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Crisis Management: Your Steps Toward Recovery

Part One: Plan and Prepare

August 3, 2017

Storm cloudsFIRST STEPS TOWARD RECOVERY

Somewhere in the U.S., a business is experiencing an event that could dramatically affect its production, its brand, or even its existence. This event may never make the news, but for the business owners, such an event could have a long-lasting, negative impact.

A power outage, an auto accident, a product recall, a tornado, a fire—any one of them,compounded by a lack of planning, could spell disaster for a company. Preventing the risks that arise from these kinds of events should be a top priority for any business.

SO MANY THINGS CAN GO WRONG

The largest category of business disaster is an isolated event: an accident at work; a car or truck crash; the failure of machinery or of a structure; a faulty product that causes injury and requires a recall.

According to Agility Recovery, a business-disaster recovery company, 38 percent of business interruption events fall under the “isolated event” designation. Hurricanes are the next-most common interruption event, at 23 percent, and winter storms come in next at 20 percent

Overall, some type of weather-related disaster accounts for around 60 percent of work interruption events, but the risk can vary greatly depending on geography. Businesses at risk for damage from hurricanes worry less about winter storms—and vice versa. On the other hand, accidents can happen anywhere.

PLANNING IS THE BEST PROTECTION

The single most effective thing a business can do to overcome a disastrous event, experts agree, is to have good crisis response system already in place. Without a crisis management plan, businesses are taking a huge risk. Who do you call first? What can you do immediately to lessen the chances of further damage? What should you tell employees? How do you deal with the media?

All these questions and more can be addressed in a comprehensive crisis management plan. These plans can’t predict every type of problem, but they can provide an invaluableuideline on how to best respond when disaster strikes. Fortunately, there is a wealth of information and resources, often drawn from the experience of other businesses, which consultants and HR specialists can provide to businesses with the foresight to prepare for the worst.

PREPARING FOR LOSS

A crisis management and recovery plan isn’t built overnight, but it can be worked out over time, with input from upper management and from workers.

The first step is to assess potential loss scenarios. Determine which types of disasters are most likely for your business and at your location(s). Prioritize them, and see which responses and actions would be duplicated under different scenarios. Thinking these things through can give you a wealth of ideas on how to minimize the damage.

Secondly, think about alternative locations. Can production be switched to another facility? Are there housing options for workers who might be displaced? Are there backups for administrative files or computer servers?.

Also, identify your key contacts. Who will coordinate the response with company leadership? Who will handles media duties or answer questions from the public? Who will talk to first responders and the regulators who will come later? Do you have a contractor who is familiar with your facilities and can step in to begin repairs?

An inventory of equipment and company facilities is also important. If equipment is destroyed, can you replace it? Do you have assets such as computers tagged so they can be identified if damaged? Are serial numbers for assets on file, and is there a backup? Do you have blueprints, photos, or videos of facilities, to document how things were before disaster struck?

A crisis management plan can be built upon existing emergency action plans. Such a process simply thinks through the scenario to a few new levels, and recognizes that documenting, communication, and working on recovery are essential steps to getting back to business.

HERE’S YOUR CARD…

A very valuable tool for employers can be a system of cards and posted information sheets that let employees know what to do during a crisis. The posters could list phone numbers of first responders, basic steps to take during emergencies, evacuation procedures for fire or severe weather, procedures for office closings or other disruptions, and a phone number for communications during an emergency.

Much of that information, especially the essential phone numbers, can be placed on a card that fits inside a wallet. A company emergency hotline number, a website to refer to, or some similar resource can be listed on these business-card sized documents. Employees will have something to refer to quickly, something they can carry with them at all times.

Look for Part Two of our three part series on crisis management next week.
Topic: Business Interruption.


Interested in this topic?

Listen to a recording of our June Seminar, "Before and After a Crisis in the Workplace"?

This document is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Marsh & McLennan Agency LLC shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting or legal matters are based solely on our experience as consultants and are not to be relied upon as actuarial, accounting, tax or legal advice, for which you should consult your own professional advisors. Any modeling analytics or projections are subject to inherent uncertainty and the analysis could be materially affective if any underlying assumptions, conditions, information or factors are inaccurate or incomplete or should change.