Category: Crisis Management

In the context of this evaluation, two cases, including The Bomb Threat and Response and The School Shooting and The Response, were assessed. In the first case scenario, a receptionist with the principal of the school analyzed the phone call informing about a bomb and identified its ID while assuming the bomb’s location in the art area. Simultaneously, the meeting of the assessment team was organized, and responsibilities were delegated (calling and visiting the identified location). Using this method assisted in saving time and responding to the situation quickly. Informing the assistant superintendent was also critical to ease the process and get the required help.

Simultaneously, the unordinary object was discovered while the building was informed and evacuated due to the threat. As for the shooting incident, the initial step was to calm down the students to avoid the panic, and after that, inform the rest of the school about the red code situation and initiate the lockdown, call for help of a school resource person, and contact the required services. In both of these situations, the sequence of actions helped react quickly to the accidents and minimized their fatal consequences.

In the case of the unexpected situation at schools, school management and teachers have to be able to analyze the accident, act according to the established plan, stay attentive and careful, avoid panic, and rely on effective and safe search techniques (Benerjee & Ercetin, 2013). In both situations, the observed skills complied with the key characteristics mentioned above, as the management, along with staff, carefully implemented crisis management plans. Along with that, acting in collaboration helped them become effective and make decisions as fast as possible. In this case, it could be said that teamwork was one of the most important matters to ensure efficiency (Daft, 2015).

The post-crisis actions are also of paramount importance, and student counselor plays a pivotal role in the recovery process. In this case, during several first days after the crisis, it is essential to be responsive and provide long-term mental health support to both students and staff (National Education Association, 2017). These goals can be achieved by organizing individual or group sessions, as this support will help minimize the risks of the development of Post-traumatic Stress Disorder (PTSD) (National Education Association, 2017).

Subsequently, the main activities will include organizing educational sessions, classroom discussions, group, and individual meetings while focusing on the students with the symptoms of PTSD (Studer & Salter, 2010). Simultaneously, it is vital to provide support to parents of the students, as they were also traumatized by the event, and contacting them and explaining the situation are priorities. Overall, covering a diverse range of school’s stakeholders will help minimize the adverse consequences of the crisis and return to daily routines.

Lastly, I believe that the situations described above and responses to them show the reality of the modern world and describe potential effective ways to react to them. Nonetheless, apart from the characteristics stated above, there are additional evidence-based intervention skills that can make a response to the scenarios more efficient. For example, educating teachers and including first aid training in the curriculum can decrease the number of deaths during diverse emergencies (Buck et al., 2015).

At the same time, it will be essential to perform a system search while informing police and other services immediately about the problem and starting providing psychological support to the students. Consequently, the main strategies may include following the lockdown drill or emergency plan, evaluating the location of the treat, adjusting the drill to the situation, and implementing the actions such as evacuating or building barricades (National Association of School of Psychologists, 2014).

References

Benerjee, S., & Ercetin, S. (2013). Chaos, complexity, and leadership. New York, NY: Springer Science+Business Media.

Buck, E., Remoortel, H., Dieltjens, T., Verstraeten, H., Clarysse, M., Moens, O., & Vandekerckhove, P. (2015). Evidence-based educational pathway for the investigation of first aid training in school curricula. Resuscitation, 94(1), 8-22.

Daft, R. (2015). Management. Boston, MA: Cengage Learning.

National Association of School of Psychologists. (2014). Best practice considerations for schools in active shooter and other armed assailant drills. Web.

National Education Association. (2017). School crisis guide: Help and healing in a time of crisis. Web.

Studer, J., & Salter, S. (2010). The role of the school counselor in crisis planning and intervention. Web.

Crisis is defined as any critical or decisive or influential point or situation. Crisis is basically unstable conditions in political, social, or economic affairs linking an awaiting unexpected or crucial change. Crisis is also considered as an affecting worrying event or shocking change in a person’s life. It is an event that can create or that is expected to lead to an unbalanced and unsafe situation that can affect an individual, group, group of people or it can be whole society. They are believed to be an unconstructive changes in the security, economic, political, social or environmental affairs when they occur unexpectedly, with small or no caution. Crisis has many defining traits but the three main traits are that the event is

• Unexpected
• Creates uncertainty/risk
• Is seen as a threat to important goals.

If the event of September 11, 2001 is recalled then one would realize that the events of September 11, 2001 were an overwhelming reminder of the need to be prepared for crises. They are not often as enormous and terrible as the attacks of September 11, but there is a need of constant cautions and readiness because of the possibility of crises. Companies should have the proper resources and pliability to continuous operations because being prepared for a crisis involves more than the ability to manage the crisis itself. The organizations that were impacted by the event of September 11, 2001 were best able to recover if they:

• Took punctual, important actions to deal with the immediate crisis and start again their operations and communicate punctually and honestly with the employees, with customers, with suppliers, and with other important stakeholders and as well as with the media and established sensible sympathy for the injured, scared and bereaved.
• Were prepared – not for such an unbelievable event but for the more ordinary and unsurprising problems of business permanence. If they had alternative computers, communications systems and proper backup of important records like contact information.
• Had strong financial statements (balance sheet, positive cash flows and good cost control) and had all kind of resources to take in the effects of the crisis and return to normal position.

Research has shown this that one of the key elements of good governance is avoiding and being prepared for the crises. Efficient organizations are less expected to have crises and are superior at solving them.

Types of crisis

It is very important to identify the type of crisis because without identifying the type one can’t make the crisis management process. Identify the type is necessary because every crisis require the use of different crisis management strategies (Davidson, 1999). Potential crises are the ones who have big impacts, but such crises can be carefully clustered to the outside world from the organization. There are many sources of crises and some of which are common to all organizations. And some of the types of the crises are specific to certain industries. Now based on the harshness, occurrences and timing of the crises, crises are fit into the three groups.

Operational crises

These types of crises are daily basis and small/negligible crises of running the organization and satisfying or providing services to individual customers. These types of the crises can easily be avoided or quickly resolved with the good management.

Sudden crises

These types of crises are the events that occur unpredictably and have a main effect on the organization. These crises include natural disasters, damages of vital services such as power, water or computers. In order to protect from these kinds of crises companies should do the proper planning and make the crises management process and it is also better to test their plans through realistic scenario- based simulations.

Potential crises

These types of crises are the serious problems that rise bigger over time and if they are not properly addressed it will become very dangerous for the organization. They include financial difficulties, investigations by the regulators, failure to respond to new completion, decline in share prices, profits decline and declining in the sales revenue (Friedman, 2001).

The groups of the crises that have been discussed above also have a close relationship or links with each other’s. For example, the signs of the potential crises can be the operational crises. And sudden crises can be build or blow up because of the operational crises. An organization can be deteriorating because of the operational crises to the point that it can’t cope with a sudden crises.

There are also different types of crises are:

• Crisis of management misconduct
• Technology crises
• Natural disaster
• Financial crises
• Confrontation
• Energy crises

Let’s have a little description of all these types.

Crisis of management misconduct

These types of crisis occur “because of the skewed values and deception but deliberate amorality and illegality” (Barton, 2007, p.2).

Technology crises

These types of crises are caused “by human application of science and technology. We have observed this that most of the time when technology becomes complex and coupled then the technological accidents inevitably occur. Technological crises can also be occurring because of the human error which causes the disruptions” (Borodzicz, 2005, p.5).

Natural disaster

Natural disaster or natural crises considered “as acts of God like earthquakes, volcanic eruptions, flooding, tsunamis that create negative effects on the life, property and on the environment” (Ferdman, 2002, p. 44). Like 2004 Indian ocean earthquake (tsunami).

Financial crises

When major portion of value of an organization’s asset is unexpectedly lost, such situation is named as financial crisis. During 19^th century as well as 20^th many banks faced crisis situation. Crash of Stock market, fluctuations in exchange rate are also the part of financial crises. Because of the financial crises people and companies tend to lose huge monetary amounts.

Confrontation

Sometime “it happens that individuals or groups fight against business , governments and various groups to win their acceptance of their demands and expectations so it create the confrontation crises” (Barton, 2007, p.4). It includes boycotts, sit-ins, disobeying police, and occupation of buildings ultimatums to those in authority (Ferdman, 2002).

Energy crises

Energy crisis occurs because of the shortage of supply of the energy. It is no secret that supply of energy resources is vital to an economy. As we know that the “demand of the energy in the global market is increasing day by day because of the industrial development and population growth and supply of the energy is therefore, far less than the actual demand” (Ferdman, 2002, p.44).

Crisis management

In order to protect the organization from the harm effect of the crises company should have proper crisis management process. Crisis management is basically “the way through which the organization deals with the important events that threatens to harm the organization, its stakeholders, or the general public. There is a difference between the risk management and crisis management. In the risk management companies are basically assessing the potential risks and finding the best way to avoid those risks and to minimize risks, but on the other hand in the crisis management companies are dealing with the threats after they have occurred” (Borodzicz, 2005, p. 5).

It is one of the fields of the management that involves “skills and techniques, expertise to identify, predict, assess and understand the serious situations especially from the moment it first occurs to the point that recovery procedures start” (James and James, 2008, p. 12).

Crisis management is basically the new field of management. It includes the forecasting of the possible crises and planning how to deal with them. For an organization it would be better that a crisis finds them prepared with time and resources prior to the beginning of the crisis.

Crisis management is the over-arching procedure through which the organization provides the suitable leadership, decision making and management of the impact of a crisis (James and James, 2008).

Crisis management process

Crisis management process is a process that includes the guidelines resources, investigation, communication and decision making that go away from a single organizational function.

Conditions that produce a crisis are normally uncontrolled and spontaneous; however steps can be taken to mitigate the effects of the crisis by:

• Predicting area of concern
• Set up the response rules to these perceived concerns
• Take action in a timely and prepared manner.

The process of crisis management has been divided into three different stages

1. Pre crisis stage
2. Crisis response stage
3. Post crisis stage

Pre crisis stage

This phase is all about the prevention and preparation. In this phase the company is looking for to decrease the identified risks that might lead to a crisis. This is the first stage of an organization’s risk management program. It is during this stage that an organization, or a company, prepares the crisis management plan. It is during this stage that the company chooses and trains management team which will deal with the crisis and conducts simulations to test the management plan and crisis management team. Organizations should update their crisis management plan annually in order to have better ability to handle the crises. Organizations should also have excellent and nominated crisis management team.

What is crisis management plan?

Basically speaking the crisis management plan is not even a plan, but a tool managers use to overcome crisis situations. CMP offers important contact information and reminds what should be done in crisis situations. Besides this it contains other significant documents as well. Most of the CMP pre assign some tasks that save too much time. Pre-assigning tasks to a group means “that there is a designated crisis team and that team members should be communicated the tasks and responsibilities they have to perform during the crises” (Davidson, 1999, p. 23).

Crisis management team

As far as crisis management team is concern it must include members from all the departments of the organization. Barton in 2007 said that “crisis management team comprises of people belonging from different departments like legal, operations, finance, public relations and human resource” (2007, p. 5).

However their composition would vary from company to company and from one situation to other. Scholars have stressed on training team members to make decisions in crisis conditions because every decision is different in a crisis. Coombs in 2007 concluded that practice could improve the decision making skills of a team.

Crisis Response

Whatever the management team does and says about a crisis situation after that crisis has hit the organization, “it is called the process of crisis response. In responding to the crisis public relations are very important. They do play a critical role and help develop the messages that are sent to various publics” (Pauly and Hutchison, 2005, p. 4). There are two main components of the crisis response.

1. The early crisis reaction
2. Reputation repairs and behavioral intentions.

Mainly, the initial crisis response guidelines focus around three main areas. These areas, or points, are the following:

• Be swift
• Be precise
• Be unswerving

It is also proved by the research that there is a need of repair the reputational damage a crisis imposes on an organization.

Post- crisis stage

This phase is then the organization returns to business as usual, or at least it thinks to do so. This is the stage where management’s attention on the crisis lowers. They tend to think that the worst is over by now. Nevertheless, during this phase there is much need for a proper follow-up communication situation. In this post crisis stage, a promise should be made by the crisis manager to give further information.

It is time now for the crisis manger and his team to provide additional information regarding the cause and effects of the crisis. The idea behind this is to regain public trust that may have been lost during the crisis. Organizations need “to communicate and update about the recovery process, corrective actions analysis of the whole crisis” (Seeger, Sellnow & Ulmer, 1998, p. 26). It is very necessary that crisis manger must agree that a crisis should be learning experience and there is also requirement of proper evaluation of crisis management process. A crisis should be a learning experience for the team as well as for the organization.

Theories and models associated with crisis management

In order to properly successfully pass through a crisis, the organization and its management team needs to understand adequately the way a crisis should be handled. A good example of this situation is the four phase model of crisis management prepared by Gonzalez-Herrero and Pratt in 1995. This is a model which includes; issues management, planning-prevention, the crisis, and post-crisis.

Business continuity planning

A business continuity plan “can help minimize the commotion, when a crisis will certainly cause a significant commotion to an organization. Before this happens there must be identification of the critical functions and process that are necessary to keep the organization running” (Friedman, 2001, p. 3).

The next logical step is to have a separate contingency plan which addresses each of the critical function. Another requirement is to test each plan separately. This is done in order to be prepared in the event of an actual crisis.

Structural- functional systems theory

In order to have effective crisis management there “should be a proper and efficient structure to provide the information to the organization in the time of crisis. Structural functional systems theory talks about the details information networks along with levels of command making up organizational communication” (James, and James, 2008, p. 36).

Examples of organizations experienced crisis

Johnson & Johnson and Tylenol

Sometime the situation is created which cannot be answerable on the company but the company finds out quickly that it takes an enormous amount of blame if it mishandles the ball in its response.

Crisis need not hit a company merely as a result of its own carelessness or misfortune. This is one of the classical stories of how a company responds to a crisis. In our case it is the Johnson & Johnson response to the Tylenol poisoning.

Story was that in 1982, 35 percent of the US market in painkiller section was captures by the Johnson & Johnson’s Tylenol tablets. This product of the Johnson &Johnson was representing something like 15 percent of the company’s total profit. Precisely at the moment when Tylenol was achieving a good market positioning and share, one person succeeded in lacing the drug with cyanide. Because of this action seven people died and an extensive panic developed about how extensive the infectivity might be. And its result was that everyone knew that Tylenol was linked with the panic. And its result was that market value of the company had reduced by $1 billion that influenced the financial position of the company negatively. The company acted immediately and recalled back its Tylenol product from every outlet. They decide that it is their duty to provide better product protection. Tylenol would not be reestablished on the shelves. Johnson & Johnson created tamperproof covering making it harder for such events to happen again.

Analysis of the crisis

As far as the cost of the above crisis is concern, that was too high. Johnson &Johnson has lost its share price because of this crisis and it has also created the loss in the production and because of the recall the goods was destroyed. But on the other hand the company’s quick and suitable action was also remarkable. Because of that crisis competitors have tried their best to become prominent in the market and capture the market. Because of this fast reaction consumer anxiety, Johnson and Johnson achieved the status of consumer champion. Johnson & Johnson was succeeding to recover the 70% of its market share within the 5 months of the disaster. One of the key victories was that it preserved the long term value of the brand. And as a result many of the customers changed from painkillers to Tylenol.

Learning behind this crisis

The techniques that made Johnson & Johnson management of the crisis in a positive manner included the following:

Company acted very quickly with the complete directness about what had happened and without delay hunted to eliminate any source of danger based on the worst case scenario. They were not waiting for the proof to see whether the infectivity might be more extensive. Johnson & Johnson also wanted to make sure that all the actions that they have taken would prevent and protect themselves as far as possible a reappearance of the problem. They demonstrated that for them consumer safety is essential.

Odwalla and the E-coli outbreak

Odwalla is a juice company that emphasizes a lot on offering health conscious juices. The company started with Greg Steltenpohl, Gerry Percy and Bonnie Bassett offering fresh oranges on a $200 juicer. Company recorded good growth with 30% annual increase. Company was able to create a good brand image in the market and create several loyal customers. However all this changed on 30, October 1996 everything was altered. The State of Washington informed the company about the connection found between the cases of Ecoli 0157:h7 and Odwalla fresh juice. The connection got verified on November 5. There were more than 60 people died in Western US and after sometime people in Canada also got sick after having these juices.

This had a negative effect on the sales of the company and its stock price decreased by 34%. More than 20 personal injury cases were filed. The CEO of the company Stephen Williamson acted fast in recalling those products which contained apple and carrot juice. He apologized for this situation and promised to pay medical costs. This helped the company in improving customer satisfaction level. In order to achieve this CEO was involved in the process of daily interaction and communication with the staff. This enabled him to extract the important and more relevant information and the view points of the employees. In order to show that the company was considerate about the customers, the company launched a special website for the customers so that they can post their complaints and feedbacks over there. Apart from this the spokesperson of the company also communicated through press and media and provided information online. The management of the company ensured that correct information and data is made available for the people. After taking all requires measures for providing correct information and for collecting feedbacks and reviews of the customers and employees, the company started to solve the issue of the contagion. For this purpose the process of ‘flash pasteurization’ was initiated by the company. This process initiated by the company ensured that the harmful bacteria E-coli will be damaged and killed and the juice will be free from any infection. With the help of all these measures the company was able to improve the image and was able to implement the most efficient system of quality control.

Learning behind this crisis

This crisis management approach helped the company in the process of rapid recovery. All these steps and measures ensured that the company is able to retain the trust and confidence of the customers and improve the sales and profits of the business. This case provides good example of crisis management which could be followed and implemented by other companies. Whenever there is any such situation the first step should be to stop the production and supply of the product. The company should also take steps to inform the customers and at the same time should listen to their problems and feedbacks in order to win their confidence. This approach not only helps company in improving the reputation and image but also contributed towards the progress and growth of the business.

Pepsi

The Pepsi Corporation had a similar crisis as the above mentioned in 1993. During that time, syringes were reported to be found in the cans of diet Pepsi. Immediately the company opened an investigation but at that time it didn’t remove these products from the shelves. What they did was to air a video of the whole process of production to the public. This was done in order to demonstrate that such tempering was impossible within their factories.

The other video released showed that the man was arrested. Then another video was released showing a woman was found copying the tampering accident.

So the made public communication throughout the crisis and that was the main tool that Pepsi has adopted to solve the crisis. Then the company had also run the series of the special campaigns to thanks to the public in order to create good image of the company (The Pepsi Product Tampering Scandal of 1993)

Conclusion

Crisis management is all about the preparation, planning and handling of the crisis. But to plan for crises seems to be an inconsistency in itself because how can a company prepare for something that is unidentified? Whenever the crisis actually appears it can be a real life struggle for survival so there is a requirement of the logical and rational manager investments. Crises are unexpected but company should be prepared for different crises because through such situations, company can have critical head start and company act quickly and directly without being surrendered to fear like other non-prepared companies. Companies should include the crisis management in the overall strategic planning of the company.

It is true that it is hard to refine all that is identified about crisis management into one, brief entry. Nevertheless, a company can, and should, try to implement the best practices and lessons of crisis management. It is also true that effective crisis management can “minimize the damages and in some cases allow an organization to come out stronger than before the crisis. And no organization is protected from a crisis so all must do their best to prepare form one” (Seeger et al., 1999, p. 46).

References

Barton, L. 2007. Crisis leadership now: A real-world guide to preparing for threats, disaster, sabotage, and scandal. New York, NY: McGraw-Hill.

Borodzicz, P. 2005. Risk, Crisis and Security Management. West Sussex, England: John Wiley and Sons Ltd.

Coombs, W. 2007. Ongoing Crisis Communication: Planning, Managing, and Responding (2nd ed.), Thousand Oaks, CA: Sage.

Davidson, M. 1999. The value of being included: An examination of diversity change initiatives in organizations, Performance Improvement Quarterly, vol. 12, no. 1, pp. 164-180.

Davidson, M. 2001. Diversity and inclusion: What difference does it make? Industrial-Organizational Psychologist, vol. 39, no. 2, pp. 36–38.

Davidson, M. 2004. Here and There: A Conversation about Identity, Industrial-Organizational Psychologist, vol. 41, no. 3, pp. 47-53.

Ferdman, B. 2002. Drawing the line: Are some differences too different? Industrial-Organizational Psychologist, vol. 39, no. 3, pp. 43–46.

Friedman, R. 2001. Managing diversity and second-order conflict, Journal of Conflict Management, vol. 12, no. 2, pp. 132-153.

James, E. & James, H. 2008. Toward an Understanding of When Executives See Crisis as Opportunity, Journal of Applied Behavioral Science, Vol. 44, No. 1, pp. 94-115

Pauly, J. Hutchison, L. 2005, Moral fables of public relations practice: The Tylenol and Exxon Valdez cases, Journal of Mass Media Ethics, vol. 20, no. 4, pp. 231–249.

Seeger, M, Sellnow, T & Ulmer, R. 1998, Communication, organization and crisis, Communication Yearbook, vol. 21, pp. 231–275.

The Pepsi Product Tampering Scandal of 1993. Web.

Introduction

The Bank of Baroda (BoB) has established a rather strong presence in the Indian market. However, as the result of several recent financial mistakes, the company has found itself in a challenging situation. Because BoB customers have been proven to have engaged in fraud within BoB’s environment, the firm has been exposed to an array of risks, the most critical of which are excessive media attention and a drop in popularity.

BoB’s first step toward an improvement of the current situation should be formulating an appropriate leadership strategy that will reinforce the significance of corporate social responsibility (CSR) and enhance the organization’s control over its own financial operations. The faster BoB realizes that all areas of its operations are interconnected, the more efficient the framework for managing the crisis will be. At present, it is strongly advisable that the principle of sustainability be used to manage the firm’s remaining financial assets and reduce the many risks that it is facing.

Risk Management System at the Bank of Baroda: Key Components

As a rule, banks use a rather rigid system of risk management (RM) that allows them to reduce the negative impact of a range of outside factors, while at the same time providing an opportunity to make the most efficient use of resources. According to the statement issued by the organization, BoB employs a set of rigid RM principles to reduce external threats. For example, discount options are only given to trusted customers with a long-standing business relationship. However, the current approach is admittedly flawed because it does not allow the bank to determine instances of bill-discounting frauds, let alone prevent them.

Liquidity Risk

The fact that there have been “irregularities with the remittances of foreign exchange” (Dhamija 2016, p. 4) within one of the firm’s departments reveals that BoB may have problems meeting its short-term debts. Therefore, the liquidity risk is going to become exponentially high for the organization. Unless the organizational management introduces a sustainable strategy for addressing this issue, the threat of bankruptcy will become imminent for BoB.

Credit Risk

Given that it was not a requirement for bank customers to provide any goods or services in order to take a loan, it would be wrong to claim that BoB’s credit risk strategy is adequate. Indeed, it would be more sensible to provide only loyal clients with extra opportunities; treating total strangers with absolute trust was clearly a mistake that BoB must not repeat in the future.

Market Risk

The interest rate risks are likely to increase at BoB due to the temporary financial challenges that the company has encountered over the past few months. Similarly, issues associated with the foreign exchange rate and its changes are bound to affect the company to a considerable degree unless an appropriate coping strategy is designed and implemented (Skoglund & Chen 2015).

Exposure Risk

Because BoB is not currently exposed to any entity or cohort of entities, it is safe to say that the organization’s exposure risk is comparatively low at the present moment. However, the company does not owe this fact to any risk management strategy; instead, the current state of affairs can be viewed as a mere coincidence. Indeed, with a close focus on its recent financial concerns, BoB has made zero progress in advancing in the target market.

Investment Risk

The negative publicity that BoB received as a result of its recklessness has clearly affected the investment risks to a considerable degree, yet the current strategy used by the company to manage the situation does not reflect the increased risk. Instead of focusing on a means of marketing that would help retain existing customers and attract new ones, the current approach reiterates the previous one and therefore fails to reflect the fact that the company is ready to address its financial issues and prevent further instances of fraud (Hull 2015).

State-Specific Risks

At present, BoB is not facing any state-specific risks. It could be argued, however, that these risks will appear with the company’s further expansion into the global market. However, with the firm currently struggling to survive in its home environment, dangers associated with foreign policy are not expected to affect the organization to a significant degree.

Operational Risks

As the case study shows, operational risks served as the foundation on which the bank’s fraud problem developed. Due to a lack of tools that could help the company track the transactions made by its customers, BoB found itself a part of the fraudulent plan and, in this way, was deceived by its own clientele. Therefore, the tool for managing operational risks needs to be completely redesigned with a closer focus on the monitoring process.

Legal Risks

Given that the current framework under which the bank operates has allowed its customers to carry out fraudulent actions, it is very likely that the company will face a plethora of legal issues soon, in addition to the other problems that it is already having. In its attempt to retain customers by refusing to adopt a more rigid system of transaction monitoring, BoB has implemented a rather undesirable, and legally questionable, business practice.

Reputational Risks

Given the current deplorable situation that BoB has found itself in, it is clear that the company has had a rather poor reputational risk management strategy. As stressed above, the firm has experienced significant damage to its public image yet has done nothing to address it. Thus, an immediate change of marketing strategy is required, with a heavy emphasis on the importance of security and transparency.

Strategic Risks

As explained above, BoB has been refusing to consider the long-term effects that the current framework will have on its performance in the target market. Therefore, it is crucial to design a viable strategy that could support the organization over a long period of time. An emphasis on sustainability should be viewed as the primary course of action to be taken in the future.

Indicators of Money Laundering at the Bank of Baroda: What Should Have Been Considered

The implementation of a more efficient monitoring device would represent a significant opportunity for the company to improve its current strategy. For instance, regular audits should become part and parcel of the company’s operations. Even though BoB has already introduced audits into its supervision process, the current strategy needs to be altered since the company’s priorities are not yet in order. As long as managers recognize the significance of auditing and regular reporting—and in this way provide a detailed account of all tasks completed and prove the legitimacy of the actions taken—the company will see greater opportunities for increased transparency. As a result, the threat of fraud in the workplace will be reduced to a minimum.

Risk Culture Assessment: Tracking the Factors That Led to the Crisis

The unique customer ID codes and instant cash transaction reports used by the company are efficient. However, the lack of care taken during the data-processing stage clearly served as the basis for the development of the fraud issue. Furthermore, a closer look at the way in which the company promotes its core values reveals that little to no attention seems to have been paid to the enhancement of the foundational principles of corporate ethics—and especially corporate social responsibility (CSR) (Eweje 2014).

Appointing an outside accounting organization to help BoB’s leaders and managers understand how the instances of fraud slipped under their radar is a very good and generally sensible idea. However, this approach also has its flaws. While people with expertise will be able to shed light on how the events in question occurred, they are unlikely to point out why the problems emerged in the first place. Seeing that the instances of fraud are likely to be connected directly to a mismanagement of the company’s day-to-day operations and a lack of decent leadership skills, it could be argued that the issue in question is linked to a range of other domains of BoB operations (Chance & Brooks 2015).

Interrelationship Between the Risks: Tying the Loose Ends Together

The firm’s financial risks have a clear and direct connection to its strategic and management-related risks as well. As explained above, BoB’s current plan to alter its existing risk management approach, especially with an emphasis on the financial aspects, is important, but it will not really address the source of the problem. The instances of workplace fraud passed unnoticed not only due to the lack of a secure system of financial transaction management but also due to the absence of a strong leadership framework. In other words, the management-related risks are just as important to the company’s current operations as the financial ones (Sadgrove 2016).

Furthermore, BoB will have to take chances with its current market risks framework. Given the recent scandal, it is no surprise that the firm is not viewed as a desirable one to invest in by future partners. The market risk management approach will have to be shaped with an eye toward promoting openness and transparency as the foundational principles of the firm’s operations. Because the identified approach may raise some eyebrows as far as the issue of customer data safety is concerned, it is also imperative that BoB focus on the enhancement of its IT framework, especially in regard to its management of data security. More specifically, devices for preventing cyberattacks and similar actions that allow cybercriminals to steal customers’ personal data should be incorporated into the company’s set of data management tools (Engemann & Henderson 2014).

Getting the Company’s Priorities Straight: The Course of Action

At present, establishing more rigid control over financial transactions is an urgent need for the company. The use of traditional tools such as audits and regular reports is a necessity. Furthermore, by incorporating the latest technological advances into its risk management framework, BoB will be able to improve its poor reputation (Corelli 2014).

Furthermore, considering the company’s long-term goals, BoB leaders should redesign the management and leadership strategies adopted at the organization. The active promotion of ethical values, CSR principles, and other related ideas must form the foundation for building a secure financial risk management approach. Employees must have an ethical foundation for their decision-making processes; otherwise, the basic problem will not be addressed, and the staff members will turn a blind eye to any violation of the company’s ethical standards by the customers.

Conclusion

BoB has been operating in the Indian market for quite a while and has enjoyed a moderately positive reputation up until recently, when the bank managers made a series of dubious decisions. The poor choice of risk management strategies made it difficult for the company to remain competitive and retain its positive reputation. Therefore, a more sustainable approach toward financial resource management is advisable.

It is imperative that the company reconsider its current approach toward the supervision of its financial transactions, especially those carried out by customers. As a result, a safer environment will be created, and a foundation will be set to prevent future instances of fraud. In other words, the case study in question shows quite clearly that there is a direct correlation between exposure to financial risk and the company’s choice of strategy in non-financial areas of operations—in particular, those that are related to leadership, marketing, and information management. As soon as the leaders of BoB are able to set the company’s priorities straight and determine the ethical and leadership-related principles according to which the firm should be run, they will have created a firm foundation for handling the bank’s current crisis.

Reference List

Chance, D M & Brooks, R 2015, Introduction to derivatives and risk management, Cengage Learning, Stamford, CT.

Corelli, A 2014, Understanding financial risk management, Routledge, New York, NY.

Dhamija, S 2016, Fraud at Bank of Baroda: manage risks or manage crisis, Ivey Publishing, Ontario.

Engemann, K J & Henderson, D M 2014, Business continuity and risk management: essentials of organizational resilience, Rothstein Publishing, Brookfield, CT.

Eweje, G 2014, Corporate Social Responsibility and sustainability: emerging trends in developing economies, Emerald Group Publishing, Bingley, UK.

Hull, J C 2015, Risk management and financial institutions, John Wiley & Sons, New York, NY.

Sadgrove, K 2016, The complete guide to business risk management, Gower Publishing, Ltd., Farnham.

Skoglund, J & Chen, W 2015, Financial risk management: applications in market, credit, asset and liability management and firmwide risk, John Wiley & Sons, New York, NY.

Introduction

Proper emergency management is essential for every organization, town, city or country if it is to protect its crucial assets and members of the public from harmful events like disasters and catastrophes. The aim of proper emergency management is to prevent various disasters from happening and, in case they happen, to minimize the loss of lives and damages to property and infrastructure through, organized, and coordinated response from all parties involved.

Proper emergency management requires planning and anticipation, and ability to respond quickly in the right way if lives and property are to be saved (Haddow and Bullock, 2007). This can only be achieved if all the relevant parties involved in an emergency response like the fire department, the police, emergency medical services and the general public is all acting in a well-coordinated manner.

Therefore, any city or country must have an emergency management plan that outlines how the input of all these stakeholders is going to be harnessed for maximum productivity. This paper will look at crisis management at organizational level, and the various emergency management systems that can be put in place in anticipation of large-scale events like a tsunami.

The Role of Emergency Management Teams

Organizations usually face everyday emergencies that can be dealt with effectively without causing any major interruptions to the organizations functions. However, when disasters strike, organizations lose their normal autonomy and are forced into different interactions that are not normal (Burns, 2001). Response to the disaster requires a more coordinated effort from both the public and private sector.

Catastrophes have even greater impact as most of the community infrastructure is affected. The community’s everyday functions are interrupted and the community is cut off from other communities, making it hard to even get outside help. An organization or community therefore needs to have in place a proper emergency response plan for any eventuality if it is to survive and rebuild in case of a large scale disaster or catastrophe.

Proper emergency management is strategy-based process that is run from the top of any organization. The emergency management team provides guidance and coordinates the different sections of the organization so as to ensure that they are all focused on the same goal. This means that all the emergency plans throughout all the levels of the organization have to be synchronized.

In such a setting, the lower levels of the organization rely on getting additional help and resources from the higher levels of the organization to help them manage an emergency (Moore and Lakha, 2006). A good emergency plan is designed to protect the assets of the organization or community. These assets can be classified as living and nonliving things.

They can also be cultural or economic, and the hazards they face can be natural or man-made. A well-structured emergency management process is usually divided into four general areas for easy management and coordination. First, risk reduction is important and measures have to be put in place to reduce the likelihood of disaster striking. The management process must also have organized ways of mobilizing resources to respond to the hazard.

The third component involves responding to the effectively to the actual damage resulting from the hazard and minimizing further damage. This includes measures like quarantine, emergency evacuations and mass decontamination. Lastly, the emergency management team must have in place a plan for recovery that will enable the organization or community to return to their normal lives as it were before the hazard incident.

Phases of Emergency Management

The emergency management processes rely on local economic and social conditions if they are to be successful (Heath, 1998). They involve mobilization of the community’s resources, right from before the disaster strikes, during the disaster, and long after the disaster has passed and the recovery process is underway.

The emergency management must therefore put emphasis on public awareness and proper infrastructure if it is to succeed with its plans in the event of an emergency. Proper emergency management is organized into four phases; preventive measures (mitigation); getting ready for any eventuality (preparedness); handling the disaster when it happens (response) and rebuilding after the disaster (recovery).

Mitigation

Any organization or community faces a lot of hazards. It is upon the emergency management team t find ways of preventing these hazards from developing into disasters. In case the disaster happens, there have to be ways of reducing the impact.

The emergency management team must conduct a thorough analysis of the risks and find ways of mitigating them. Financial investments are also protected through insurance. The mitigation process puts a lot of emphasis on long-term measures for minimizing or eliminating the risk, and their implementation form part of the recovery process after a disaster happens.

Mitigation involves taking some structural and nonstructural measures. For example, the authorities can build dykes and flood levees to mitigate the effects of floods, or retrofit buildings for earthquakes. Non-structural measures include proper legislation, land use planning and insurance coverage.

The authorities are tasked with providing communication to the public regarding the risks they face. They also organize for evacuations, and may be forced to carry out forceful evacuations of those who are not cooperating. Even if some of the measures carried under mitigation are not the best, this is still a very affordable way for authorities to handle a crisis (Treece, 2002).

In coming up with mitigation measures, the authorities assess the risks thoroughly and evaluate the hazards. The fire and rescue department in any community must be involved in the mitigation programs. They can educate the public on the various safety and evacuation drills to be performed when disasters happen, and their roles during such emergencies so that the public can cooperate with them.

Preparedness

Preparedness refers to the behavioral changes undertaken to limit the effects of a disaster on people. It is an ongoing process that involves planning, organizing and managing of activities related to prevention, response and recovery from disasters.

It requires continuous training, equipping, evaluating, monitoring and improving the measure put in place to deal with a disaster when it strikes. Under the preparedness phase, the authorities are expected to come up with plans of action for managing and countering the risks, and to build the appropriate capabilities suitable for the implementation of such plans (Treece, 2002).

First, the authorities must come up with communication plans that use terminologies and methods that are easy to understand to avoid creating confusion. The fire and rescue services and other teams that will be involved in case of a disaster need to be properly trained and equipped to prepare them for their tasks. The authorities should also develop emergency population warning methods and evacuation plans, including setting aside emergency shelters.

Since professional emergency workers can sometimes be overwhelmed during large-scale emergencies, it is advisable to have groups of trained volunteers among the civilian populations as their help is really valuable in an emergency situation. A big part of preparedness involves being able to predict casualties. This entails the prediction of how many deaths or injuries are to be expected in case of a major disaster so that the authorities know what plans to put in place for such an eventuality.

Response

When it comes to response, all the necessary emergency services that are needed at the disaster site have to be mobilized quickly. The first wave of crucial emergency services to arrive at the disaster zone includes fire fighters, ambulance crew and the police. The military and other specialist rescue teams can also be involved in the disaster relief operation. Such responses ought to have been well rehearsed during the preparedness phase so that there is efficient coordination of the various teams involved in the rescue operation.

Since the vast majority of the victims of a disaster will die within 72 hours after the impact, it is important to start search and rescue efforts immediately (Moore and Lakha, 2006). An organization’s response to a major disaster is based on preset emergency management systems and processes. In an emergency situation, discipline is important in terms of structure, doctrine and process.

There should also be some flexibility to allow for improvisation, adaptability and creativity when responding to the disaster. There is also need to form a team of leaders from the various response agencies to coordinate proceedings as more teams come in. The new leadership team must come up with a structured set of response plans that allow for the functional rescue operational process already in place to continue while adapting to new challenges as they arise at the disaster site and beyond.

Recovery

After the disaster has passed and the rescue operations are over, the affected area will have to be restored to how it was before the disaster. The recovery efforts focus on issues and decisions to be made after the response operations are complete. All the destroyed properties have to be rebuilt and the destroyed infrastructure has to be repaired.

People also have to go back to their jobs or get new ones. The rebuilding efforts should aim at eliminating or at least minimizing the risks that were there in the community before the disaster struck (Disaster and Recovery Planning Guide, n.d.). This is also an opportunity to implement some of the mitigation measures that might have been unpopular before, as they are less likely to attract any opposition while the recent disaster is still fresh in the memories of the public.

Media Coverage and Public Perception and Response

The media plays a crucial role in informing the public about the unfolding events when a disaster happens. The manner in which they frame their news coverage has a direct impact on the public’s perception of the disaster and will influence how the public responds.

The media is therefore encouraged to elicit a public response that benefits the organizations involved and the people impacted by the crisis. It is important that the authorities take quick control of the message whenever a crisis occurs (Polit, 1998). The media can play a crucial role in helping coordinate the rescue and recovery efforts by relaying crucial information from the authorities to the public.

Cooperation on a personal level is also important. This cooperation and positive response should not just come after the disaster happens but should start from the initial phases of emergency management. For example, personal mitigation is necessary and involves avoiding unnecessary risks and following the guidelines set forth by the relevant authorities.

Individuals are also encouraged to take insurance on their properties and to avoid investing in disaster prone areas. It is important to follow the instructions of the authorities and to abide by the regulations put in place right from the beginning. There are many emergency response measures that one can take on a personal level, and one can always get more information on this from the relevant authorities and other sources.

Tsunami Emergency Management Systems

The tsunami disaster that hit Japan in March 2011 killed and injured thousands of people and left tens of thousands homeless. The Fukushima nuclear power plant was also severely damaged and posed a newer risk, leading to the evacuation of thousands of people from the exclusion zone.

The impact of this disaster served as a wakeup call to many countries, and measures are already being put in place some countries to help them be ready to deal with a large-scale tsunami. Many programs have been put in place by individual countries and the international community to improve public safety during tsunami emergencies. Some of the programs that have been proposed or are already underway include a global tsunami early warning system and national weather service tsunami programs.

Global Tsunami Early Warning System

The push for a global tsunami early warning system started after the 2004 Indian Ocean tsunami disaster and was reinforced by the recent tsunami disaster in Japan. The idea faces several financial, technical and political challenges that have to be ironed out before it is can be put in place (Simola, 2005). Some developed nations have the resources and capabilities to establish their own regional emergency disaster warning networks and have already done so.

However, for a truly global tsunami-monitoring network, government policy analysts have been raising technological and national security issues as challenges that have to be overcome first. The U.S. for example fears the open access and sabotage of international communication networks. There is concern that some of the data collected could be deemed sensitive and might reveal methodologies that would compromise the intelligence-gathering operations of the U.S. and other nations.

The Global Earth Observing System of Systems (GEOSS)

The United States has taken initiative towards a global disaster warning system with the GEOSS project that also provides for building capacity for global tsunami early detection and warning capabilities. GEOSS’s infrastructure will be based on exact environmental data collection platforms, environmental observation systems, telecommunication capabilities and communications lines that are operational around the world.

By linking the operations of GEOSS and other systems, the United States would assist other countries in developing a tsunami early warning capacity. The tsunami early detection systems have also been upgraded to make them more efficient. The U.S. is leading in terms of new technologies for tsunami preparedness, for example, the state-of-the art Deep Ocean Assessment and Reporting of Tsunamis (DART) buoys that are used for operational detection of tsunamis and verification on non-events in the ocean.

Tsunami Action Plan for the U.S.

The United States, as part of improving its tsunami warning and detection system, has already deployed 32 DART buoys to improve tsunami detection from the Gulf of Mexico, the far Pacific and Atlantic Oceans and the Caribbean Sea.

There is also a push by some social scientists for the implementation of proper legislation that will help in protecting the country from tsunamis. There is already a plan underway to train local authorities on local tsunami emergency planning. Interagency resource sharing at all levels of government is also strongly emphasized.

The National Weather Service (NWS), through the National Tsunami Warning Program (NTWP) has two tsunami warning centers that monitor, detect and warn of possible tsunamis arising in the Pacific Ocean (George, 2002). The NTWP also has an associate program that concentrates on reducing the rate of false tsunami alarms arising from the Pacific Ocean. There is also the National Tsunami Hazards Mitigation Program (NTHMP) to help states in emergency planning for tsunamis (Robbins et al, 2001).

Conclusion

Crisis management is an important undertaking for any organization or community. Effective emergency management systems must be put in place if an organization or community is to effectively deal with disasters when they happen.

Such systems must first start by taking preventive measures and making preparations before the disaster strikes. This includes public education and properly equipping important organizations like the fire and rescue department whose role in emergencies is crucial.

The response to the emergency also needs to be well planned and coordinated between the different authorities involved for the mission to be smooth and successful. Large-scale disasters like tsunamis require planning on a large scale, starting from the international community, down to the individual countries and local communities.

The effects of large-scale tsunamis have already been seen and felt, and as a result, countries have stepped up their efforts for early detection and warning before a tsunami strikes. They have also put in place measures to be taken and how the public is expected to respond in case of a tsunami emergency. With these measures in place, the impact of the disaster can be lessened considerably.

References

Burns, N 2001, The practice of Emergency Response, WB Saunders Publications, Philadelphia.

George, B 2002, Disaster Theories: The Base for Professional Evacuation, Appleton and Lange, Norwalk.

Disaster and Recovery Planning Guide, n.d., A guide for Facility Managers, Fairmont Press Inc, Lilburn, Georgia.

Haddow, G D & Bullock, J 2007, Introduction to Emergency Management, Butterworth Heinemann, London.

Heath, R 1998, Crisis Management for Managers and Executives, Financial Times/Prentice Hall, New Jersey.

Moore, T & Lakha, R (eds) 2006, Tolly’s Handbook of Disaster and Emergency

Management: principles and practice, 3^rd edn, Heinemann Butterworth, London.

Polit, D F1998, Disaster Management: Principles and Methods, JB Lippincott Company, Philadelphia.

Robbins, S P, Judge, T A, Millett, B & Boyle, M 2011, Organizational Behaviour, Pearson, New York.

Simola, S K 2005, ‘Organizational crisis management: overview and opportunities’,

Consulting Psychology Journal: Practice and Research, Vol 57 No. 3, 180-192.

Treece, J W 2002, Elements of Research in Emergency Response, Mosby, St. Louis.

Crisis response system

Overall summary

The organizational studies show that complexity in management have been there from long ago in organizations, thus complexity thinking have always been used and it is not a modern phenomenon.

In this article, Paraskevas (2006) tries to show ways on how to formulate a crisis management plan that “consists of a full range of thoughtful processes and steps that anticipate the complex nature of crises and is built upon rational expectations about how a crisis will manifest itself and how the organization will respond to it.”

The case study provides insight information on crises management facilitating understanding of the organization’s behavior proving them as complex systems. According to the case study, the complexity applications in businesses largely remain at a theoretical level from the fact that this field is still on development stage.

The upcoming researches are focusing their application on specific fields such as organizational learning, supply chain and logistics, organizations of health care, change in management and other management topics, management of knowledge and innovation as well as management of small businesses among other sectors.

This research article shows that an elaborate Crisis Management Plan does not really guarantee an effective crisis management, but rather the management of the firm should perceive crises management as a living structure within the firm and facilitate it to achieve its objectives. The system should not be driven by a particular aim agent’s behaviors and reactions but at the collective sturdiness and resilience of the firm.

It should state the terms of engagement among its numerous agents but not influence their decisions. Paraskevas (2006) also takes a look at the topic of crisis situations and argues that instead of focusing on organizational crises, more emphasis has been projected to other forms of crisis. Thus, failure to plan for crisis has made organizations more prone and has seen progression of crisis level from controllable stage to uncontrollable.

Key learning points

Some of key learning points include:

• Planning for crisis
• Stages of crisis
• Causes of crisis
• Consequences of crisis
• Cautions of crisis
• Traditional approach on crisis management
• New approach to crisis management
• Complexity-informed framework for effective crisis response (Polkinghorne 1988).

Statements of agreement and disagreement

“The impact of crisis is not tied to the organization where the crisis occurs but has repercussions to connected organizations.” This statement is true because at any give instance of crisis occurrence, both the organization involved and other connected ones such as suppliers and consumers feel the impact of the crisis.

When a crisis occurs, changes are implemented which affects both the inputs and outputs of the organization. Accordingly, the suppliers are face with change in quantity to supply, which is mostly characterized by decrease, and the consumers are face with reduction of organization’s production accompanied by higher prices.

“Crisis response is a complex- co-evolving system.” I agree with this statement because the processes of self-organization may result to new order situation which will result into crisis requiring different responses.

The fact that some responses were effective to some crisis does not mean that they will to other crisis. This is so because the crises are not predictable and their differences calls for different forms of responses. Diverse situation require diverse responses at each time of crisis occurrence. “A uniform response in all properties is strongly desirable.”

I disagree with this statement because as discussed earlier crisis level show different properties. Accordingly, this shows that no one or similar responses will succeed in dealing with the situation since these different properties call for different responses. For example, prepared of responses of a crisis such as disease outbreak will be completely futile in a terrorism or attack crisis. Therefore, a uniform response in all properties may not be required (Pascale et al 2000).

Critical Analysis

As the article puts it, today’s organizational environment which is incorporated by discontinuity as well as continuous change, crises have become as a norm rather than organizational exception. At any given time an organization is at crisis or at prodromal stage with fluxes which gradually amplify to crisis.

As the situation intensifies, the organization loses its equilibrium and the situation moves to an acute level where disorders in the organization ooze out. However during this stage the organization is able to act as an island of order in a sea of disorder where the structure of the organization is able to hold together and scatter the fluxes impacts.

According to the article researcher the hotel employs strategies which hold the situation such as calling for treatment to all affected staffs; ensuring media does not disseminate the information to the public and substantial sum of compensation to avoid legal actions. At this stage, the crisis becomes a driver; driving the organization in a particular direction.

As a result, the organization is forced to operate under different set of governing principles. The article also indicates that paper work strategies of response to situation as unnecessary because they tend to focus on expected crisis though crisis are unpredictable (Plsek and Wilson 2001).

Learning outcomes

Understanding crisis response as a complex system is helpful in dealing with real cases. This will enable a clear focus on what crisis plans and tools will likely accomplish.

Accordingly one can be able to respond to the crisis before it reaches to an acute level. This can be done by covering the dents caused by the crisis and at the same time preventing it from progressing forward. Although there may be no definite way of dealing effectively with crisis, the article has provided identifiable crisis response weakness and ways of overcoming them.

It is important for an organization to view a crisis response as a living system within an organization, rather than just a procedure. Accordingly the system will be able to accomplish its purpose of not only providing solutions but also providing conditions suitable in facilitating multiple solutions to problems. In a complex science, the system provides diverse and flexible responses based on the conditions of the crisis (Fink 1986).

Reference List

Fink, S. (1986). Crisis Management: Planning for the Inevitable. New York: American Management Association.

Paraskevas, A. (2006). Crisis management or crisis response system? A complexity science approach to organizational crises. Management Decision, Vol. 44, No. 7, pp. 892-907.

Pascale, R.T., Millemann, M. and Gioja, L. (2000). Surfing the Edge of Chaos. New York: Three Rivers Press.

Plsek, P.E. and Wilson, T. (2001). Complexity, leadership and management in healthcare organizations. British Medical Journal, Vol. 323, pp. 746-9.

Polkinghorne, D. (1988). Narrative Knowing and the Human Sciences. NY: State University of New York Press.

Crisis management

Crisis definition

This is the process by which a company handles an unexpected situation or event that threatens its existence. Crisis management consists of ways of response to the crisis in both reality and perception.

Crisis is an unexpected catastrophe happening in or to a company and it threatens the operations of the company. Such situations are fires, floods, cutthroat competitions, inflation or deflation, misconduct of company or its management and even external confrontation. Wormald an Australian company is mostly involved with fires and equipment involved (Gottschalk, p.256).

What is a company crisis?

This is an unstable situation in a company and it affects its daily activities. These situations are unpredictable. Wormalds deals with fire fighting and prevention. It was established 120 years ago and is found in 80 countries. It has sophisticated equipment for this and also very highly trained staff (www.tycon.com)

‘Characteristics of a crisis’

Crisis has four major principles. The first being that crisis is unexpected and out of routine. It creates uncertainty and is seen as a threat to company’s’ achievements is the third. “The fourth is that a crisis creates a need for transformation: change of old system to a new one” (Williams, p. 400)

Theory – crisis management & planning

There is not a single company that will look forward to having a crisis since it causes disaster for it. Wormalds has its machinery always ready and its staff, to attend emergencies. The company has a program that trains emergency response, warden and fire extinguisher training, evacuation procedures, breathing apparatus and confined space training. They also have emergency numbers for emergencies services (Lee, p.106).

Guidelines and Preparation

A company should prepare contingency plans in prior. The team involved should rehearse the plan creating a drill a service that Wolmad offers to companies. Wormalds considers having portable equipment as the first line of defense and enables response (www.wormalds.com)

Goals of crisis management

Crisis management enables a company to prevent further destruction by responding quickly.It also aimed at preventing extensive media coverage that may damage the company’s reputation. It prevents too much government involvement which can even lead to a close down or receivership. “Management of crisis provides the best response to the situation” (Coombs, p.125)

Stakeholder Strategy

“Stakeholders are the parties that are impacted by a company’s actions or operations.” They have direct or indirect stake in a company. Wormalds stakeholders are;

Table 1 (Title) communication

Wormald’s ensures that they are all informed on the situations arising and they have the right information too (Marra, p. 475)

Crisis management strategies

The following are some of the crisis management strategies used by Wormalds.

Table 2 (Title)

All strategies should be directed to handling the situation (Coombs, p. 279)

Crisis Management Team

In times of crisis, Wormald’s selects a team to take care of issues as they occur. The team comprises of a group of competent decision makers who can assess the situation and determine the extent of the crisis (Pious, 96).

Table 3 (Title)

Every member of the team should be committed to finding a solution and implementing it (Kauffman, p. 425).

Media Management Strategies

The media will always be involved in any kind of crisis despite the company laws, or magnitude of the situation. There should be strategy to handle that, Wormalds is secretive with its client information both in crisis and in normal operations. (www.wormalds.com)

Table 4 (Title) Media principles

Crisis Preparation

This is ensuring that a company is prepared for any unexpected event that may affect its operations. The following are the procedures are provided by Wormalds.

Table 5 (Title)

Wormalds encourages contingency planning which is planning in advance through drills and preparing a crisis plan.

Crisis Communication

This is designed to protect and defend a company facing a crisis. It can be investigation by authorities, allegations, a lawsuit or the media.

Table 6 (Title)

According to Wormalds, good crisis communication can transform the unexpected into the anticipated and save the company’s credibility and reputation.(Burnett, p. 75)

Crisis Evaluation

Crisis is part of its management and it involves imposing laws to ensure that there is a great concentration on the public’s welfare. Wormalds is always determined to protect the community.

Table 1 (Title)

Crisis evaluation enables the management to implement recommendations presented so as to prevent a similar occurrence in future hence protecting the community around the company.

Conclusion

Wormald is a company that values its staff and is, committed to enhancing its capability through accrediting its staff, regular internal audits, equipment monitoring and servicing. The company strives to provide an integrated service to its client, and most of all peace if mind.

Works Cited

Burnett, Jeffrey. Strategic Approach to managing Crises. Wiley: New York. 1998. Print.

Coombs, White. Communications and Attributions in a Crisis. Springer: MA,1996. Print.

Coombs, White. “Information and comparison in crisis response.” Journal of Public Crisis forecasting, 3.75 (2005): 52-56. Print.

Gottschalk, Jack. Crisis Management. John Wiley & Sons: Hoboken, 2002. Print.

Kauffman, John. “Crisis Communications Regarding Apollo.” A Public Relations Review, 25.4 (1998): 421-432. Print.

Lee, Jares. “Crisis management.” Journal of Public Relations Research. 11.3 (2001): 243-271. Print.

Marra, Faith. Crisis communication plans. Learn: MA,1998. Print.

Pious, R, M. The Cuban missile crisis and the limits of crisis management. Learn: MA, 2001.Print

Regester, Michael & Larkin, Judy. Risk issues and crisis management. Kogan Page Publishers: New York, 2002. Print.

Williams, Olaniran. Expanding Crisis Planning function. University of Cambridge: New York. 1998. Print.

Introduction

All organizations face crisis of different natures and scales at one time or another and how the organizations responds to the crisis may well determine its future success or failure. Devlin (2006) states that it is the responsibility of an organization through its public relations office to ensure that the organization recovers gracefully from a crisis and that this recovery occurs in a timely manner.

This paper will analyze the role that public relations played in the recovery from the over-dosage of premature babies’ incident by the Methodist Hospital. The success of the response by the hospital will be reviewed and anything that may have been done differently noted.

The Crisis

The case in question involves the death of a number of babies as a result of a medical error in the Methodist Hospital in Indiana. A total of six premature babies were given an overdose of heparin due to an inventory error. As a result of this, there was a wide public uproar as the relatives of some of the deceased babies expressed their discontent and anger over the incident.

The hospital crisis was further heighten by the appearance of the relatives of one of the dead babies on national television (Indiana News, 2006b). The relatives expressed their anger over the incident and blamed the death of their baby on the misconduct of the hospital staff whom they claimed should have known better than to deliver the wrong dosage to their baby.

How the Hospital Responded

The hospital was quick to respond to the issue and it gave details of the error that had led to the death of the premature babies. It took responsibility for the actions of its medical personnel and acknowledged that human and procedural errors were the cause of the overdoses that resulted in the fatalities. The hospital CEO also pointed out that the fact that the babies were very premature may have contributed to their death (Jones, 2006). However, he noted that it was the huge influx of the drug that led to their death.

Since an oversight on the part of the nurses is what had led to the wrong doses, the hospital enacted new policies that would require a minimum of two nurses to validate heparin doses so as to avoid any future administration of wrong doses.

The nurses who had administered the wrong dosages were also given counseling so as to help them come to term with their actions and help them return to normalcy and continue serving the community. The report also noted that hospital staff had met with the families of the affected babies and offered their apologies for the incident.

Why it was Necessary to Respond

The response of the hospital was necessary for a number of reasons. To begin with, the public needed information on the crisis. The response was also needed to disseminate information to the public. Being one of Indiana’s largest hospitals, the error at the Methodist Hospital had attracted wide public attention and everyone wanted to know what was going on.

Theodore and Webber (2006) report that the hospital’s spokesman kept the public up to date with news of how the affected babies were faring and also in case a fatality occurred. The official news provided by the hospital which was credible and truthful became the primary source for the public. By being the major source of information on the issue, the hospital ensured that sensational gossip did not become the primary source of information for the public on the issue.

The hospital had admitted that it was its traditional procedures of stocking vials from the inventory to the drug cabinet that had resulted in the fatal error. For the public to be reassured that such errors would never occur again, the hospital had to make major changes to the old system. To this end, the hospital stated that it would not keep vials of the adult doses of heparin (10,000 units) in its inventory (Indiana News, 2006).

The response also helped to put the public’s mind at ease. The hospital took full responsibility for the error with the CEO stating that “the blame for our errors falls upon this institution; a weakness in our own system has been exposed” (Pinto, 2006). In anticipation of the public questioning whether the error was not only limited to the premature babies, the hospital took the time to clarify that infant doses had not been given to adult patients (Jones, 2006).

How the Response promoted the view of the hospital

The hospital was keen to demonstrate that it had learnt from the mistake and would take measures to ensure that such an error never occurred again. For example, all employees were expected to sign a document on the importance of correct drug administration so as to demonstrate their commitment to ensuring patience safety in future (Indiana News, 2006).

A senior figure in the hospital administration, the president of the organization which owns the Methodist Hospital, reassured the public that this error was an isolated case and it would not pose any risk to other babies who were being treated at the hospital. The view of the hospital was further advanced by revelations that errors occur in a number of hospitals over the country and that technology was used to try and reduce the number of this errors (Pinto, 2006).

Outcome of Response

The public’s positive perception of the hospital was encouraged by the response. The fact that the top management of the hospital was willing to go on record accepting responsibility for the deaths of the two babies showed that the facility has integrity.

Emphasis was placed on the fact that it was a veteran technician who accidentally stocked the drug cabinet with the wrong dosage of heparin (Theodore & Webber, 2006). Such a revelation demonstrates that the error was not cased by the hospital employing incompetent staff but rather by an honest mistake on the part of the seasoned pharmacy technician.

The public would like to be reassured that such an accident would never be allowed to happen again. As a result of the response, information about the hospital’s new measures to avoid a repeat of the tragedy was disseminated to the public. The only way for this to occur was through a thorough change of the hospitals system and the response detailed how the hospital had gotten rid of the old system and replaced it with a new more thorough system.

An investigation by the Indianapolis Police Department ascertained that the fatal errors were accidental in nature and that the nurses who were responsible for the mistakes had not done it intentionally (Pinto, 2006). The radical changes implemented by the hospital ensured the public that the same error would never occur again therefore restoring trust in the facility.

How I would have handled the Response

If I were in charge of the public relations of the hospital, there are a number of things I would have done differently. I would have placed some emphasis on the long successful relationship that the hospital has had with the community. I would also have placed emphasis on how the hospital has always been keen to safeguard the interest of the patients.

With such a background, the public would be more inclined to view the death of the two babies as a tragic accident. By reminding the public that patient interest has always been the Methodist Hospital’s driving force, the publics would be put at ease in spite of the incident.

Expressing concern for the public will result in a better perception of the organization by the public. With this in mind, I would have ensured that the public is constantly reminded that the hospital is working overtime not only to resolve the current crisis but also to ensure that future patient safety is observed.

Conclusion

This paper set out to review the crisis that followed the over dosing of premature babies in the Methodist Hospital. It has been noted that the response made by the hospital was very appropriate and yielded good results. A positive in the hospital’s handling of the situation was that it did not attempt to downplay the issue and publicized its responses as much as it could.

Future speculations that the hospital tried to hide the problem by withholding information from the public could therefore not arise. The primary concern in the crisis was the safety of the consumers and the public at large and since the hospital addressed this very efficiently, the level of damage from the crisis was limited and the organizations reputation was not badly damaged.

References

Devlin, S. E. (2006). Crisis Management Planning and Execution, NY: CRC Press.

Indiana News (2006). Hospital Changes Procedures After Babies’ Fatal Overdoses. Web.

Indiana News (2006). Infant’s Family Speaks Out Following Hospital Deaths. Web.

Jones, K. (2006). Heparin Overdosage Kills Two Premature Babies at Methodist Hospital. Web.

Pinto, B. (2006). Hospital Procedures Questioned After Death of Two Babies. Web.

Theodore, K. & Webber, T. (2006). Third baby dies after error at Indiana hospital. Web.

Introduction

Crisis management is an essential strategy that organizations employ in the prevention and mitigation of hazards threatening to harm humans and property⁶. Crisis management models are applicable in the assessment of terrorism and other risk events that are common in various organizations^{4, 5}. Effective crisis management is possible when there is a reliable forecast of risks that a given organization faces. ISO-30000 offers an elaborate risk management process comprising risk identification, risk analysis, and risk evaluation³. Risk identification enhances the forecast of risk for it entails an assessment of an organization, strategic operations, and social, political, economic, technological, cultural, and legal environment. Risk analysis provides a way of profiling risks and mapping them to specific areas requiring urgent attention, and thus, improving the reliability of the forecast. The review of risk identification and analysis requires risk evaluation to update the dynamics of threats and hazards that an organization faces.

The process of Threat and Hazard Identification and Risk Assessment (THIRA process) offers four phases of forecasting and handling risks¹. The first phase involves the identification of threats and hazards from humans, the natural environment, and technology-based on potential risks, experiences, and expertise. Contextualization of threats and hazards by describing their occurrence regarding time, location, and conditions promote the reliability of the forecast. The third phase of the THIRA process is the establishment of capability targets by undertaking the quantitative assessment of impacts such as the size of an area affected the number of displaced households, the number of injuries, the number of deaths, and the extent of infrastructure damaged¹.

The last phase entails the forecast of resources required to prevent the occurrence of threats and hazards as well as protect communities through recovery and mitigation strategies. The National Preparedness System has stipulated six steps of forecasting threats and hazards. These steps are identification and assessment of risks, estimation of capability requirements, creation and sustenance of capabilities, delivery of capabilities, validation of capabilities, and review and update of capabilities². The THIRA process and the National Preparedness System permit reliable prediction of risks and consequently plan for effective response to prevent and mitigate. In this view, the study seeks to undertake vulnerability and risk assessment of Rice University’s Baker Institute of Public Policy.

Vulnerability and Risk Assessment Practical Application Assignment

The following table identifies vulnerabilities and risk scenarios events of the Baker Institute of Public Policy at Rice University. The identified vulnerabilities and risk scenarios are flood, hurricane, earthquake, mass protest, campus shootings, terrorism, power outage, water outage, arson, electrical fire, robbery, cybercrime, sexual abuse, disease outbreak, political clashes, hostage situation, bomb threat, elevator failure, racial fights, and food poisoning. To assess the relative risk of each of the risk events, the assessment tool quantified the probability of occurrence, impact on students, impact on staff, impact on learning, the preparedness of the institution, and the effectiveness of mitigation measures.

Table 1: Vulnerability and Risk Assessment Tool for the Baker Institute of Public Policy at Rice University.

Risk assessment using the designed tool shows that the institution has a high probability of the occurrence of natural disasters such as a hurricane and flood and human actions such as cybercrime. The mean of the occurrence of risk events is 25%, which means that these events are unlikely to occur in the institution. Risk events such as hurricane, flood, earthquake, campus shootings, hostage situation, bomb threat, terrorism, arson, and electrical fire have a high or moderate impact on students, staff, and learning. On average, these risk events have a higher impact on learning (M = 2.4) when compared to staff (M = 2.25) or students (M = 2.24). The assessment of the preparedness shows that the institution has moderate preparedness (M = 2) while the effectiveness of mitigation is also moderate (M = 2.2). The findings suggest that the institution needs to review its preparedness to enhance its effectiveness in mitigating the occurrence of risk events. The assessment of relative risks for flood, hurricane, and cybercrime 52.65%, 41.45%, and 61.15% respectively, which are relatively higher than those of other risk events. Mass protest, sexual abuse, political clashes, and food poisoning have relative risks of 25.1%, 32.58%, 24.74%, and 23.47% correspondingly. Other risk events have low relative risk values of less than 20%.

The data obtained from the assessment tool was used to generate a heat map to illustrate the distribution of risk events in terms of probability and impact on students, staff, and learning. The heat map shows that most risk events are probable and have a high impact on students, staff, and learners. However, few risk events are likely to occur and have high impacts on students, staff, and learners.

The risk matrix below classifies risk events into four categories depending on their probability level and impact level. Most risk events, namely, arson, earthquake, campus shooting, terrorism, electrical fire, disease outbreak, hostage situation, bomb threat, water outage, and power outage have probabilities lower than 30% and impact level of above 7. Flood, hurricane, cybercrime, and mass protest have high impact levels of greater than 7 and probabilities 30% and above. Racial fight, elevator fight, and robbery are risk events that have impacts lower than 7 and probabilities lower than 30%. Comparatively, sexual abuse, food poisoning, and political clashes are risk events that have low impact levels of less than 7 and high probabilities of 30% and above.

References

“Threat and Hazard Identification and Risk Assessment Guide’, DHS, Second Edition, 2013. Web.

“National Preparedness System”, DHS, 2011. Web.

“A Structured Approach to Enterprise Risk Management (ERM) and the Requirements of ISO-31000”, AIRMIC, alarm, IRM. Web.

Willis et al. (2005). Estimating Terrorism Risk. RAND. Web.

Poland, James M. “Understanding Terrorism: Groups, Strategies, Responses”. Prentice Hall, 2011. Chapters 2, 7, and 8.

Fink, Steven. “Crisis Management, Preparing for the Inevitable”. AMACOM, 1986. Chapters 6, 8, 10.

Research Topic Introduction

Field of Inquiry

Risk is an inherent component of business activities as it underlies the decisions in such areas as production, marketing, finance, and accounting, among others (Lavastre, Gunasekaran & Spalanzani 2014). Since the recognition of its importance, the issue has been studied extensively and is currently readily recognized as an important aspect of strategic organizational management.

To respond to the threats, it poses to the stability and consistency of business operations, numerous strategies and techniques have been devised intended to minimize the adverse effects of risk on the business operations and, by extension, its profitability.

Currently, the said strategies are recognized as about two broad categories – prevention strategies aim at minimizing the chance of occurrence of a disruptive event whereas mitigation strategies are expected to decrease the impact after its emergence. Depending on the magnitude of the expected event and the amount and severity of the effects it produces, these strategies and methods are commonly characterized either as risk management or crisis management.

Recently, the concept of business continuity has gained significant traction in the academic literature (Sahebjamnia, Torabi & Mansouri 2015). On the surface, it demonstrates characteristics similar to those of risk management as it is usually brought up in the context of resistance of the business to disruptive influences, the ability to retain operational capacity in challenging situations, and the ability to restore critical organizational functions in the shortest time with the involvement of minimal resources.

However, despite the evident similarity between the two areas, their goals and tasks are different enough to view them as related but distinct fields. Despite the existing differences, the terms are commonly used in conjunction or synonymously.

While attempts exist to classify them as separate concepts, there is no agreement on how the issue can be approached. The most common views are those where the two fields are perceived as related and relatively equal in taxonomic terms, those where one is considered a subset of the other, and those where their relationship is recognized but their hierarchical order is unspecified. The following project aims at establishing the areas of interconnection between risk management, crisis management, and business continuity and clarifying their relative hierarchical placement.

Research Project Significance

The lack of clarity in the definitions of the identified concepts and the vagueness of the relationships between them undermine the field of risk management in several areas. First, all of the identified concepts are actively used by the managers across the business domain. For instance, business continuity planning has become a common part of the organizations’ strategic development.

However, to determine the viability of each specific approach, it is usually necessary to conduct an evaluation that would provide a comprehensive picture of enterprise risk management success. This step depends on a thorough understanding of the issue at hand and the ability to narrow down the inquiry to increase the precision of the measurement. Besides, understanding the interconnection between the identified concepts can aid in the process of assigning weight to each element of the assessment process, thus improving the relevance of the results and providing the opportunity for applying the findings in a similar setting.

From a broader perspective, the knowledge obtained in the course of the project may add to the theoretical basis pertinent to the field of strategic management. The most feasible area of improvement of the theoretical framework lies in the need for assessment of the need for the introduction of risk management strategies and tactics, their monitoring, and adjustment. By now, multiple frameworks have been proposed, some of which are based on more traditional elements while others exhibit relatively novel approaches (van der Vegt et al. 2015).

Nearly all of them utilize the notions of business contingency, risk management, and crisis management to some degree, and, in some cases, include business contingency plans as determinants of the evaluation process. Nevertheless, the majority of the sources use the terms in a self-explanatory manner without specifying the operational definitions. Also, in at least some instances, the proposed frameworks featured incompatible hierarchical structures.

Naturally, the frameworks developed in such a manner would be severely limited in cross-compatibility and would not produce consistent results. Consequently, the clarification of the identified gaps in knowledge can eliminate the identified uncertainty and provide a more reliable approach to both the development of new and measurement of existing frameworks for strategic planning.

Project Goals

The project is intended to decrease ambiguity in the field of risk management by specifying the interconnections between risk management, crisis management/preparedness, and business continuity. Therefore, the specific targets of the project are as follows:

• Determine the existence of a relationship between the concepts;
• Establish the hierarchical order within the relations;
• Identify the goals and tasks common for the concepts;
• Identify the important differences and incompatibilities;
• Outline the relative weight of each concept for the strategic management process.

Once these targets are reached, the project is expected to provide a solid ground for the framework development and, possibly, improve the process of evaluation of the outcomes of the specific risk management techniques and tactics. Alternatively, the finding may point to promising directions for further research in the field.

Methodology

Considering the lack of unified definitions for each of the identified concepts as well as a relatively lax approach used by the scholars dealing with them in their studies, it would be appropriate to use the descriptive research design for the project. First, it is consistent with the coverage of the issue in contemporary academic literature since it is commonly referred to throughout the field but lacks the depth necessary for an unambiguous and quantifiable application.

Second, despite the lack of a robust theoretical basis, the concepts are routinely utilized throughout the managerial field and are expected to be familiar to the managers across organizations. Therefore, it would be reasonable to use a survey with open-ended and close-ended questions as a data collection tool. Such a method will allow for a relatively seamless and time-saving process while at the same time allow for additional insights

In-Depth Literature Review

To identify the gap in current knowledge on the topic, it is first necessary to explore the existing literature related to the matter, determine the commonly used definitions, identify the boundaries of the concepts, and, if possible, outline the current consensus about the interconnection between the concepts in question. The following section contains an extensive literature review of the areas of risk management, crisis management, and business continuity as presented in the current academic studies.

A descriptive study by van der Vegt et al. (2015) provides an overview of the development of risk management practices in the late twentieth and early twenty-first centuries. The authors argue that the shift towards modern business practices eventually rendered the efficiency of traditional risk management practices obsolete, which prompted the introduction of several novel approaches, including the contingency theory (van der Vegt et al. 2015).

The data for the study was gathered from the available literature and summarised. The findings suggest that risk management practices have a feasible effect on business continuity (van der Vegt et al. 2015). However, the mechanism behind the alleged influence is neither specified nor tested.

A study by Torabi, Soufi, and Sahebjamnia (2014) proposes a new framework for business continuity management systems (BCMS). According to the authors, their novel framework is expected to enhance the business impact analysis and, by extension, improve the overall reliability and applicability of the BCMS. Torabi, Soufi, and Sahebjamnia (2014) employ a range of multi-attribute decision-making techniques for their framework whose effectiveness is apparent from the reported use cases. The relevance of the newly proposed framework is confirmed by a case study. While the researchers point to the risks inherent to business practices, no connection is established between business continuity and risk management practices.

An article by Lavastre, Gunasekaran, and Spalanzani (2014) proposes a framework for supply chain risk management that is expected to decrease the uncertainty, increase predictability, and thus improve organizational performance. The theoretical framework in question includes several key elements such as characteristics of the participants, their relationships with industrial partners, perception of risk, and risk mitigation methods involved.

The relevance of the framework is tested by applying it to the data obtained from 164 companies in the industrial sector (Lavastre, Gunasekaran & Spalanzani 2014). One area of application of the proposed framework is a business continuity plan. However, no rationale for such an application is provided in the study.

The study by Järveläinen (2013) explores a specific subset of risk management practices – the issue of data safety and accessibility. According to the author, the literature on risk management and business continuity agrees on the importance of the issue but fails to provide a coherent framework for its implementation (Järveläinen 2013). Thus, a framework is proposed that is expected to enhance operability and applicability of continuity management and tested using a survey administered to IT managers. While the author perceives business continuity and risk management as interlinked concepts, no details are given in support of this assertion.

A study by Qiang et al. (2014) provides an overview of supply chain risk management and identifies several issues in the Chinese closed-loop supply chain. The data is gathered from the academic literature and organized in the form of a systematic review. The authors argue that the current methods of risk management are insufficient for effective risk measurement and mitigation and draw evidence from the case of food industry shortcomings in China (Qiang et al. 2014). The article prominently employs the concepts of business continuity and risk management but does not contain a theoretical basis for such an alleged connection.

A review by Simchi-Levi, Schmidt, and Wei (2014) identifies approaches to the mitigation of unpredictable supply chain disruptions. The article focuses on low-probability events that cause major impacts, such as massive epidemics and natural disasters. The authors suggest that such events render the traditional risk management techniques ineffective and support their assertions with the evidence from the existing literature (Simchi-Levi, Schmidt & Wei 2014). The article mentions business continuity plans as one possible area of application of the proposed framework but contains no rationale for such an application.

A study by Brender and Markov (2013) explores the perception of the potential of cloud computing for risk management associated with data security. The authors point to the fact that despite its evident positive impact, cloud computing poses a range of new risks in the areas of data security, compliance with regulations, and disaster recovery (Brender & Markov 2013). The researchers use several case studies of Swiss companies to support their suggestions. The article mentions both business continuity and risk management as viable areas of cloud computing utilization. However, no connection is established between the two.

A study by Sahebjamnia, Torabi, and Mansouri (2015) identifies the gaps in the current decision-making process related to risk management of businesses. According to the authors, the lack of unity at the tactical and strategic levels leads to the disrupted efficiency of the disaster recovery plans. The novel framework proposed by the authors relies on the minimization of recovery time objectives and testing for applicability at an operational level (Sahebjamnia, Torabi & Mansouri 2015). Notably, the authors use the concepts of business continuity and crisis management throughout the paper without specifying the nature of their relationship or the involved hierarchical connections.

An article by Ho et al. (2015) provides a comprehensive review of the literature on the topic of supply chain risk management. The data for the study is gathered from the relevant academic sources and systematized according to the identified categories of risk factors and common strategies. Importantly the study cites several sources that categorize business continuity planning as an intrinsic component of the risk management process. However, no details are given on the proposed hierarchy as it is supposedly outside the scope of the inquiry.

A study by Epstein and Khan (2014) explores the potential benefits of using Application Impact Analysis (AIA) for improving the viability of business continuity planning. To substantiate their assertions, the researchers draw evidence from the theoretical academic literature. The authors view business continuity as one of the approaches to risk management practices. However, the connection is neither specified nor substantiated throughout the paper.

An article by Hohenstein et al. (2015) contains a literature review about the concept of supply chain resilience (SCRES). The data is gathered from the available literature using a set of well-defined criteria. The research is aimed primarily at the phenomenological aspect of the issue, stressing the need for the formulation of a definition of SCRES and the identification of its components. The study employs the notions of crisis management and business continuity as components of risk resilience interchangeably.

Research by Farrell and Gallagher (2015) studies the implications of enterprise risk management (ERM) maturity valuation. The data is derived from the results of the application of the Risk Insurance Model to several firms in the five years (Farrell & Gallagher 2015). The study focuses on risk management approaches and uses business continuity as one of the criteria for measurement of the maturity of ERM. However, continuity is used in a self-explanatory manner and is not specified as an operational definition.

A study by Gatzert and Martin (2015) aims at determining the core components responsible for the successful initiation of enterprise risk management and identifying the value its implementation creates in the organizations. The data is gathered using a literature study with a robust set of criteria. The findings of the researchers suggest a positive relationship between certain characteristics of the organizations and the ERM implementation and result in corporate value improvement. However, despite the involvement of business continuity factors, the authors do not include it in the list of ERM-associated values.

Research by Grötsch, Blome, and Schleper (2013) attempts to determine the causes behind the inability of businesses to mitigate the adverse effects of supplier insolvencies on supply chain functionality. The researchers use the available data on past occurrences of such insolvencies that are verified via interviews with representatives of the industry. The study utilizes business continuity plans as one of the measures of organizational proactiveness in risk management but presents no rationale behind such an approach.

Baskerville, Spagnoletti, and Kim (2014) study the effects of response and prevention paradigms, determine their relative efficiency, and identify the need for the optimal balance between them via a security framework. The authors use the comparative case study method in support of the proposed framework (Baskerville, Spagnoletti & Kim 2014). The article lists business continuity planning is an important element of response models but does not identify its interconnection with crisis management.

Interlink of Risk Management, Crisis Management/Preparedness, and Business Continuity

Abstract

Business continuity is an important characteristic of the modern organization, determining the uninterrupted nature of business operations and, by extension, contributing to the sustainability of revenues.

Currently, the concept is strongly associated with risk management and crisis preparedness. However, such a relationship is usually established based mostly on the evident similarities of goals and tasks pertinent to the said concepts and is rarely backed by the evidence from the research. The current project is intended to confirm the interconnection between risk management, crisis management, and business continuity, identify the existence of hierarchical order, and outline their relative impact on organizational performance. The project utilizes a qualitative research design. The data is gathered using an online survey.

Introduction and Significance of the Study

Risk is an essential component of the business. The increasing complexity in the fields of production, finance accounting, and marketing make it virtually impossible to account for all possible deviations from the scheduled procedures. It is also worth mentioning that businesses are becoming increasingly vulnerable to various sporadic threats, such as natural disasters. In response to the apparent threats, a significant bulk of research has been done in the field currently collectively addressed as risk management.

Based on these studies, the current consensus in both the academic and the managerial fields now recognizes the importance of risk management as a subset of strategic organizational management. To respond to the issue, numerous strategies and tactics have been introduced that were expected to minimize the impact of the possible negative occurrences on business sustainability and profitability. These strategies and tactics are commonly grouped into two broad categories.

The first category includes prevention strategies that aim at either avoiding the events which have adverse effects on business practices or minimize the likelihood of their occurrence, thus eliminating the threat. The second category encompasses mitigation approaches that are meant to be introduced after the occurrence of a disruptive event and aim at the minimization of its negative effect on organizational performance and, by extension, the profitability of the business operations. As can be seen, both categories have the same ultimate goal but are implemented at different stages and require different approaches.

It is also worth mentioning that the scope and magnitude of certain events, such as natural disasters, was considered sufficient for the creation of a separate subcategory, known as crisis management. The unpredictability and massive scale of these disruptive events render the traditional mitigation strategies irrelevant and require the introduction of more effective approaches.

As was mentioned above, the risk management strategies have an overarching goal of achieving the uninterrupted, steady, and predictable performance of the business. This concept eventually crystallized into what is known as business continuity.

Recently the concept has garnered significant attention in both the theoretical domain and as a part of managerial practices (in the form of business continuity plans). On a superficial level, the concept can be readily associated with the concept of risk management as both are associated with the increased organizational resilience to disruptive factors, the capacity for rehabilitation after adverse events, and the ability to return to the normal functioning in the most time-saving and resource-efficient manner. However, the concepts also employ a range of techniques and objectives that are distinctive enough to differentiate between the two.

Nevertheless, there is still a notable lack of consistency in the use of the terms across the academic literature. The two concepts are routinely used in a manner suggesting their synonymous nature without a rationale for such association. Admittedly, attempts have been made to introduce clarity to the field. Currently, three dominant views can be observed in the academic domain: the approach that considers risk management and business continuity related concepts with that are relatively autonomous, the one where one is viewed as a subset of an intrinsic component of the other, and the one that recognizes the relation of the concept but does not provide a conclusive statement regarding their hierarchical order.

Naturally, such a situation is highly unfavorable for both the theorists and managers in the field. For the former, the vagueness and lack of consistency introduce an additional challenge to the process of developing the frameworks and strategic solutions for businesses. Also, it compromises the applicability and scalability of the findings of individual studies since the absence of common ground renders the obtained solutions incompatible with those implemented using a different framework.

For the latter, the lack of understanding of the relative significance of each term and their hierarchical interconnections undermines the assessment capacity of their actions. In simple terms, the managers are unable to conclusively measure the outcomes of their decisions using only vague definitions and intuitive views on the interlinked nature of the concepts in question. To sum up, the findings of the project are expected to improve and systematize the current understanding pertinent to the concepts of both risk management and business continuity, enhance the managerial practices, and, possibly, outline viable directions for further research.

Problem Statement & Purpose of the Study

Considering the information above, two problems can be identified in the field of organizational management. First, the terms “risk management,” “crisis management,” and “business continuity” appear to be used interchangeably despite several loosely compatible objectives throughout the academic literature. Also, many sources consider one of the concepts as an element of the other, apparently guided solely by the intuitive perception (since such an approach is rarely substantiated by the existing taxonomy).

Since both concepts are routinely used for the development of novel frameworks intended to improve the risk management processes in the organizations, some confusion can be expected. Another notable issue is the inability to consistently measure the outcomes achieved by the introduction of risk management practices. While it is certainly possible for managers to select one of the currently existing frameworks and conduct the assessment internally, the findings will be incompatible with those obtained using a methodology built upon a premise of different types of connection.

Finally, without the understanding of the nature of the interconnection between risk management, crisis management, and business continuity it would be impossible to estimate their relative significance in the process of strategic planning. Such a gap in knowledge would eventually result in ineffective resource allocation and, possibly, unforeseen setbacks in business operations. In conclusion, it is possible to formulate the following problem statement from the information above: The current literature does not contain a conclusive statement regarding the principles of interconnection or hierarchical order of risk management, crisis management, and business continuity, which compromises both the theoretical and practical utilization of each of the said concepts.

In response to the identified issues, the purpose of the current study is to identify the existence of interconnection between the concepts in question, determine whether a hierarchical order is involved in the relationship, identify the similarities and differences in goals and means pertinent to each concept, and outline their relative significance. The said findings are expected to introduce additional clarity both to the developers of the risk management frameworks and the managers dealing with strategic planning. Also, it would be reasonable to expect that the data obtained in the course of the project would highlight the viable directions for further research and possibly identify the overlooked shortcomings of the existing approaches to business continuity.

Research Question/Issues

The primary research question of the study is as follows:

• What is the nature of the interconnection of risk management, crisis management, and business continuity and is there a hierarchical order pertinent to the interconnection?

However, several issues need to be addressed to formulate a conclusive answer. Specifically, it would be beneficial to identify the differences between the concepts in question to produce an accurate distinction between them. For the same purpose, it would be necessary to detect the similarities between risk management and business continuity. This knowledge would highlight the areas of intersection and, therefore, enhance the understanding of the relationship between the studied concepts and clarify the hierarchical order involved. Finally, the information on the relative weight of each component could be determined from the obtained data, which could improve the issue of ineffective resource allocation.

Literature Review

As was mentioned in the previous section, risk management, crisis management, and business continuity have been recognized as important areas of organizational development and have been extensively covered in the respective academic sources. However, their usage lacks consistency and is rarely backed by the formulated operational definitions. Thus, to better understand the setting of the proposed study, it is first necessary to review the relevant literature on the topic. The following literature review presents the most commonly used definitions and provides insights into the academic consensus regarding the interconnection of the concepts in question.

The trends in the development of the risk management practices identified in the descriptive study by van der Vegt et al. (2015) can be broadly described as the gradual shift from the traditional risk mitigation plans towards novel approaches in the late twentieth and early twenty-first centuries. The primary reason for this, according to the authors, is the ongoing transformation of the business practices that, in their current state, are incompatible with the traditional means of risk mitigation, and require the introduction of new theoretical frameworks based on the contingency theory (van der Vegt et al. 2015).

The authors assert that risk management practices have an observable effect on business continuity but provide no rationale for their conclusions. A similarly comprehensive overview of the field of supply chain risk management is provided in the article by Ho et al. (2015). The data for the review is obtained from the existing literature and systematized. Interestingly, the author cites several sources that characterize business continuity planning as one of the core components of the risk management practices (Ho et al. 2015).

This connection can be interpreted as an attempt to classify the former as a subset of the latter, thus highlighting a possible hierarchical order. A more in-depth inquiry into supply chain risk management is provided by Qiang et al. (2014). The research team argues that the traditional methods of risk management have only limited applicability in the modern organizational environment and exemplify their assertions by studying the case of failures in the Chinese food industry.

Both business continuity and risk management are used in support of the viewpoint. However, no attempt is made to establish a relationship between the two. Another aspect that is considered a major disruptive factor for traditional business practices is the occurrence of natural disasters. According to Simchi-Levi, Schmidt, and Wei (2014), they exhibit several distinctive characteristics (e.g. massive scale and low predictability) that make the said events resistant to traditional means of prevention and, to some degree, mitigation.

The authors list business continuity planning among the possible ways of risk management strategies, which implies that the former is considered a subset of the latter. The study does not contain the rationale for such a decision. Interestingly, business continuity is excluded from the list of relevant factors by some researchers. For example, a systematic review of the components responsible for the successful initiation of enterprise risk management by Gatzert and Martin (2015) provides a comprehensive list of factors responsible for the creation of value through ERM. Despite the inclusion of features of business continuity (e.g. revenue consistency), it is not included in the list of components.

The studies of specific tools of risk mitigation also employ business continuity. For instance, Brender and Markov (2013) explore the implications of cloud-based solutions for business safety and security. According to the authors, the multitude of risks associated with the practice in the areas of data security, regulation compliance, and disaster recovery nullify the expected positive impact of the technology (Brender & Markov 2013).

The researchers state that cloud computing can be utilized in the fields of risk management as well as business continuity planning but establish no connections between the two. Epstein and Khan (2014) explore the benefits of Application Impact Analysis for business continuity planning. The authors utilize the term “business continuity” throughout the paper in a self-explanatory manner. Most likely, it is considered an approach to risk management (implying both connection and hierarchical order) but not substantiated with evidence. Hohenstein et al. (2015) discuss the viability of the concept of supply chain resilience (SCRES) and point to the lack of both the definition and the identification of its components (Hohenstein et al. 2015).

The authors assert that both risk management and business continuity planning are viable ways of business resilience improvement. However, the terms are used interchangeably without clarification. The same approach is exhibited by Farrell and Gallagher (2015) in a study of enterprise risk management maturity valuation. The authors apply the Risk Insurance Model to determine the level of maturity of individual firms and use business continuity as one of the metrics. Nevertheless, the concept is not defined as an operational definition, and the connection between it and business management is not explained.

In the same manner, Grötsch, Blome, and Schleper (2013) consider business continuity planning as one of the determinants of organizational proactiveness in a specific field of supply chain risk management responsible for the mitigation of adverse effects of supplier insolvencies. However, neither the connection nor the implied hierarchical order is substantiated.

Some authors build upon the apparent similarity of the concepts mentioned in the previous section in an attempt to devise new frameworks. Torabi, Soufi, and Sahebjamnia (2014) suggest one such framework for business continuity management services (BCMS). The key point of the proposed framework is the business impact analysis component that is expected to improve the applicability of BCMS.

The research team tests the viability of their framework by examining its use cases in existing organizations (Torabi, Soufi & Sahebjamnia 2014). Both business continuity and risk management are incorporated as framework elements with no connection established by the authors. A similar approach is taken by Lavastre, Gunasekaran, and Spalanzani (2014), who suggest a framework expected to increase the reliability of the evaluation process and improve organizational performance.

The framework involves the characteristics of the participants, perception of risk by stakeholders, the relationships with partners in the field, and risk mitigation methods as core elements (Lavastre, Gunasekaran & Spalanzani 2014). The authors mention business continuity planning as one of the areas of application of their framework, but the suggestion is neither detailed nor backed with evidence.

Sahebjamnia, Torabi, and Mansouri (2015) argue that the current risk management practices used by the businesses overlook several critical points. To address the identified shortcomings, the researchers suggest a novel framework that relies on recovery time objectives and testing for applicability at the operational level (Sahebjamnia, Torabi & Mansouri 2015). Both concepts are used throughout the article, but neither is suggested as an element of the framework or tied to the other in any way.

A study on data safety and accessibility by Järveläinen (2013) provides a framework intended to improve operability and accessibility of business continuity planning. Even though business continuity is interlinked with risk management throughout the paper, the nature of the relationship is not specified.

Baskerville, Spagnoletti, and Kim (2014) propose a security framework intended for balancing the prevention and response paradigms in risk management practices. The authors classify business continuity planning as one of the elements of the response models, which implies both an interconnection and a well-defined hierarchical placement. However, no evidence is presented by the authors in support of the conclusion.

As can be seen, three common approaches are prevalent in the literature available on the topic. The first group includes scholars who tend to view risk management, crisis management, and business continuity as interlinked concepts and use them interchangeably and in a self-explanatory manner based on their similarity. The second group introduces certain details regarding the interconnection but provides no rationale for such a decision and does not substantiate it with evidence.

Finally, the third group specifies the nature of the interconnection by classifying one of the concepts as a subset of the other, thus introducing the hierarchical order to the taxonomy. However, in all cases, the connection is based on the apparent similarities in goals rather than the analysis of the data. Such an approach results in the emergence of frameworks that employ the concepts differently and, by extension, generate incompatible data during the assessment process.

Research Methodology and Framework

The study will be conducted in the form of descriptive research. Such design choice is justified by the relatively broad scope of the inquiry as well as by the relative scarcity of information available in the academic literature. Also, it should be noted that while business continuity is extensively used throughout the literature, it is rarely defined with a precise and agreed-upon definition, which also necessitates a descriptive inquiry to be addressed.

Another important reason is the apparent lack of an in-depth understanding of the interconnection between risk management, crisis preparedness, and business continuity. While the majority of the theoretical perspectives imply such a relationship, it is evident that their conclusions are not backed by the evidence but are instead based on the existence of similarities of tasks and goals in the respective fields.

While such an approach does not necessarily lead to a faulty conclusion, it is still desirable to clarify the matters, which can be performed effectively using the descriptive approach. Finally, it is worth pointing out that the scope of the study combined with the diversity of approaches characteristic for the field of business continuity and crisis preparedness suggests the existence of valuable insights on the impact of risk management strategies and techniques that are downplayed in both the theoretical and practical fields. In this case, the qualitative nature of the chosen research design offers the possibility of identifying the overlooked areas and thus highlighting the viable directions for further studies.

Considering the specificities described above, it would be reasonable to suggest the constructivist perspective as a basis of the project’s framework. As such, the study will focus on the perceived relationship between the concepts as well as their relative significance in the ERM practices. As was explained above, the business continuity plans that are currently being used by the majority of organizations are relatively diversified both in structure and the set of measures and techniques. Therefore, the quantitative assessment may provide distorted or incomplete data unless the data collection is organized with the acknowledgment of the majority of practices. However, such a tool needs to be constructed by the facts that are currently unavailable and can be gathered from the perceptions of the individuals.

The most suitable data collection method for the study in question is a survey consisting of both open-ended and close-ended questions. Such a method is suitable for the project for several reasons. First, it allows for a relatively small sample size, which is beneficial considering the resource limitations and time constraints of the study. Second, it provides the possibility to adjust the amount of the information obtained from the participants by including both open-ended and close-ended questions.

The former can streamline the process of data collection, are highly accessible, and can be easily processed using the readily available functions of the data collection tool. The latter requires more time to process and analyze but hold greater potential for the in-depth insights regarding the impact of risk management on business continuity. Also, it is possible to expect that some of the responses will point to the viable areas that were either overlooked during the stage of survey design or not identified by the previous researchers.

Plan for Sampling & Data Collection

The sample for the survey will consist of managers working in the field of risk management. The suitability of the sample will be ensured by the introduction of a set of inclusion criteria. First, the participants would be expected to have at least four years of experience in the managerial position. Since one of the concepts, business continuity, is based on the premise of uninterrupted functioning for a certain amount of time, the said criterion would increase the likelihood of participants’ familiarity with the issue in question. Second, the participants are expected to be involved with both strategic and tactical data of their organizations’ performance.

In this way, they will be able to observe the outcomes of the risk management and crisis management techniques on organizational performance and, as a result, link their observations to characteristics of business continuity. Third, the organizations where the sampling will take place will be expected to engage in business continuity planning as a part of their risk management effort. This factor will ensure the relevance of the participants’ experience to the topic of the study. The estimated number of participants that is considered sufficient for the success of the project is twenty individuals.

The sampling process will be initiated by contacting the administration of the selected companies and outlining the goals of the project as well as the criteria of the sample. Once the approval of the administration is obtained, it would be possible to get the list of suitable employees. These individuals will be contacted via email, briefed on the details of the project, and invited for participation. Simultaneously, they will be provided with the sampling criteria and asked to provide personal referrals to include the suitable individuals overlooked by the administration. The candidates who will agree to participate will then be contacted over the phone and provided with a detailed account of the possible security and privacy issues about the study, after which their formal consent will be obtained.

Once the final list of the participants is formed, it will be possible to proceed with the data collection. The data for the study will be collected using an online survey tool. The participants will receive a link to the questions via e-mail or other messaging means. Ten days will be allocated for the participants to provide their responses, after which the submissions will be locked to ensure the integrity of the data.

The respondents will be notified of the duration of the data collection stage during a telephone conversation, and a reminder will be attached to the link. Once the survey is locked, the number of responses will be matched with the initial list of participants, providing insight on the response rate. Due to the inclusion of both close-ended and open-ended questions, two approaches to data analysis will be necessary. The responses to the former will be processed using the capabilities of the data gathering tool. The latter will be handled separately by identifying common themes, coding the responses accordingly, organizing them in respective categories, and calculating the percentages of occurrence of each theme.

The obtained data will undergo a deidentification process upon collection to retain the privacy of the participants. The demographic data will be included in the survey to determine whether the sample is representative of the population in question. It should also be noted that the project is voluntary and provides no incentives to the sample. This condition will be specified during a telephone conversation as a part of formal consent retrieval.

The privacy of the participants will be ensured primarily via the capabilities of an online tool. Specifically, the resource will collect the IP addresses of the respondents to ensure the integrity of the data. However, this information is not disclosed to either the researchers or a third party and thus poses no threat to the participants. All information gathered by the tool is transferred in the encrypted form to minimize the possibility of disclosure of sensitive information.

All information will be stored on an account created for the project and will be deleted after its termination. The account will be protected by a strong password to minimize the possibility of the loss of data. The responses to the open-ended questions will be encrypted for storage and transportation using open-source software to increase data security. The participants will be briefed on the protective measures as well as the possible risks pertinent to the data collection process.

Reference List

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Assessment of the Crisis Facing Templeton Engine Company

The phone call made by the sales manager of Precision Cutting Tools Company, Dave Giltner, explaining the expected price increase of its products by six percent should be considered an issue of urgent attention (Dobler par. 1). Templeton Engine Company has a sole supplier of tooling kits and this means that it has few chances of escaping from the impending price increase. The Federal Aviation Agency (FAA) regulates the manufacture, quality, and supply of aviation tools and Precision Cutting Tools has a competitive advantage over other companies because of its compliance with the standards set by this governing body.

The increase in the competition among major aviation industry players necessitates the need to offer cheap but quality products to ensure the operations of a company are profitable, relevant, and have a future. Precision Cutting Tools is a single-source supplier of tooling kits to the Templeton Engine Company and this means that it has a high chance of arm-twisting it to follow its regulations including price increase.

Templeton Engine Company uses tooling kits worth $1 million annually (Dobler par. 9). Its decision to decide that Precision Cutting Tools will be its sole supplier was based on the quality of tooling kits it produced and the federal regulations that focused on the need to use tested and approved products. The manager of Templeton Engine Company should request a report from Precision Tooling Kit detailing the justifications for the price increase.

This will enable this company to understand that the reasons for the price increase were beyond Precision’s control. In addition, accepting the price increase and moving forward may be a simple alternative but this may have serious consequences on the profit and stock turnover of this company. Working with other departments to identify trends of tooling kits should be another alternative to be explored by this company; however, this may take a long time yet this company is working on a fixed schedule. Exploring the possibilities of outsourcing this product from other cheaper companies is another approach that may be taken by the manager; however, this may compromise the quality of products it uses in its operations.

Lastly, Neil may perceive this issue to be of great importance to the company and thus he must ensure it is managed carefully. This means that he may consider involving the president of his company and requesting that he consults with his counterpart in the supply firm. However, this may be perceived to be a cowardly move and the president may think that Neil is delegating his duties, becoming lazy and incompetent, and thus lacks the ability to defend the company’s rights.

Recommendations

Neil is in a dilemma that poses serious challenges to the future of his company depending on the decisions he makes. First, Neil should consider the option of advising the company to start producing its own products and stop relying on suppliers. The advantage of this alternative is that it will help the company to regulate the price of its products because it will be using its own raw materials. In addition, this will ensure the company incurs predictable expenses and not unexpected price increments. However, the disadvantage of this option is that the company will be forced to incur additional expenses to recruit or train employees. In addition, this alternative may take a long time to be operational and this will inconvenience the company.

Secondly, Neil may request a justification for the price increase by informing Precision Cutting Tools to explain the reasons for the price increase. This means that a price increase of inputs should be justified by statistics that will prove the need for a supplier to compel customers to buy their products at higher prices. The advantage of this alternative is that it will allow the supplier to present reasons that justified its price increase.

For instance, the supplier may explain that an increase in inflation has led to a high production cost and that is why the prices of its products are high. However, the disadvantage of this alternative is that the supplier may falsify the reasons for the price increase; moreover, there may be genuine reasons for doing so and this will force Neil to accept the offer.

Thirdly, he should work with other departments like the supply, manufacturing, and engineering to ensure he establishes the truth about tooling trends. This will help him to decide whether to accept or reject the price increase. In addition, this will be a good way of determining future trends about the quality, demand, and price of this product. This is a good way of ensuring that the company plans for the future increase in prices of its raw materials.

However, some aspects may not be easy to predict because of their nature. For instance, few companies manufacture aviation products, and thus there is limited information about them. Therefore, Neil may not get the required information to make informed decisions.

Neil may conduct research and evaluate the possibility of contacting other suppliers. This will help his company to know whether the price increase is justified or not. In addition, he will have a variety of suppliers and this will enable his company to have a say in determining the price of its inputs. However, this move may not yield the expected results if Precision Cutting Tools knows about this movie. It may impose other stringent measures that may affect the relationship between these companies.

Lastly, the phone call made to Neil requires him to act within 60 days. This period is short and he may not have time to explore other alternatives. Therefore, he may consider informing the president of his company and recommending that he contacts his counterpart to discuss the issue. This approach is good because presidents have the final say in the decisions of their companies; therefore, they may decide to water down the recommendation and continue operating as if nothing has changed. In addition, they have the power to influence the decisions of their subordinates without explaining their reasons for doing so.

However, the disadvantage of this alternative is that it may make him be perceived to be incapable of managing his responsibilities. In addition, the presidents of these companies are not the best people to address the problem because they may not have the professional abilities to manage this issue.

Conclusion

Templeton Engine Company should invest in producing what it requires and stop outsourcing key services to other companies because this exposes it to manipulation. Neil should seek explanations as to why Precision Cutting Tools increased the price of its products this will help him to evaluate whether they are genuine or not. Thirdly, the procurement department will develop an appropriate approach that will help the company to manage unexpected issues like an increase in the prices of its inputs if it works with other sectors. The possibility of contacting other suppliers will help this company to realize that there are companies that offer cheap products. It is easy for the presidents of these companies to decide the way forward for them because they have the final say in their organizations.

Works Cited

Dobler, Ronald W. Templeton Engine Company. Web.