Crisis Management Plan - Development, Part 1

An effectively implemented Crisis Management Plan is generally structured with three primary elements involving:

Crisis Management Plan structure elements involve comprehensive crisis exposure analysis, a multitude of task components while Timing interfaces with various time periods which are pre-crisis, during crisis and post-crisis.

There are three primary categories to be considered in typical comprehensive crisis exposure analysis. The categories are broad in nature and the situations presented focus on risk and insurance management program applications.

The following are the broad crisis management major categories identified for crisis assessment considerations:

To accomplish this comprehensive assessment task, the extent of specific losses must be determined through a review of probable loss frequency and severity. Severity can be categorized in one of three levels of loss magnitude which range from an accidental event that is effectively funded under the risk management program to a major unfunded or underfunded catastrophe that could threaten the ultimate financial survival of the organization. (Refer to subsection 4.4)

The crisis exposure assessment should remain broad in scope and not become inhibited by the traditionally narrow considerations of only those perils addressed by standard commercial insurance policies.

The crisis management plan normally involves structured formulation, implementation and operating strategy as well as on-going operating maintenance, thus typically involving the following five sequential phases:

The above five sequential steps are summarized in detail in the organized plan Exhibit 7.1. Frequently, a comprehensive Crisis Management Plan is formulated and implemented in a developing structure of individual components including the task modules indicated in the following Exhibit 7.1:

Exhibit 7.2 graphically depicts the four specific time periods and their continuously evolving interrelationship which is: (1) prior to crisis, (2) during crisis, (3) immediately following crisis and (4) post crisis.

The following is a summary overview of the significant activities anticipated during the four specific time periods:

The most important time segment concerning Crisis Management Plan timing is the period identified as "prior to crisis". This involves an on-going time period without any definable termination.

Within this major time segment lie Crisis Management Plan formulation, implementation and on-going maintenance. At the time of a crisis, the ultimate success of the Crisis Management Plan is dependent upon the effectiveness of the strategic planning which has been completed during this time period.

This time segment is relatively brief and addresses only action necessary during the actual crisis occurrence. This involves immediate action by the Emergency Response Team and Crisis Management Committee. The plans for anticipated crises must involve pre-determination of sequential task actions, establishment of priorities and delegation of authority.

At the time of a crisis occurrence, Crisis Management Plan policies and operational procedures should immediately implemented. To be successful, the control of a crisis involves a logical sequence of activities with pre-determined priorities.

The post-crisis period is of relatively short duration and includes initial salvage operations, containment of loss and evaluation of the situation. Recovery plan assessment considerations, include, but are not limited to impact on staff, operating status, third party exposures, claim value and recovery considerations.

During the relatively brief time period following a crisis, a preliminary assessment of the existing situation should be completed; the crisis media and public relations strategy should be implemented and decisions concerning contingency plan implementation for as alternate locations and resources should be acted upon.

The final time segment in the crisis management strategy possibly involves a period of several years depending upon loss magnitude, extent of asset loss and litigation concerning subrogation opportunities and activities.

This segment concerns possible activation of alternate locations contingency plans as well as operations during the recovery period. The primary termination of the post-crisis recovery period is when normal operations are resumed. The secondary termination of post-crisis recovery is when the associated insurance claims and/or subrogation legal activities are completed. 

Crisis Management Plan strategic objectives should interface with the identified emergency needs as well as with the immediate objectives and long-term goals of the operating entity. The Crisis Management Plan strategy should involve a broad focus encompassing life safety, pre-loss planning, post-loss recovery, asset conservation, revenue production maintenance, operations continuity and legal compliance with the ultimate goal of financial survival.

The Crisis Management Plan pre-loss planning and post-loss recovery task objectives should be broad in scope and normally include, but not be limited to those topics identified in the following Exhibit 8.1:

The goal of the Crisis Management Plan is to provide the organization with maximum life safety for both employees and visitors, operational continuity, asset conservation and financial survival. The operating assumption must be made that key management responsibility is the same during a crisis situation. It should be an accepted fact that the management employee job description is applicable for normal business or crisis conditions thus providing an on-going policy which may be referred to as for better or worse.

A Crisis Management Policy Statement should be developed to interface with the organization's crisis management needs and bear executive approval. With this approval, the Policy Statement then provides twenty-four hour operating authority to those members of the management team who are called upon to react at the time of an emergency with decisions possibly outside their realm of authority.

It is recommended that The Crisis Management Plan be operated and governed via a structured committee approach. The Crisis Management Committee should have the responsibility of formulating, implementing and operating the Crisis Management Plan. The organization should adopt effective emergency and contingency planning policies in order that the Crisis Management Committee may operate with dispatch as well as within the bounds of pre-approved executive authority, the Crisis Management Policy Statement.

The primary purpose of a Crisis Management Committee system is to provide a technique by which to attack and resolve specific task problems associated with the operation of a Crisis Management Plan. The committee approach involves a high level of efficiency, provides for back-up membership and cross training. The Emergency Response Team is managed by the Crisis Management Committee and has the primary responsibility of providing an immediate, qualified group to perform emergency operations before outside assistance arrives.

The committee operational approach allows for a concentrated time commitment by concerned management to function efficiently in operating the Crisis Management Plan. Furthermore, the committee approach involving several different operational management levels may concisely interface with normal existing management policies and procedures.

Major segments of the Crisis Management Plan responsibility may be divided and organized into crisis management committees, sub-committees, task activity groups and emergency response teams. There should be specific pre-assigned responsibilities within the identified Crisis Management Committee area. The Emergency Response Team should have the primary responsibility for the immediate management of any developing crisis situation.

The committee concept for the Crisis Management Plan is somewhat similar to the typical Loss Control Committee approach, however, the following significant differences must be noted:

Operational goal is to focus on life safety, crisis vulnerability assessment, business continuity and financial survival rather than property, liability including auto, and workers compensation insurance claims frequency and severity

Significantly higher level of management is represented on the committee, thus allowing for effective decision making while responding to the established line of authority

Exhibit 8.2 illustrates "Crisis Management Plan Responsibilities" and the typical chain of command. Committee responsibility, Emergency Response Team direction and reliance upon the Crisis Management Policy Statement and Crisis Management Manual are clearly identified.