plan

Be prepared to feedback how you would react as the MD/BoD to your scenario

You need to consider each stakeholder group!

Long term strategyNeed to consider the BIG picture!What will be the impact on ALL sectors of the business

HRMOperational ManagementMarketingFinance

Strategy issues includeProfit margins what will the impact be? (short term less important than the LONG TERM!)Risks & uncertainty what is the business attitude to risks?Opportunity costsBusiness objectives Constraints internal & externalEthicsBusiness cultureAnsoff matrix & Boston matrix

Strategy tactics what if Richard Branson died in an accident? How should the Virgin conglomerate react?

Strategy tactics what would the school do if the U6 revision trip were in Londonwhen a bomb goes off?

Strategy tactics how would you have reacted If you were the MD of Bernard Matthews?

Strategy tactics What are the implications to TESCO of poor quality FUEL being sold?How would you have reacted?

Strategy tactics You are head of ICT at a bank and a tape of all customerData has been lost in transit!

HomeworkRevise for assessment next lesson!

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