Business Crisis and Continuity Management (BCCM)

Class Session 12

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Business Crisis and Continuity Management – The business management practices that provide the focus and guidance for the decisions and actions necessary for a business to prevent, mitigate, prepare for, respond to, resume, recover, restore and transition from a disruptive (crisis) event in a manner consistent with its strategic objectives. (Shaw, 2006)

STRATEGY

Strategy is1. a coherent, unifying and integrative pattern of decisions;2. a means of establishing the organization’s purpose in term of long

term objectives, action plans and resource allocation priorities;3. a definition of what is the real business (products and/or services) of

the organization;4. a response to the internal and external environment to remain

competitive.5. a means of defining management roles and responsibilities at all

levels of the organization;6. a way of defining the organization’s contributions to its stakeholders.Applied Strategic Planning page 3

PLANNINGA formalized process to produce an articulated result in the form of an integrated system of decisions (interdependent decisions). Planning requires thinking about the future in an attempt to exercise some level of control over it. Adapted from CALSTATE.EDU Web Site

“Establishing objectives and choosing the most suitable means of achieving those objectives before taking action” – anticipatory decision makingApplied Strategic Planning page 3

STRATEGIC PLANNING

“the process by which the guiding members of an organization envision its future and develop the necessary procedures and operations to achieve that future”

From Applied Strategic Planning

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QUESTIONS FOR STRATEGIC PLANNING

1. WHERE ARE WE NOW2. WHERE DO WE WANT TO BE (AND WHEN

DO WE WANT TO BE THERE)?3. WHAT ARE THE ENVIRONMENTAL

(INTERNAL AND EXTERNAL) CONDITIONS THAT SHAPE OUR OPTIONS?

4. HOW DO WE GET FROM HERE TO THERE?

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BENEFITS OF STRATEGIC PLANNING

1. INCREASED EFFECTIVENESS2. INCREASED EFFICIENCY3. IMPROVED UNDERSTANDING AND BETTER LEARNING4. BETTER DECISION MAKING5. ENHANCED ORGANIZATIONAL CAPABILITIES6. IMPROVED COMMUNICATION & PUBLIC RELATIONS7. INCREASED POLITICAL SUPPORT

Creating and Implementing Your Strategic Plan. Bryson and Alston. Page 9.

Benefits of Strategic Planning1. A framework and a clearly defined direction that guides and supports the

governance and management of the organization

2. A uniform vision and purpose that is shared among all constituencies

3. An increased level of commitment to the organization and its goals 4. Improved quality of services for clients and a means of measuring the service

5. A foundation for fund raising and board development

6. The ability to set priorities and to match resources to opportunities

7. The ability to deal with risks from the external environment and

8. A process to help with crisis managementFrom Alliance for Nonprofit Management

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Tactical (supporting) objectives directly supporting strategic BCCM

1. Ensuring the safety of employees, customers and the public.

2. Protecting business tangible and intangible assets (e.g. physical property, data and information, goodwill)

3. Minimizing business operation disruptions. 4. Resuming, recovering and restoring business operations according to a

pre-developed and defined priority scheme.

5. Maintaining a positive internal and public image. 6. Complying with legal and regulatory requirements.

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PLANNING TO PLAN

VALUES SCAN

MISSION FORMULATION

STRATEGIC BUSINESS MODELING

PERFORMANCE AUDIT GAP ANALYSIS

INTEGRATED ACTION PLANS

CONTINGENCY PLANNING

IMPLEMENTATION

THE APPLIED STRATEGIC PLANNING MODEL FIGURE 1 -1

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A Good Mission Statement

A good mission statement captures an organization’s unique and enduring reason for being, and energizes stakeholders to pursue common goals. It also enables a focused allocation of organizational resources because it compels a firm to address some tough questions: What is our business? Why do we exist? What are we trying to accomplish?

From: "Mission Matters." The CPA Journal.

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AmerisourceBergen Mission Statement

“To build shareholder value by delivering pharmaceutical and healthcare products, services and solutions in innovative and cost effective ways. We will realize this mission by setting the highest standards in service, reliability, safety and cost containment in our industry.”

From AmerisourceBergen Web Site.

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DHS Mission

We will lead the unified national effort to secure America. We will prevent and deter terrorist attacks and protect against and respond to threats and hazards to the nation. We will ensure safe and secure borders, welcome lawful immigrants and visitors, and promote the free-flow of commerce.

DHS Strategic Plan. 2004.

DHS Strategic Goals

1. Awareness2. Prevention3. Protection4. Response5. Recovery6. Service7. Organizational excellenceDHS Strategic Plan 2004

TSA Mission

The Transportation Security Administration protects the Nation’s transportation systems to ensure freedom of movement for people and commerce.

TSA Strategic Plan 2004

Aligning TSA Goals with DHS Strategic Objectives

DHS Strategic Goals

Awareness Prevention Protection Response

Organizational Excellence/

Service

TSA Strategic Goals

Domain Awareness

Prevent/ProtectRespond/Restore

Organizational Effectiveness

TSA Strategic Goals

1. Domain Awareness – Ensure we gain awareness of the full scope of threats and vulnerabilities to all modes of transportation in our domain of responsibility

2. Prevent and Protect3. Respond and Restore4. Organizational Effectiveness

Strategic Objectives for Goal 1

Domain AwarenessStrategic Objective 1.1 – Gather and analyze intelligence

information related to threats and vulnerabilities of all modes of transportation and assess the effectiveness of available countermeasures to most effectively manage risk.

Strategic Objective 1.2 – Make innovative use of analytical and detection technologies and techniques to collect and manage information regarding potential threats to persons, cargo, and commerce in the transportation arena.

Strategic Objective 1.3 – Disseminate relevant transportation security and intelligence information to appropriate entities in a timely and functional manner.

John Laye’s Strategies

1.Eliminating the threat 2.Continuity 3.Quick restoration disaster recovery 4.Deferred restoration disaster recovery 5.Discontinuing the product

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Pitching Preparedness by Philip Jan Rothsteinor

How to Convince Senior Management that BCCM is a Strategic Investment

www.rothstein.com Key Points• Justify on tangible results, not emotions• Point out specific, direct benefits• Recognize top management may have other conflicts• Speak top management’s language

Selling BCCM as a Strategic Investment

1. BCCM philosophy as demonstrated by past efforts and commitment

2. Risk appetite 3. Risk culture4. Oversight of the Board of Directors5. Integrity and ethical values of the

organization’s people

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Selling BCCM as a Strategic Investment

6. Commitment to competence7. Management philosophy and operating

style8. Management’s assignment of responsibility

and authority9. Organizational structure10. Human resource policies and practices

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The Impact of Corporate Culture on Continuity

1. What three things does the organization value most?

2. What 10 words would best describe the organization?

3. What’s important at the organization?4. How do employees get promoted and what

behaviors get rewarded? From The Impact of Corporate Culture on Continuity

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The Impact of Corporate Culture on Continuity

5. How does a person fit into the organization?6. Do organization leaders/managers take risks?7. How are decisions made and then

communicated throughout the organization?

From The Impact of Corporate Culture on Continuity

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31 different rationalizations that in different combinations and degrees of belief shape the organizational culture with respect to crisis management. Source: Mitroff and Pauchant. (1992) Transforming the Crisis-Prone Organization. p. 86.

Properties of the

Organization Properties of the environment Properties of the Crises

Themselves Properties of Prior Crisis

Management Efforts 1. Our size will protect us. 2. Excellent, well-managed

companies do not have crises. 3. Our special location will

protect us. 4. Certain crises only happen to

others. 5. Crises do not require special

procedures. 6. It is enough to react to a crisis

once it has happened. 7. Crisis management or crisis

prevention is a luxury. 8. Employees who bring bad

news deserve to be punished. 9. Our employees are so

dedicated that we can trust them without question.

10. Desirable business ends justify the taking of high-risk means.

11. If a major crisis happens, someone else will rescue us.

12. The environment is benign; or, we can effectively buffer ourselves from the environment.

13. Nothing new has really occurred that warrants change.

14. Crisis management is someone else’s responsibility.

15. It’s not a crisis if it doesn’t happen to or hurt us.

16. Accidents are just a cost of doing business.

17. Most crises turn out not to be very important.

18. Each crisis is so unique that it is impossible to prepare for all crises.

19. Crises are isolated incidents. 20. Most crises resolve

themselves; therefore time is our best ally.

21. Most (if not all) crises have a technical solution.

22. It is enough to throw technical and technical quick fixes at a problem.

23. Crises are solely negative in their impact. We cannot learn anything from them.

24. Crisis management is like an insurance policy; you only need so much.

25. In a crisis situation, we just need to refer to the emergency procedures we’ve laid out in our crisis manuals.

26. We are a team that will function well during a crisis.

27. Only executives need to be aware of our crisis plans; why scare employees or members of the community?

28. We are tough enough to react to a crisis in an objective and rational manner.

29. We know how to manipulate the media.

30. The most important thing in crisis management is to protect the good image of the organization.

31. The only important thing in crisis management is to ensure that our internal operations stay intact.

Considerations for Calculating the Cost of Downtime

1. Revenue lost by inability to accept orders.2. Cost of lost productivity.3. Value of inventory lost or spoiled.4. Cost to recover and/or rebalance manufacturing

processes.5. Fines, fees and/or compensatory payments.6. Cost of marketing and sales efforts to recover

revenues.7. Lost customer loyalty, reputation and/or goodwill.8. Cost of legal, health, safety and/or legal exposure.

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Difficulties Associated with Calculating the Cost of Downtime

Many impacts can be overlooked or underestimated (e.g., intangibles and lost opportunities)

Many impacts can be overestimated since: • Services may be made up to customers• The cost of downtime is not necessarily a linear relationship• Customer loyalty issues can increase or decrease impacts• Not all of overhead may be impacted (e.g, administrative

services, senior personnel activities)• Outsourced services may be discontinued without penalty• Certain support and administrative tasks which provide

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