Business continuity

management:

THE IMPORTANCE AND VALUE

OF CONTINGENCY PLANNING

FOR FOOD SAFETY IN THE

DAIRY INDUSTRY

25 April 2018

J Burger

OUTLINE

• Overview

• What is Business Continuity Management (BCM)

and its importance

• Contingency planning and food safety

• Key principles to effective BCM and food safety

contingency planning

• Advantages of an effective BCM programme

• Conclusion

Overview

When Disaster Strikes

Overview

Rescue has to be safe and prompt

…to guarantee quick resumption of manufacturing

…leading to

…reduced losses from the incident

Overview

Main Message: …“When Disaster Strikes, Recovery Isn’t

Enough.”

The answer lies in formulating,

implement and maintaining of an

effective, sound and fit-for-

purpose BCM Program

Overview

• Operating a dairy business is simply not easy –

threats of all kinds whether sabotage, power

failures, drought or food safety crisis

• When a major disaster strike it would simply be

beyond the normal control of the company

• Solution is not to close shop (business) but rather be

prepared even for extreme circumstances (disasters

are part of business)

Overview• One way of preparing for adverse times such as a food

safety crisis is by developing and implementing an

effective Business Continuity Management Program

• Firms may be hesitant to adopt a BCM program because

of the perceived costs and complexity involved

• Organizations that prioritise other areas of the

business may never regret their decision to do so.

• They may never encounter disruptions, weather

based disasters or a major food safety incident.

But, just like fire insurance, it’s value isn’t fully appreciated

until the day there’s a fire.

Overview

• Business continuity is sometimes confused with

disaster recovery – the two are not the same!

• BCM is a holistic management process that seeks to

identify, in advance, the potential impact of for

example a food safety crisis and the organization’s

ability to again function normally.

• BCM would result in the formulation of a business

contingency plan (BCP), which would specify in

greater detail the recovery of the company’s

activities/processes.

WHY IS CONTINUITY IN THE DAIRY INDUSTRY SO CRITICAL

• Increasing complexity and operational risk acrossthe dairy supply chain (global role players,technology and R&D)

• If things go wrong the interdependencies (inputsuppliers)among dairy industry participants maybe severely impacted

• A severe food safety incident of one individualcompany may affect the entire dairy industry

• Need to maintain public confidence in the entiredairy supply chain

• Participants of dairy stakeholder business have ashared interest in promoting the resiliency in thedairy industry

WHY SHOULD WE BE CONCERNED

• A major food safety incident of one dairy

company have the potential to trigger

systemic risks and endanger:

➢public health at large

➢financial stability of the entire dairy industry

as major role-player in the agro processing

sector

➢integrity of dairy as a whole

• Stakeholders have a moral and legal

obligation to mitigate systemic risk caused by

interdependencies and among participants

Challenges towards effective BCM

• Securing safe and alternative supply of raw materials

and key ingredients from multiple suppliers.

• Traceability in the event of reputational risks.

• Implement comprehensive and effective recall.

• Managing the press and social media after serious

events such as food safety incidents and national

recalls.

• Consumer trust and loyalty that can take years to

build can be lost quickly when events of this nature

occur.

• A large proportion of businesses in the value (inter

decency) can close by such an event and are unlikely

to re-open.

International Standards

• The need for formalised business continuity systems in

the food industry has for some time been driven by

several Global Food Safety Initiative (GFSI) standards

including the British Retail Consortium (BRC) and Safe

Quality Food Initiative (SQFI) and endorsed in SA by the

CGCSA.

• GFSI standards dictate requirements for organizations

to set up business contingency plans that logistically

guide them to recovery and restoration of critical

functions, within a predetermined time, following an

extended crisis/disaster).

Business Contingency Plan (BCP) for

food safety

• A logistical plan guiding a food company to recovery

and restoration of critical functions within a

predetermined time following a food safety crisis.

• A plan based on the understanding of the threats to a

business prepared by senior management outlining the

methods and responsibility the company will implement

to cope for example with a food safety crisis.

Key principles: Board and senior

management responsibility

• The ultimate responsibility of putting in place a sound BCM forfood safety lies with an organization's board of directors andsenior management

• Issues to note:✓ Food safety contingency should be an integral part of the overall risk

management program

✓ The board and senior management are collectively responsible foreffectively managing the company’s food safety contingency plans

✓ A framework should be implemented for reporting to the board andsenior management on matters relating to ensure business continuity

✓ Roles, responsibilities and authority to act, as well as succession plansshould be clearly defined.

Key principles: Food safety risk

assessment

• Proactive identification of potential risk factors

through a drill or exercise is vastly preferable to

reactive management of a food safety disaster and

a media (social or otherwise) scandal.

• The company needs to address food safety issues

critical to itself and its customers.

• Researching, understanding and prioritizing threats

and vulnerabilities unique to your products,

ingredients, processes and supply chain, is

fundamental in identifying potential impacts

• HACCP plan helps to create a framework for

building resilience and effective responses.

Key principles: Food safety risk

assessment

Key principles: Communications

• The company should include in their BCPs procedures for

communicating within the organization and with relevant

external parties in the event of a food safety crisis.

• Issues to note:

➢ Communication procedures should identify those

responsible for communicating with all relevant parties

➢ Communication procedures should build on any

communication protocols that already exist in the food

safety and quality system

➢ For authorities, if necessary, include contact information for

national agencies such as DOH Directorate Food Control

➢ Communication procedures should provide for the regularupdating of contact information of relevant parties

Key principles: Communications

• The company should address communication issues withthe authorities in other jurisdictions where applicable inthe event of a major food safety incident with crossborder implications

• Issues to note:

➢ Depending on the size of the dairy company it is likelythat impact of a food safety crisis may extend acrossnational borders

➢ Need for periodic discussions with the authorities indifferent jurisdictions to develop a sharedunderstanding in the event of significant cross bordereffects and agree on communication procedures insuch situations

Key principles: Testing of contingency

planning

• Dairy companies to test their BCPs, evaluate their

effectiveness and update their BCPs

• Issues to note:

➢ Testing should be conducted regularly

➢ Where applicable tests should be conducted

from alternate sites with relevant participants and

operators

➢ Testing is also essential for promoting awareness,

familiarity and understanding among key

personnel of their roles and responsibilities in the

event of a major food safety incident.

Key principles: Review contingency plan

• Management must ensure review of contingency

plans into their frameworks for ongoing assessment

for which they are responsible

• Issues to note:

➢ update plans are a going concern

➢ ensure plans are appropriate

➢ ensure adequacy of the testing program

This will ensure that industry participants are in fact

implementing effective BCM

Key principle: Embedding BCM in the

company’s work culture• BCM and food safety contingency planning should

form part of the core values of the company to instillconfidence in the ability of the company to copewith major food safety incidents

• The main techniques for developing a sustainableBCM culture within an organization, include:

➢ Assessing the current level of awareness of, andcommitment to, BCM against the desired level;thereby identifying the ‘training gap’ that existsbetween the two

➢ Designing and delivering a campaign to createcorporate awareness and develop the skills,knowledge & commitment required to ensuresuccessful BCM; and

➢ Checking that the awareness campaign hasachieved the desired results, and monitoringBCM awareness in the long term.

Advantages of a food safety

contingency plan

Food safety

CP

Investor confidence

Compliance issues

Insurance purposes

Enhancedcomm.&coordination

Part of Survival Lessons

•Recent natural disasters aroundthe globe have highlighted thatbusinesses without a plan willmost likely collapse•A CP will minimize the chances

of this, while preparing yourbusiness for survival.

Institutions with a CP are perceivedas more valuable to deal with

Confidence by theregulator oncompliance issues

• Insurance is one way ofminimizing impact of riskon the business

• A solid BCP reflects howrisk-averse an institution is

• This could lead to lower orstable premiums

•A CP fosters stakeholdercommunication• If every party knows how to

communicate, effects ofthe disaster will beminimized.

1

2

34

5

CONCLUSION

• The frequency and intensity of both man-madeand natural calamities in the food industry is onthe rise

• In future both stakeholders in dairy supply chainand authorities should ensure preparedness toeffectively respond to unexpected food safetycrisis

• BCM and food safety contingency planningreduces the likelihood and consequences of acrisis through:

➢ understanding the company’s critical objectives

➢ identifying possible barriers and interruptions

➢ testing control strategies, and;

➢ determining how to continue should a major

food safety incident occur

Thank you!