5.7+Crisis+Managment+&+Contingency+Planning+(HL)

5.7 Crisis Management & Contigency Planning


THE KEY IDEA BEHIND THIS SUB-TOPIC IS: HOW, AS A BUSINESS, DO WE HANDLE DISRUPTIVE EVENTS!!

IB students are expected ....
 * understand the difference between contingency planning and crisis management,
 * the key components of effective Crisis Management
 * analyse the benefits of Contingency Planning

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Q. How does this topic fit into the Operations Management unit? The answer is //'loosley'//

Crisis' could occur in any number of forms, with any number of origins - though the key question would be : ** can __operations__ continue in the face of this disruptive event? **

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The difference between a Crisis and an event that is unfortunate but not really a Crisis ? Both are bad news for the firm and have the potential to stop operations - that is how they are similar here is how they are different.... //an earthquake [these are usually without warning]// || //eg. Accident with a machine results in a bruised leg,// //a storm arrives [this usually has sometime warning before]// || As the Operations Manager it is your job to ensure that when either of these occur, the firms response is as effective as possible, and operations are disrupted as little as possible.
 * __**CRISIS**__ || __**UNFORTUNATE EVENT**__ ||
 * //difficult to predict// || //possible to predict// ||
 * //effects are huge and possibly disastrous// || //effects vary in size from minor inconvenience, upwards// ||
 * //difficult to plan precisely for// || //it is possible to plan for,// ||
 * //Manages react to this// || //Managers proactively plan for this// ||
 * //Eg a worker goes crazy and attacks a colleague,//

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= CRISIS MANAGEMENT =

A crisis shouldn't be a crisis if we could have planned for it //(reference the meme up at the top)//. A crisis should only be caused by an unexpected event, normally a first-time event : an event whose consequences and effect could not have been accurately predicted. + to qualify as 'a crisis' an event must not only be impossible-to-predict, but it must also have severe consequences.

You could not have predicted you would find a cockroach in your pizza - but get over it, tell the waiter, he'll get a new pizza, maybe even free : it's NOT a crisis! How to define when the consequences are severe? difficult to say, depends on the case study, if the customer has a medical phobia of cockroaches, and experiences a mental breakdown, then maybe a crisis has occurred. !

So is it possible to plan for a crisis? YES AND NO

NO: you can't plan for something you don't know the details of - well **not in great detail** anyway. YES : You can train and develop attitudes, and basic rules

So Crisis Management Plan could be , Rule 1 : Remain Calm - confirm that the problem is real, and when confirmed sound the alarm Rule 2 : Check Customer Safety etc

These can be only general guidelines. It might be that confirming the problem is real is completely unnecessary....

Whatever the Crisis Management Plan might entail it should have.... TRANSPARENCY & COMMUNICATION : do not try underplay or hide the problem. Most stakeholders will understand a crisis is a crisis and not blame you for it. SPEED & CONTROL : Stakeholders like to see that you are in charge and taking actions to minimize the effects of the crisis however its a delicate balance - you dont want to "jump the gun"!

While customers, governments, staff etc are sympathetic that crisis' could happen to anyone they want to know that the effects were minimized because you as an organisation were as prepared as it was possible to be!
 * Bottom line is : **

Good crisis management should prevent a bad thing becoming a terrible thing.

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= CONTINGENCY PLANNING =

Some people refer to these as a 'Plan B' - it is, in effect, the Plan for //what to do when that thing which we hope doesn't happen, does in fact happen//. It is about __proactively__ planning for events we can reasonably expect to possibly happen at some point.

Contingency Plans typically looks like this : //If X happens, our course of action will be Y.//

etc etc
 * If there is a Fire, we will evacuate the building immediately and go to the pre-designated area
 * If the international supplier doesn't deliver on time, we will get alternative raw materials from a local supplier whose number and details we have already researched.



For School Trips staff do a 'Risk Assessment'-
this is done __//before//__ the trip and involves identifying... (i) what possible threats there are (ii) how serious will it be if these threats are realized (iii) what is the likelihood of this threat being realized (iv) what to do if the threat does in fact occur

step (iv) is a CONTINGENCY PLAN.

For a trip to Coca Cola factory
 * __RISK__ || __SERIOUSNESS (/10)__ || __PROBABILITY(/10)__ || __COURSE OF ACTION__ ||
 * Being kidnapped by gangs in Apopa || 10 || 1 || Inform the Police immediately, ensure the safety of the remaining students - and then contact Mr Keslake ||
 * Student falling while climbing the stairs || 3 || 3 || Use the First Aid kit to dress the injury, call an Ambulance if the injury is serious. ||

Some really smart R.A. Forms will also include a 5th Column : "what Measures are being taken to reduce the Probability of the event occurring" - this too is part of CONTINGENCY PLANNING because "prevention is better than cure"

ADVANTAGES : DISADVANTAGES :
 * Limits damage, saves money in losses and law suits, protects reputation
 * Time and money is spent planning for an event that may never happen
 * Despite good planning, it is impossible to cover every eventuality and sometimes negative consequences just cannot be avoided.
 * Smart, intuitive decision making when the actual event occurs can sometimes be just as effective
 * Over-planning could lead to inflexibility when the event occurs and the real consequences are actually being felt - your Plan might not prove to be the best course of action however its what you planned so its all you think about - and do.

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 * a key element to Contingency Planning is understanding the __//**TRIGGER**//__.

This means //we see the possibility of X happening, we have plan Y in place : we wait and monitor and see if X really will happen... but at what point do we say, its close enough, i am not waiting for X to actually happen, i am implementing plan Y now!//

__en example__ : In the event of an Armed Intruder entering the school premises we will : sound the alarm to all classes and teachers will lock doors and students hide from view. Vigilantes will confront the man, with extreme violence as an option.

This obviously is a disruptive event - we don't want to implement the plan unless we are __sure__ there is an emergency. We also dont want to wait until the Intruder starts killing people, to be sure..

Scenario : the vigilante reports a man has just entered the school premises. Instead of going to Reception as instructed, the man turned right and is going towards the LRC, he looks like he is hiding something under his shirt that appears to be the size of a typical pistol... He is reasonably well dressed and doesn't seem to be agitated - what do we do... ?!?!?

You see the point? - a plan needs a trigger (excuse the bad pun) - a clear event, which if happens is a signal to us to go from 'ready' to 'action' ! .................................................................................................

a few cartoons downloaded from the web...

_____________________________________________________________ REMEMBER the links of this unit to the big topic :

and from a legal point of view:
 * Crisis' could occur in any number of forms, with any number of origins - though the key question would be : **can __operations__ continue in the face of this disruptive event?**
 * While customers, governments, staff etc are sympathetic that crisis' could happen to anyone they want to know that the effects were minimized because you as an organisation were as prepared as it was possible to be!