RISK CRISIS MANAGEMENT: A RAPID RESPONSE October 5th, 2015, pm

Transcription

1 RISK CRISIS MANAGEMENT: A RAPID RESPONSE October 5th, 2015, pm Panel Members: Udo Kappes, Airbus Group Insurance Risk Management Hans-Peter Wollner, BELFOR Rob Harford, Salamanca Risk Management Moderator: Julia Graham, FERMA President 1

2 Crisis Management A rapid response Airbus Group Insurance Risk Management principles Here: Key Risk Responses Risk Prevention (Loss Control Programme) Self Insurance Crisis Management From an Asset Insurance perspective Business Continuity Management (Business Impact Analysis) Emergency Response Plan ( Red Alert agreement) Case studies 2

3 Airbus Group Insurance Risk Management Principles Loss Control Programme & Risk Engineering - Objective assessment by Risk Engineers of the leading Property insurer - Approx. 100 sites visited and engineered p.a. - LCP reports discussed with site management and distributed to co-insurers 3

4 Crisis Management From an Asset Insurance perspective Business Impact Analysis Risk Analysis - Key hazards - Loss scenarios - Risk Mitigation Business Model Analysis - Product/ Services flow - Interruption assessment Financial Analysis - Profit allocation to products/ Services - Costs related to delivery Business Impact Analysis - Identification of key processes/facilities wrt revenues & costs - Evaluation of financial impact Business Continuity Management strategies 4

5 Crisis Management From an Asset Insurance perspective Emergency response Plan 5

6 Airbus Group Crisis Management From an Asset Insurance perspective Red Alert Agreement Preparation for Emergency situations Provides contact details Guarantees immediate response times Provides information material with clear advice Allows access to Emergency Response trainings Permanent review of contact lists and distribution of updates keeps risk awareness alive! 6

7 Case Studies Lessons learnt Even quite minor incidents can have severe consequences, if not analysed quickly by experts Emergency plans should contain clear advice regarding immediate involvement of cleaning and restoration experts (following potential contamination) Decisions based on knowledge about the damage extent and being responsive to business impacts are valuable Effective Business Continuity Planning requires continuous risk awareness 7

8 Sometimes crisis management creates: A sad experience! 8

9 Germany and international airlines were shocked after the horrable plane crash in the alps in March 2015 Among all the painful memories about the victims and their families and left behind we suddenly became involved German Lufthansa looked for a company able to collect pieces of a plane crashed in the mountains and called Airbus if they have any idea how to handle such a case Airbus recommended to call us. Alpinists entered the inaccessible areas in the mountains and collected singly and mostly small pieces and brought it to a storage place. We could fulfill the needs of Lufthansa and all obligations regarding confidentiality and press communication. We are very happy that it was a single challenge what hopefully never ever will come again 9

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11 Brief introduction 11

12 Corporates in emergency situations may face Fire damage Water damage Storm damage Floods 12

13 One major task is: back to live! Immediate measures Damage restoration Prevention of further damages Restoring of the initial situation Limitation of business interruption 13

14 Deterioration after a fire can reduce the opportunity Time taken to make decision Contamination by fire, soot, water, etc. Corrosion Damage -total loss Removal of contamination Restoration combined with replacement of damaged parts All parts damaged: Recovery no longer possible 14

15 Gaining control is crucial in the initial phase of damage Typical Incident Development Decisions to be made Information available Answers are needed rapidly Knowledge and expertise is essential Information is needed to take the right decisions Time after Incident

16 Two examples of large commercial losses 1.) A loss in Poland (supplier to manufacturer in Germany) Time lack in decision making by local insurer increased BI for german manufacturer 2.) Alternative Quick response by large loss restoration team resulted in recovery and avoided downtime

17 Supplier in Poland suffers major fire A German gobal corporate became affected by a severe fire damage in Poland Production of the key supplier caused a stop in several plants due to a lack of parts from Poland. Business interruption is 1 mill. per day damage The German company called the same day BELFOR Poland assists by releasing the damaged area (27.7 and 28.7 by hiring a local structural engineer) Preservation work on the tools starts on 28.7 following advice from BELFOR PL and a verbal assignment of work by the customer 17

18 Supplier in Poland suffers major fire Quotation for start of clean-up operation and salvaging of tools on ( ) Order to be placed by supplier is agreed In anticipation, reservation of a crane and clearing machinery to tear down the hall on Monday ( ) is done The supplier's Polish direct insurer wants to use a cheaper provider and delays the placing of work The reserved machinery and crane becomes cancelled as the order is not placed damage 18

19 Supplier in Poland suffers major fire damage German company sends BELFOR reminder of placed order. Order is placed on ( ) Crane (70 tonnes) and clearing machinery have to be ordered again Work starts on ( ) The pillars have thermally deformed as a result of which the cross beam (3.5 tonnes) cannot be lifted out of the bracing. Solution: Hydraulic grippers on excavator Tools can only be salvaged once the loosehanging parts have been cleared and the hall has been made safe so it won't collapse Service provider indicates that all wearing parts for all plastic injection tools should be ordered as a precaution to avoid delays after the clean-up 19

20 Supplier in Poland suffers major fire damage In parallel, a large series of ultrasonic immersion baths is built to recondition the tools in Hamm, Germany The first tools are delivered to Hamm on ( ). The first reconditioned tool is passed for repairs to the damaged party's sub-contractor in individual parts on Spare parts have not been ordered. Delay due to lack of parts approx. (??? weeks) Service provider reconditions and hands over a total of 50 tools. Business interruption damage to date. Total costs for BELFOR Poland approx. 1.5 mill. Total costs for DeHaDe approx. 750 k 20

21 Supplier in Poland suffers major fire Lessons learnt: damage Delays caused by not placing orders can be avoided. (6 days? = 6 mill.) Delays caused by missing wearing parts can be avoided. (???? ) Coordinated planning and use of the reconditioning company's experience is helpfull Retroactive effects are normally not part of emergency plans 21

22 An alternative example 22

23 Quick decision Fire damage in final assembly line belonging to an international market leader for machinery in the food industry Cause of fire: Short-circuit when charging a forklift battery in the production hall Staff and later on fire brigade use extinguishing powder 7500 m² hall and all the machinery in it are contaminated with extinguishing powder Call to service provider by the broker on Friday at around 9 am BELFOR arrive at around 10:30 am, initial stocktake of situation Customer produces list of priorities because some machinery are scheduled to be supplied to international customers Work starts at 1:30 pm Direct insurer arrives at 4 pm and appoints chemist to contain the damage (chemical analysis) All building surfaces, machinery and some semi-finished products need reconditioning 2-shift (day and night) operation of 100 people per shift for 9 days Business interruption damage is avoided Total cost for service provider services 1 mill. 23

24 Lessons learnt Powder extinguishers are cheap and effective but use may become expensive 24

25 Benefits of facilities / equipment recovery Reduced business interruption Reduced loss of profits Reduced consequential losses Reduced risk of losing customers Reduced risk of losing market shares Reduced cost of reinstatement Typically 10% to 30% of the replacement price 25

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27 RED ALERT policy holder is already familiar with his service provider! RA partner RA partner BELFOR RED ALERT contact Inspection Proposal for initial measures Issue work order for initial measures Carry out initial measures RA partner Damage contained No initial measures needed No costs

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29 Rob Harford Head of Risk Consulting Salamanca Risk Management (SRM) 29

30 Planning: Crisis Management What could possibly go wrong! Poor risk assessment Ineffective documentation Command and control Exercising 30

31 Execution: Crisis Management What could possibly go wrong! Wishful thinking (failure to act upon triggers) Mishandling communications and PR Social media monitoring and exploitation Controlling of communications (inwards and outwards) 31

32 Summary Ensure you understand the risks in detail Have a flexible easy to use plan, that has some of the work already done for you and that all stakeholders are incorporated in. Ensure the CMT is appropriate for the task, stand them up early and make sure their roles are clear. Exercise the CMT and put the plan through its paces, it s a bad time to realise a plan is unfit for purpose when a crisis is underway. Know your plan, have confidence in it and have the bravery to accept that you are in a crisis. Communicate clearly, through coordinated mechanisms, and most of all be human the public love to empathise and demonise in equal measure, ensure they choose the right one! 32

33 Thanks for your interest! Questions and answers? Panel Members: Udo Kappes, Airbus Group Insurance Risk Management Hans-Peter Wollner, BELFOR Rob Harford, Salamanca Risk Management Moderator: Julia Graham, FERMA President 33