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Crisis Management Planning Provides Broad Business Benefits

April 9, 2014 - Kestrel Management

Recently, Kestrel teamed up with the North American Die Casters Association (NADCA) to assess crisis management in the die casting industry. For comparison, several die casting manufacturing locations were reviewed to assess crisis management planning and prevention and related loss prevention planning and strategy. The focused case study that revealed less than sixteen percent of companies in high-risk industries has a formal crisis management plan.

OSHA Compliance & Worker Safety

OSHA compliance and worker life safety provide an important element to crisis management planning and prevention. When accidents happen without crisis management plans, prioritization goes from the organization to the moment, which is where mistakes in planning and response occur. In order to help companies better prepare for crisis planning and reduce life safety risk, OSHA-compliant procedures are an important prerequisite.

Eliminating Reactionary Decision Making

The case study assessment of loss prevention plans and strategies to compliment the crisis management area provided a broader understanding of enterprise risk factors and improvements. Industry experts recommend taking a holistic approach to addressing these areas, as one level of planning and prevention supports the other. Independently, solid programs will only provide mutually exclusive benefits; when combined, they serve to protect the overall viability of the company, employees, and the public.

The goal of planning is to prioritize these factors well before a crisis event may occur and to provide a formal means for accomplishing this. Prioritizing well before there is a crisis eliminates reactionary decision making. This way, if and when a crisis occurs, it can be dealt with in a more organized way with a well-organized, 48-hour plan broken down into logical and executable steps. A well-organized process should provide an outline of everything a company would need to do (including the areas of federal and state compliances) in a scripted and orchestrated timeline.

Benefits of a Well-Developed Plan

The case study looked at companies with well-developed crisis management plans supported by up-to-date OSHA programs and found that the level of accidents, incidents, and worker’s compensation costs were significantly lower than those companies operating without crisis management plans. In this comparison, accident/incident levels were less than 10% for a company with a formal crisis management plan compared to companies without a plan. Workers’ compensation costs were less than 25% for the company with the plan.

Prevention and planning leads to lower risk potential, lower insurance costs, a better workers’ compensation experience, and sustained overall benefits.

Developing a Crisis Management Plan

To achieve these benefits and establish a well-founded crisis management plan, companies need to assess prerequisite prevention safety and health programs required by OSHA and a formal loss prevention practice. The ultimate goal is enterprise risk management and business value protection.

The following provides a list of some key elements of a well-developed crisis management plan:

  1. Crisis management planning, program participation, implementation, and plan maintenance/update responsibility at various levels of the company management team
  2. Completion of crisis management prerequisite program development, including life safety, OSHA accident prevention, and emergency response
  3. Development and implementation of crisis management and business continuity plans based on the ISO 9001, National Fire Prevention Association (NFPA), and ASIS standards
  4. Incorporation of the seven key steps, including threat assessment, business impact, emergency response, business recovery, crisis management training, plan evaluations, and plan maintenance
  5. Definition and planning of disaster scenarios, including tornado/severe weather, flood, hurricane/storm surge, earthquake, snow and ice event, fire onsite, fire offsite, lightning, chemical emergency, terrorist acts, explosion or transportation accidents (plane, rail, trucking/automobile), etc.
  6. Consideration of business process functions, including assessments for manufacturing/equipment, raw materials, product inventory, logistics, information technology, finance, customer information, safety, environmental releases and utilities
  7. Prioritization to rate and rank incidents and for management to determine mitigation plans and criteria as part of a crisis management plan
  8. Breakdown of business recovery with established goals every two hours and specific time-phased goals (e.g., two hours, six hours) for at least a 48-hour period through the crisis mitigation and beyond
  9. Training for all potential disaster situations, including employee response and goals
  10. Consistently established crisis management plan audits, evaluations, verifications, trials and drills
  11. Corrective and preventative action (CAPA) implementation and plan maintenance update on a prescribed schedule of at least annually
  12. Drills and communication, including specific event communication and disaster communication to the general public, customers, and the marketplace
  13. Continuous Improvement through a required Plan-Do-Check-Act cycle to ensure a well-established program is kept up-to-date and current

 Submitted by: Randy Block

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