crisis management how would you ‘cope’?. what disasters could your house face?
TRANSCRIPT
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 security• document security• personnel security• hardware security• telecommunications security• software 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 & vulnerabilities
• Threats include• Deliberate manipulation of information • Impersonation of a legitimate user• Untrained 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 analysis
Risk Analyst's need to identify….
1. The potential cost of the loss of ‘data’
2. The probability of problem occurring
3. The cost of measures to protect
4. The 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 building• Power supply breakdown• Virus infection• Theft of equipment• Theft 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 catastrophic
• 90% 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 takeover
Faulty/dangerous products
Environmental disaster
Major customer withdrawingorders
Physical destruction e.g. bombing / earthquakes / Physical destruction e.g. bombing / earthquakes / fires
Strikes 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
Recruitment
Operations: particularly if JITStorage/warehousingMachinery
Finance: 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 content
• A list of the most critical business functions;• A list of the facilities
hardware, software, data, personnel and other equipment necessary to support those functions
• A Back-up procedure• A method for getting in touch with all key personnel• A Recovery procedure • Education and training of personnel involved in implementing the
plan• Regular drills to test the effectiveness of the plan
Contingency Planning• The very nature of this unit reflects that businesses
have to be able to respond to change and change can be unpredictable
• What is contingency planning?The process by which organisations try to prepare
for unexpected and potentially disastrous events
• What is crisis management?– The manner in which an organisation responds to an
unexpected and potentially disastrous event
BUSS4.8 Planning for Change
A 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 Plans
• Value• Sense of security• Limits damage• Speeds up
recovery process• Informs staff
training• Preventative
measures can be part of CSR
• Limitations• Costly and time
consuming– Including opportunity
cost
• Needs reviewing• Lack of predictability
BUSS4.8 Planning for Change
Fifa 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 Plan• Cadbury’s testing out of date
• Cadbury’s withdraws products made in China
• Cadbury’s is finedIn each case:
Identify the cause of each eventIdentify the potential threat
What 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 Cadbury’s. 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 strategy
• Need to consider the BIG picture!• What will be the impact on ALL sectors of
the business…
• HRM• Operational Management• Marketing• Finance
Strategy issues include
• Profit margins – what will the impact be? (short term less important than the LONG TERM!)
• Risks & uncertainty – what is the business’ attitude to risks?
• Opportunity costs• Business objectives • Constraints – internal & external• Ethics• Business culture• Ansoff 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 London
when 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 customer
Data has been lost in transit!
Homework
Revise for assessment next lesson!