Risk and Crisis Management are very important for smooth sailing of business or personal life. In this paper let’s look at few basics of Risk and Crisis Management.
Risk Management: How one can manage the risk? It is buy way of creating risk mitigation plan. Is it so easy? Then why should we talk about it?
Let’s take an example of driving a car in highway & the few risks associated to this are vehicle meeting with an accident, flat tire, fuel getting emptied, driving on wrong route & over speeding causing inconvenience to others. To mitigate these risks the driver should possess some basic knowledge of the vehicle like controlling the vehicle speed, how to change the flat tire, basic diagnosis to understand the fault/ mechanical failure, when to fill the fuel and the speed limit which gives better control of his vehicle. If a driver does not bother about any of the above just takes the key and drives away has high probability of ending up with one or more risk listed above. When he actually faces managing it becomes herculean task as he is not prepared to face anyone of them.
To give a real life example, when I acquired my first Maruti 800 car one day the vehicle stopped middle of the Cubbon Road at Bangalore & I was panicked as did not even know the service center number. When the mechanic finally landed and changed the fuse which was just below the steering I got relieved. At the same time learnt a lesson that driving is just not getting the license from RTO and driving the vehicle, it is important you need to know few basics of the vehicle you drive. If I had known how to change the fuse, the job would have got done in a minute and not wasted 2-3 hours in the main road for the mechanic.
I still remember the first fire safety and first aid training which I attended couple of decades ago, the instructor Mr. Jayasheel Adapa told audience that “fire does not destroy so many people it is the stampede created by people who don’t know how to escape from the fire destroys thousands”. If you introspect the various fire accidents you will recall how true this statement even today. In many organization employees don’t take seriously the evacuation drills and participate in it, these are conducted to mitigate risk of loss of life in case fire or evacuation of building to be done for some reasons.
The first step in risk management is to identify the things that might disturb normal life or business, in the above example of driving on highway there is high probability of flat tire and if you don’t know how to change it will delay your journey. The mitigation plan is either you know how to change it or know the details of nearest mechanic who can help to change the flat tire.
Let’s look another example from personal life. All of us want to lead peaceful and financially sound retired life. One can overcome the risk of disturbed and dependent retired life only if he/she starts planning it well in advance. Planning well in advance for retired life is risk mitigation plan. No one can provide a recipe for retired life, it is individual who need to decide what kind of retired life you would like to lead and plan it today.
Similarly in business list down the risks which might occur and that might disturb the normal functioning of business, certain risk/s which is/are acceptable and others you need to have well defined mitigation plan. These mitigation plans will help you to bring your business back on track. Few example of risk management from facilities management area are as follows: We have the concept of annual preventive maintenance schedule during this schedule various maintenance activities are undertaken for electrical/mechanical equipment and few upgrades/changes planned as well. First we prepare a plan to execute all these activities and wherever upgrades/changes planned we come up with the roll back plan as well. The roll back plan helps us to bring back the system to original condition in case of upgrade/changes did not deliver the desired results. Similarly when we introduced the new automated tool for employee transport pick-up and drop system for the first 2-3 days we had few additional cabs deployed at strategic points in the city as well as in office, in case of few misses in pick-up/drop we were able to deploy the standby vehicle to ensure business is not affected because of new system
implementation. Such risk mitigation plan helps gain confidence of client/customer and the success of new initiatives.
When you take up new initiatives to improve your service levels or operational efficiency there are few minor setbacks you need to encounter, if you plan ahead and put in place proper risk mitigation plan success is assured. I am sure these examples helped to understand the Risk Management basics. Success is assured only if you know what will fail/go wrong as well you have a well-defined risk mitigation plan. If you want to learn swimming jump into the water, it has risk of you getting drowned but your objective is not to get drowned but to swim and many learn and swim and few give up as they are more concerned about the risk without mitigation plan. Focus on your well defined “Goal” and you will find ways to mitigate the risk which comes along the way.
Crisis Management: is managing the un-expected event that harms the organization or individual’s regular activities. Crisis normally takes place without prior warning and mostly would cause disturbance to regular activities. The Crisis Management is to reduce the impact of crisis and evaluate the plans to bring in normalcy within the short period of time. Few examples of crisis are-fire, floods, bomb threats, strike. Assessing the outcome of such events in advance is difficult.
In the Globalized environment it is essential that apart from managing risk we have to manage the crisis as well. Crisis Management starts with establishing a clear communication tree. During crisis your organization employees should know whom to contact and where to look for information. It helps us to control the “Grapevine” in communication, which causes huge damage to the organization. “People can wait to hear the good news and but bad news needs to be told immediately without censoring it” this will help manage things better in case of crisis.
Some steps organizations should put in place for effective crisis management is as follows:
1. Formation of Crisis Management Team & communicating it to employees with their names & contact details.
2. Within the Crisis Management Team each one assumes different responsibility and takes charge of their role immediately after the crisis. Example: Identify a member each to take care of communication with Press & Employees, take control of relief work, take control of damage assessment etc.
3. Clear Channel of communication needs to be established-normally organization uses the telephone communication bridge services (Helpline). The bridge line gets opened immediately after crisis strikes and is available for employees to contact and obtain update as and when required.
4. Helpline gets periodical update from the Crisis Management team and POA, which gets communicated to employees.
5. Company intranet site gets updated with appropriate information, so that employees able to access the company site gets firsthand information about the crisis.
6. The crisis management team is authorized to take decision based on situation and the information update they have in hand.
7. During crisis if the organization has well established Business Continuity Plan then it gets activated to ensure continuity of business.
8. Communication channel for employees, clients, media gets regulated through the member in-charge of the communication.
In times of crisis the key objective is to reduce the damage to the life and restoration of business back to normal. Keeping this in mind the team works with relevant stake holders and manages the crisis.
In case of “Risk” it is possible to work with mitigation plan and the “Crisis” needs to be managed