05 crisis management

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Crisis Management

How would you cope?


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What disasters could your house

face?


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Possible disasters


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Business Disasters


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Ifyou were a terrorist, what business

areas would you threaten?

physical security

document security

personnel security hardware security

telecommunications security

software security


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So what is risk analysis?

Risk Analysis has been defined as:

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

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

threats (something could go wrong)

and vulnerabilities (the information system/sused by the business will allow things to dowrong).


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Threats & vulnerabilities

Threats include

Deliberate manipulation of information

Impersonation ofa legitimate user

Untrained or poorly trained staff

Vulnerabilities include:

- Poor website or network design (e.g. which canallow "hackers" into a system or web site)

- Poor recruitment procedures


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Stages ofRisk analysis

Risk Analyst's need to identify.

1. The potential cost of the loss of data

2. The probability ofproblem occurring

3. The cost of measures to protect

4.T

he inconvenience to staff

securitymeasures are useless ifeveryone bypasses

them!

Youneed to

knowthis!


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Disaster Avoidance.


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What can a business do to avoid the

following disasters?

Fire in building

Power supply breakdown

Virus infection

Theft ofequipment

Theft ofcustomer data

Think of a HQ

of a city bankto set thecontext for

your answers


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So why should anyone bother

with disaster management?


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More recent crisis?

2008


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Can you think ofany businesses that

have had to deal with a crisis

recently?JJBSports results: 72store closures, 800 job

losses, adjusted operating

profits down 28% at

34.3m.

Ikea, the Swedish retail chain, warned

that the housing downturn is hittingsales of its flat-pack furniture and said

it is scaling back some of its

expansion plans


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What other types of

crisis might a business face?

Hostile takeover

Faulty/dangerousproducts

Environmental disaster

Major customerwithdrawing

orders

Physical destruction e.g. bombing /earthquakes /Physical destructione.g. bombing / earthquakes / fires

Strikes by workforce


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What areas of a businesscould a crisis affect?

Marketing:

public image under threat PR

Ad campaigns

Promotions 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 ifJIT

Storage/warehousing

Machinery

Finance:

ad campaigns;

environment clean up;

compensation


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Can crisis be avoided?

Companies can have contingency plans

established in orderfor staff to know how

to deal with a crisis when it occurs!


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Contingency Plan content A list of the most critical business functions;

A list of the facilities

hardware, software, data, personnel and other equipmentnecessary 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


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Contingency PlanningContingency Planning The very nature of this unit reflects that businesses

have to be able to respond to change and change canbe unpredictable

What is contingency planning?y 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?


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Contingency PlansContingency Plans

Value

Sense ofsecurity

Limits damage

Speeds up

recovery process

Informs staff

training Preventative

measures can be

part ofCSR

Limitations

Costly and time

consuming

Including opportunitycost

Needs reviewing

Lack ofpredictability

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?


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Contingency PlanContingency Plan

Cadburys testing out ofdate

Cadburys withdraws products made in

China

Cadburys is fined

In each case:

Identify the cause ofeach event

Identify the potential threat

What actions could have been taken to prevent these events?

Rank each event on a scale of1 10 in terms ofseriousness to the

future success ofCadburys. Justify your answerBUSS4.8 Planning for Change


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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!


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Strategy issues include

Profit margins what will the impact be?

(short term less important than the LONGTERM!)

Risks & uncertainty

what is the business attitude to risks?

Opportunity costs

Business objectives

Constraints internal & external

Ethics

Business culture

Ansoffmatrix & Boston matrix


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Strategy tactics

what ifRichard

Branson died inan accident?

How should the Virgin

conglomerate react?


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Strategy tactics

how would you have reacted

If you were the MD of

Bernard Matthews?


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Strategy tactics

What are the

implications to TESCO ofpoor quality

FUEL being sold?How would you

have reacted?


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Homework

Revise for assessment next

lesson!

05 crisis management

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