TDowhanick.ppt

1 Copyright © 2005 InBev – All rights reserved

Crisis Planning and Preparation at Labatt Brewing Co. Ltd.

Terrance M. Dowhanick, Ph.D.!nBev North America Quality Compliance303 Richmond StreetLondon, OntarioN6B 2H8

Food Safety: Full Circle. Third Annual One Day Symposium, Sept 21, 2006

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Are you prepared?

Coca-Cola. Great product, great reputation and, even more important, invaluable trademark. Which happens to be in your hands at the moment.

You’re two hours into a possible product recall amid feverish speculation that the product has been contaminated. As a member of the crisis management team, you’re trying to leave your office for a high level emergency meeting, when suddenly you collide with a reporter who promptly waves a microphone in your face.

“Would you drink a Coke right now?” He demands.

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What company can afford headlines like this...

…’The Food Standards Agency (FSA), the British government's food watchdog, has ordered the recall and says salmonella is unacceptable at any level and Cadbury should have notified them earlier when the bacterium was found in their products.’

…’Cadbury Schweppes apparently delayed informing health authorities for five months that minute traces of salmonella had been found at one of its UK chocolate factories.’

…’Cadbury said the withdrawal was a "precautionary measure“’…

…’the incident is an unmitigated disaster in terms of public relations.’

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And It’s Not Just Companies At Risk….

GM: The cover-up17.sep.06The Independent (UK)Geoffrey Leanhttp://news.independent.co.uk/environment/article1604094.ece

…Britain's official food safety watchdog has privately told supermarkets that it will not stop them selling an illegal GM rice to the public. Documents seen by this newspaper show that the Food Standards Agency assured major manufacturers and retailers 10 days ago that it would not make them withdraw the rice - at the same time as it was telling the public it should not be allowed to go on sale…..

…Last night, Peter Ainsworth, the shadow Environment Secretary, described the agency's conduct as "a massive scandal" and said it "smelt of a cover-up". He said he would be asking for an official investigation into whether the agency had broken the law….

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What’s the impact on thebottom line?

Ford cars and trucks Cost: $400 million

Bridgestone/Firestone tires, Cost: $356 million

Intel motherboards, Cost: $253 million

General Mills cereals, Cost: $125 million

Tylenol, Cost: $100 million

Perrier sparkling water, Cost: $70 million

Ford Pinto, Cost: $65 million

Coca-Cola, Cost: $60 million

Fisher-Price PowerWheels, Cost: $30 million

Hudson Food Inc. meat prods.Cost: $28 million

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Planning allows us the best opportunity to influence the consequences before they’re imposed on us.

Emergence

Emergence

Interpretation

Interpretation

Positioning

Positioning

Resolution

Resolution

Prepare and plan

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What’s a Crisis?

A crisis is when:

An incident or issue causes normal, day-to-day operation to cease or be altered dramatically;

The incident or issue actually threatens – or is perceived to threaten – one or more of the following:- lives- social/community well-being- economic stability- environmental balance

Intense scrutiny demands action

In the extreme, reputation is compromised

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Crisis Terms and Definitions

Crisis Management is the timely implementation of a planned process of crisis operations to effectively bring the incident under control

- utilization of sustained communication to generate stakeholder understanding

- application of disaster recovery procedures to allow the organization to function at some level of efficiency

- post-issue/incident reputation restoration communication.

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Crisis Operations is the timely implementation of a planned and tested technical response to bring the crisis under control as quickly as possible with the least amount of loss internally or externally. This may involve a specially-trained emergency response team.

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Crisis Communication is the implementation of a planned process to effectively inform all stakeholders with relevant information during the life of the crisis in a manner that is timely, honest, credible, caring, and socially responsible.

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Disaster Recovery is the implementation of a planned process to restore or apply alternative systems and services in order that the organization can effectively meet stakeholder expectations.

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Reputation Restoration is the development and implementation of a planned process to demonstrate and communicate the organization’s commitment to responsible, ethical behaviour to regain over time stakeholder confidence, trust and support.

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Risk Management is the process of assessing vulnerabilities and exposures and arranging appropriate safeguards and liability/insurance coverage.

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Incident-Driven• ammonia/

caustic leak• product

contamination• wildcat strike

Incident-Driven• ammonia/

caustic leak• product

contamination• wildcat strike

Issue-Driven• responsible use• perception vs. reality• regulatory issues

•(US Bioterrorism Act)• personnel issues/strike

Issue-Driven• responsible use• perception vs. reality• regulatory issues

•(US Bioterrorism Act)• personnel issues/strike

Two types of Crises

Inaction by management/company drives two types of crises:

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More crises now because...

Consumer expectations for high quality products and processes

Lack of tolerance; high skepticism; distrust

Environmental sensitivities

“Instant” media e.g. scientific and technical reporting, comparisons of related disasters after the fact, shortened timelines for credible response

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more serious

Perception

of Event

less serious

Time

Perceptual Gap

Public Perception (second reality)

“Operation” Perception (first reality)

Cost to correct & organizational impact increases with time

Cost to correct & organizational impact increases with time

Managing the Perceptual Gap

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Managing the Perceptual Gap

Credible communication is key to keeping reality as factual as possible

technical experience

fact-based decision making

quantifiable/verifiable data

data/evidence gathering

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Unprepared Management Behavior in a Crisis

Disbelief

Frustration

Self-Protection

“Flight/Fight” Option

Siege Mentality

Short-Term Focus

Lack of technical data credibility

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Media Response in a Crisis

Instant initial coverage

Rapid “live eye”

Antagonists Agenda

Witnesses/survivors

“Piecing”: Fact and fantasy

Linkages

Reporters interviewing reporters

“Experts” found

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Public Reaction to a Crisis Over Time

Lack of credible info/data/analysisLack of credible info/data/analysisCuriosity

Concern

Anxiety

Fear/Anger

Revenge/Avenge

_______________________Line of Tolerance

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Government(s) Reaction to Crisis

Political positioning/posturing (e.g. Dawson College/gun registry)

Regulatory scrutiny

Depending on severity/impact, potential intervention

Possible ongoing visibility on the political level

Longer-term, potential regulatory change or inhibiting legislation (e.g. 9/11/Bioterrorism Laws/US import regulations)

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Managing the Crisis

Coordination = Contain and Control

Managing a crisis requires:

- superb communication coordination of a number of stakeholders

- control throughout the crisis and knowing which people must get involved

- understanding your stakeholders, the information and facts they require, the appropriate time to provide the information and who from the company should be providing it

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Managing the crisis

…and, most important, having a plan that’s been tested over and over again

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Role of Crisis Management Team

Coordinates all people needed to resolve the issue/incident. Determines necessary resources.

Coordinates and manages the flow of information and facts to the various stakeholders

Acts as a central resource of all information and facts pertaining to the incident

Makes the necessary decisions based on the facts provided

Maintains the documentation related to the crisis

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• Team Leader (Zone President)• On-site Coordinator• Information Tracker• Communication Coordinator• Employee/Family Liaison

• Team Leader• On-site Coordinator• Information Tracker• Communication Coordinator• Employee/Family Liaison

Others as determined by team leader:• Public Affairs• Legal• Risk Management• People (commercial and supply chain)• Finance• Commercial• Distribution• Procurement• Brewery Operations• Quality Compliance• Environment, Health & Safety

North America Zone Crisis Management Team

Site Crisis Management Team(includes breweries, QQT, LNO, King Street)

• Team Leader (Regional Director)• Sales Coordinator• On-site Coordinator• Information Tracker• Communication Coordinator

Others as determined by team leader:• Public Affairs• Legal• Risk Management• People (commercial and supply chain)• Finance• Commercial• Distribution• Procurement• Brewery Operations• Quality Compliance • Environment, Health & Safety

Commercial Crisis Management Team(includes Ontario, Quebec, West, Atlantic)

Types of Crisis to be managed:on-site injury or death, theft, operational failures, product tampering, product recall, major supplier interruption, local or regional boycott, incident at Labatt-sponsored public event, issues involving government compliance or regulations

Types of Crisis to be managed:consumer illness or death, national boycott, kidnapping, major computer failure, embezzlement, seriousdamage to site operations

Others as determined by team leader:• Public Affairs• Legal• Risk Management• People (commercial and supply chain)• Finance• Commercial• Distribution• Procurement• Brewery Operations• Quality Compliance• Environment, Health & Safety

• Team Leader (Regional Directors)• Information Tracker• Communication Coordinator• Sales Coordinator

Crisis Management Team for “Partner” RelationshipsTypes of Crisis to be managed:recalls & withdrawals with partners, partner sponsorships, product tampering, brand integrity, customer/consumer relations,corporate reputation, sales, promotional activities

Others as determined by team leader:Public Affairs, LegalRisk Management, People(commercial and supply chain)Distribution, Brewery OperationsEnvironment, Health & Safety

• Legal Coordinator• Quality Compliance Coordinator• Procurement Coordinator• Finance Coordinator

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Managing the Crisis: Standard process – 7 Steps

#1. Follow specific procedures for:

Bomb Threat: call police, evacuate, call Risk Management

Hostage Taking: call police, evacuate, call Risk Management

Kidnapping: get details, don’t make deals, call Risk Management

Extortion: get details, don’t make deals, call Risk Management

Environmental: involve government authorities

Health and Safety: involve government authorities

Product Recall: follow recall procedures/ involve government authorities

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#2. First Alert:

Get control immediately!

Determine off-site emergency services needed

Obtain all available information to decide nature of crisis

Determine necessary resources: people and equipment

Begin coordination of communication and getting the facts

Managing the Crisis: Standard process

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#3. Get the Facts:

On-site coordinator provides known facts to team

Team determines what’s missing; what’s needed and when will it be received

Team determines “who needs to know;” “who wants to know”

Team leader begins coordination of roles

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#4. Convene the Crisis Management Team:

Team leader begins to evaluate:

Nature and extent of incident?

Time it occurred and discovered?

Names and status of people involved?

Consequences and likely consequences?

What’s being done now, by whom? Additional resources required?


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#4. Convene the Crisis Management Team:

When will more information be available?

Who already knows about the incident – what do they know?

Have security, switchboard, customer service been notified?

Does everyone on the team know what they are to do next? Who are your stakeholders?


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#5. Manage the flow of information:

Determine who needs to know; who wants to know

Continuously update information; verify facts; update stakeholders

Maintain contact with government, emergency authorities

Always track the flow of information


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#6. Manage the Crisis to Resolution:

Remember: it’s not over until it’s over

Continue monitoring situation

Provide ongoing updates to various stakeholders

Determine what is needed to restore reputation andensure follow through


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#7. Reporting:

Learn from your experience!

Determine level of preparedness and act on deficiencies

Evaluate risk management and possible vulnerabilities. Address the issues

Ensure overall reporting is complete


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Measures of Success

Demonstrated care and compassion to employees and consumers/customers

Acts quickly and diligently. Is able to contain the incident.

In control and does/is perceived as doing everything possible to manage the incident

Timely, appropriate & consistent responses to all stakeholders

Credible, honest & socially responsible

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Measures of Success

Fact-based decision making

Actions build stakeholder confidence, trust and support

Corporate reputation/image is not put at risk

Company does/is perceived as providing all necessary resources to control the incident

Does/ is seen as working collaboratively with government authorities

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Measures of Success

Today’s reality:

The way you manage your crisis is a

reflection of the way you manage your business.

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Y2K – The Potential Crisis of the Millennium

Began risk assessments and contingency planning in 1998

- Completely cross-functional

1999- Rolled out contingency plans

- Trained on-site and corporate crisis teams (bench-top simulations & presentations, on-camera simulations)

- Developed and conducted full-scale crisis simulations prior to 9/9/99

- Modified and finalized plans based on simulation learnings

- Experienced Y2K without problems

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Pre & Post Y2K Crisis Simulations

Continued with updated training sessions & full-scale crisis simulations at breweries

- Product Recalls

- On-site accidents

- On-site deaths

- Off-site incidences

Simulations involved- Local actors

- Local Emergency Response Teams

- Local Press

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Anatomy of a Crisis Simulation

Components of a Crisis Simulation- Technical

QA verification Fact gathering Prove/disprove

- Regulatory Police/Fire Department/Ambulatory Services CFIA Environmental

- Media/Public Affairs Press Radio Television

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Scripted simulations prepared months in advance

Actors briefed on roles on day prior to simulation

Public Affairs ran control center

Risk Management audited Crisis Center

Quality Compliance audited key players on location

Duration: 4-6 hr

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Post-simulation wrap –up immediately followed with full participation of all actors, external services, corporate auditors and brewery /corporate employees involved

- Actors impressions on how they were treated

- Regulators impressions on how on-site brewery personnel handled the situation

- Risk auditor impressions of how crisis center managed the crisis

- Quality Compliance auditor impression of how personnel handled actors & regulatory staff

- Written report within 30 days with key recommendations for follow-up

42 Copyright © 2005 InBev – All rights reserved

Crisis Planning and Preparation at Labatt Brewing Co. Ltd.

Terrance M. Dowhanick, Ph.D.!nBev North America Quality Compliance303 Richmond StreetLondon, OntarioN6B 2H8

Food Safety: Full Circle. Third Annual One Day Symposium, Sept 21, 2006

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