Welcome to RIMS 2012 Annual Conference & Exhibition
Welcome to RIMS 2012 Annual Conference & Exhibition Panelists: Dave Arick, ARM Assistant Treasurer, Global Risk Management - International Paper Company David Smith Vice President - Risk Management Family Dollar Stores Robert Peterson, ARM, ALCM Executive Vice President, National Client Development - Sedgwick Session CLM204 Tuesday, April 17, 2012 2:15 p.m. - 3:30 p.m. Crisis Management Strategies Sedgwick Bob Peterson Executive Vice President, National Client Development
Sedgwick Introduction and Overview Despite best efforts, large losses are certainties throughout a risk professionals career. A well-written, well-executed crisis management plan can mean the difference between an organizations survival and demise. Exposures must be addressed in preplanning discussions along with post crisis strategies that include corporate communications and media relations as part of recovery to protect the intangible assets of brand and reputation. Learn the key elements of a crisis management plan, steps to effective execution and how to maintain and restore confidence in your business in the aftermath. What is Crisis Management? Also referred to as. Disaster recovery Business continuity planning Crisis:
Any situation that is threatening or could threaten to harm people or property, seriously interrupt business, damage reputation and/or negatively impact share value. Top 10 Crises of 2011 Tepco News Corp Penn State Blackberry Phone hacking scandal Misconduct allegations
Major outage Netflix Sony HP Qantas ECB Change in business model Data breach Labor dispute Eurozone crisis
Natural disaster Change in board members Dow Chemical Olympic sponsorship http://www.holmesreport.com Cost of a Crisis Example - Data Breach Frequency in millions 700 $8.0
$1.0 0 $0.0 2005 2006 2007 2008 2009 2010 2011 Reported number of data breaches involving personal data 2005 2006 2007 2008 2009 2010 Average organizational cost of a data breach involving personal data Business Insurance, March, 19, 2012
Business Continuity Measures Top business-continuity measures being adopted by large companies. Created a business-continuity plan 64% 30% Developed a communications or training program to enhance its business-continuity or business-resilience strategies 42% 39% Developed an integrated business-resilience strategy 37% 42% Discussed business-resilience issues with supply chain partners Reponded to the recent increase in natural disaster by rethinking business-continuity strategies
46% 33% Plan to adopt in the next 3 years Have adopted in the last 3 years 41% 37% 0% 10% 20% 30% 40% 50% 60% 70% Source: June 2011 international survey of 391 senior executives by the Economist Intelligence Unit on behalf of IBM. The survey covered all industries; 48% of the respondents worked in companies of more than $1 billion in revenue. Summary Plan for Ultimate goal
Predictable and quantifiable events Minimize the impact Unexpected and unwelcome events Resume normal operations Questions to Ask What are the worst things that can happen to my organization? Can we afford the risk?
What can we prevent? What are we willing to do to prevent the event/incident? How will we deal with it? What is the reporting and communication process during the crisis? Common Mistakes Inadequate planning
Failure to bring the business into the planning and testing of your recovery efforts Failure to gain support from senior-level managers team know that your integrity is the most valuable commodity you The dynamics of a crisis can change based on external events. Once identified, empower
Images Let everyone on your Speed Honesty 3 Keys to Crisis Communications People believe what they see over what they hear. You can have great talking points and a have in a crisis and it your team to make the great spokesperson
must not be tactical decisions destroyed because the compromised. required to words are out of sync communicate events as with the images coming they unfold. from the scene. http://signalbridge.blogspot.com/2011/07/3-keys-to-crisis-comms-in-digital-age.html
Crisis Management Strategies International Paper Dave Arick, ARM Assistant Treasurer, Global Risk Management International Paper Company Global leader in paper and packaging $30 billion in 2011 sales 70,000 employees in 24+ countries Manufacturing locations (excludes JVs) 39 pulp, paper and packaging mills 300+ converting, packaging and recycling plants 200+ distribution branches Includes Temple-Inland, acquired February 2012
Crises Come in Many Varieties Manmade incidents, like fires & explosions Natural disasters, like hurricanes A Historical View of Crisis Management Efforts Facility-based FM Global recommendations (flood, hurricane, fire brigades, emergency response, etc.) Telephone hotline to corporate staff personnel Uneven corporate
involvement, awareness Risk management Information technology Environment, health & safety Developing Management Support December 2005 Meeting Executive offices relocating to Memphis Concerns raised post-Katrina: what if Memphis has the BIG ONE (i.e., a major earthquake)? What preparations
have been made? What is needed? How is capital allocated for this? Eventual outcome: BCP department Crisis Management Timeline General Management of the Organization The Crisis Management Process Risk management Risk assessment Loss prevention Mitigation planning Developing responsive, comprehensive insurance program Communicating risk issues Business continuity plans Developing plans Testing plans
Revising/updating plans Training personnel Pre-Event Incident management Incident response Communications Activating and executing plans Mitigation Business resumption Business recovery Insurance recovery Crisis/Event After Company Resources/Functions Information Technology
HR/Communications (incl. public affairs) Security Environment, Health & Safety TEAM Legal Operations Finance & Accounting Risk Managements Role in Crisis Management Focus on driving loss
prevention, facility response plans, and risk-based decisions Complement BCP department efforts Insurer and broker resources Regular discussions and moral support Ensure that company insurance programs evolve as IPs understanding of possible scenarios evolves - understand coverage if/when its needed! Some Closing Thoughts
support Senior management support is critical guidance Plenty of external guidance if no inhouse expert on-going The work isnt done when the plans are! Regular exercises to test plans and current thinking, with plans updated as new learnings surface
Sustain mode - must keep plans updated as the company evolves, and teams must stay active/current Crisis Management Strategies Family Dollar stores David Smith Vice President, Risk Management Family Dollar Stores Charlotte, NC based Family Dollar stores offer quality merchandise at everyday low prices, in easy to shop neighborhood locations. 53 years in business A Fortune 300 company
7,200 stores Small Box 2 to 4 team members staff the stores Growth: 1 new store every 25 hours More than 850 million customers per year 11 distribution centers 45 states 50,000 Team Members Annual sales in excess of $8.5 billion
The Awakening...... for those of us who lived through these events, the only marker well ever need is the tick of a clock at the 46th minute of the eighth hour of the 11th day President George W. Bush Family Dollars Approach Since 9-11-01 Evolutionary Experience Based The Windstorm Phases: Pre - Katrina Ike (Katrina to Irene) Irene & Forward People Centric Communications Cross Functional/Global
Initially IT Centric Reactionary Natural Disaster Sr. Management ? Risk Management Store Operations Enterprise Risk Management Infiltration Post 9-11 to Katrina IT Back Up Data Centers Internal Outsourced IT Business Continuity Plan Statistically 2.5 Stores Impaired each Month Response Plan (Reactive)
TRIA Katrina to Irene (Ike) Business continuity plan in place and practiced Interdepartmental Multi-disciplined Proactive/Loss Avoidance Proactive Reactivity People Centric Safety
Compassionate/supportive Communications Communications is Critical Operations Decision Leaders Vendor Partners Communications Risk Management Community Response Internal Business Unit Experts
Irene & Forward Communications Hurricane Irene Stores Strike Zone Mapping Pre-Event Regular internal meetings Monitoring Warning protocols Direction Staging
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