Despite the title, this is an optimistic piece. Read to the end and you will understand.
Nearly all articles in this series address some element of proactive risk management as an effective, economic and efficient device to prevent problems from arising in the first place. But sometimes things go awry in business. Chemicals leak. Fires start. Employees fight or walk out. Trade secrets are stolen. And so on … So, let us “talk” about these worries just a bit.
To do that, we will envision two types of active risk management scenarios – crisis management and situation management.
Crisis management is defined to encompass damage potential and risk management activities out into a community beyond a business’s physical (including online) boundaries of control. Examples include airborne toxic leaks [note: this writer has experienced one of these; it was not fun], exterior fires [another note: one of these, too], hijacked servers, all the way to radioactive waste emissions.
Situation management, on the other hand, can entail damage potential and risk management activities within a business’s physical (including online) boundaries of control. Examples of these circumstances could involve equipment fires or staff altercations.
Neither of those two categories of crises are enjoyable for anyone involved. For management, staff, neighborhoods, first responders or regulators. But those circumstances must be promptly and properly remediated when they do occur. [And a final note: sometimes insurance claims are involved, which is a tale for another day.] And such circumstances must be prevented from recurring.
Both crisis and situation management provide opportunities for the operators of involved businesses to demonstrate their leadership in one area of critical importance – transparent information-sharing. Attending to the problems at hand actually permits the managers to build a merit worthy reputation by saying what they are going to do (and not do) about the matter and then actually acting accordingly. By doing so they can earn a reputation for being honest brokers of reliable and actionable information, both as to the immediate dilemma and in general.
- Communications in response to risk gone awry, such as is addressed in this piece, can break out in a variety of forms:
- Communications plans – to update internal and external stakeholders about the risk, sometimes by “plain, ole fashioned” phone trees
- Evacuation plans – to remove internal stakeholders and to protect proximate neighborhoods from the risk
- Remediation plans – to “mop up the mess” caused by the risk as quickly and safely as possible
- Evaluation plans – to prevent the risk from happening again by adding to the business’s evolving learning curve
Now back to the “hook” at the beginning – which was, “this is an optimistic piece.” The overall topic does not feel too good, what with all the leaking, burning, fighting and evacuating. That would be an accurate sentiment; the happy ending does not lie there. Rather, the promised optimism emerges from building a continuously improving knowledge base to prevent those sorts of concerns from happening again, as well as others still unknown.
Let us summarize the positive side of addressing so-called crises and situations, then. By building, improving, actually implementing and flexibly updating risk management plans, and doing so proactively on a regular, routine and pre-scheduled basis with the use of checklists, one can certainly be aware of the risk potentials, but also focus their productive time, talents and resources on the marketplace. That is, innovating and bringing out their innovations. Now that is an outcome that can make a business person smile.
So, we started with a seemingly distressing topic and worked to convert it to a positive. (Not bad for fewer than 1,000 words. Not bad at all.)
For more information, call Philip N. Kabler of the Gainesville office of Bogin, Munns & Munns, and P.A. at 352-332-7688, www.boginmunns.com/Office?Office=Gainesville, where he practices in the areas of business, real estate, banking and equine law.
This article is not intended to serve as legal advice, and readers should not rely on it as such. It is offered only as general information. Readers should consult with an attorney regarding their legal matters, as every situation is unique.