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Disaster Management Basics
It IS All About Survivability
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We tend to subconsciously decide what to do before figuring out why we want to do it.
Disaster Management Basics
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Business: what is it?
Business is driven by strategy carried out in the form of plans by people who operate in existing and evolving markets.
Every organization’s “strategic plan” (developed either formally or informally) identifies their critical objectives.
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What is a disaster?
What is a disaster for your organization?
Merriam Webster:
something (such as a flood, tornado, fire, plane crash, etc.) that happens suddenly and causes much suffering or loss to many people
something that has a very bad effect or result
a complete or terrible failure
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Is Your Organization’s Planning Brittle? Do the organization’s plans stand in silos of excellence? Are activation and implementation of plans independent
and uncoordinated? Does the organization face critical junctures of survival
every time an event or certain shocks affect it? Does analysis of “worst case” scenarios underlay the basis
for planning? Do the plans reflect the strategy, goals and objectives of the
organization?
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Is Your Organization’s Planning Brittle?
We live in a complex and interdependent world, filled with complex systems that are full of interdependencies (touchpoints) that are hard to detect.
The result is nonlinearity in responses to events, especially random events/shocks.
The odds of rare events are simply not computable.
Model error swells when it comes to small probabilities.
The rarer the event; the less tractable, and the less we know about how frequent its occurrence.
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Complexity
Touchpoints
Responsiveness
Resource Constraints
Is Your Organization’s Planning Brittle?
It is much easier to sell: “Look what I did for you”
than
“Look what I avoided for you.”
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Business Continuity – From What?
What is going to cause discontinuity?
What is the single highest probable failure factor for your business?
People?
EHS Issues?
Terrorism?
Cyber-threats?
Internal Factors?
Nuclear, Chemical, Biological?
Workplace Violence?
Sabotage? Operations?
External Factors?
Fraud?
Mismanagement?
Natural Disaster?
Power Failure?
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How much Analysis are you doing right now?Symmetric Threats – Natural, Normal, Abnormal
Natural Disasters•Hurricanes•Earthquakes•Floods•Tornadoes•Drought
Economic Disasters•Recessions•Stock Market Downturns•Rating Agency Downgrade
Personnel Disasters•Strikes•Workplace Violence•Vandalism•Employee Fraud
Physical Disasters•Industrial Accidents•Supply Chain•Value Chain•Product Failure•Fires•Environmental•Health & Safety
Criminal Disasters•Product Tampering•Terrorism•Kidnapping & Hostages
Information Disasters•Theft of Proprietary Information•Hacking, Data Tampering•Cyber Attacks
Reputation Disasters•Rumors•Regulatory Issues•Litigation•Product Liability•Media Investigations•Internet Reputation•Social Media
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Asymmetric Threats – Known is replaced by the invisible foe
Put simply, asymmetric threats are a version of “not fighting fair,” that can include surprise, unplannable and unpredictable events, impacts to your touchpoints that have not been anticipated.
Not fighting fair also includes the prospect of an opponent designing a strategy that fundamentally alters the markets that you compete in.
How much Analysis are you doing right now?
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Business Impact Analysiswhat are we analyzing?
We know now what to measure, we know the current performance and we have discovered some problem areas. Now we have to understand why problems are generated, and what the causes for these problems are.
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If you don’t know what you don’t know, how can you prepare for it?
Conventional practices leave us vulnerable to random, potentially catastrophic events, that cannot be predicted based on simple extrapolations from the past or projections of the future.
Prediction – Projection
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Low
High
Geo-PoliticalGlobal Workforce
Environmental
Competition
Economies
Infrastructure
Social Trends
Technology
Markets
Foreign Sources
Impact
Like
lihoo
d
LowHigh
Very RapidImpact of the risk would be evident in a month
RapidImpact of the risk would be evident in a quarter
SlowImpact of the risk would be evident in a year
RISK VELOCITY
Emerging Risks – Likelihood, Impact & Velocity
Sovereign Debt
Alternatives
• Traditional risk assessments that prioritize risk on probability and impact are outpaced by the speed at which risks move throughout the organization.
• While 70% of finance executives agree that risk velocity is a core consideration, only 11% have introduced it into their risk assessments.
Source: Deloitte; Risk Integration Strategy Council Research
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STRATEGY: What are we committed to?
CONCEPT OF OPERATIONS: How will we fulfill these commitments?
STRUCTURE: Do we have an organization that serves our needs?
RESOURCE MANAGEMENT: How will we manage our resources?
CORE COMPETENCIES:What skills do we expect from our organization?
PRAGMATIC LEADERSHIP: How will we optimize authority, decision-making,workflow, information sharing?
Six Key Questions
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Decision Making Issues Related to Risk
Identify Alter
Neutralize
Share
Diversify
Mitigate
Transfer
Contain
Offset Effects
Reduce Exposure
Alleviate Impact
Change Negative – Positive
Insure Against Loss
Monitor
Hedge
Derivatives
Control
Discount
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A stone and its weight in pebbles – size matters.
A collection of small units with semi-independent variations produces vastly different risk characteristics than a single large unit
Living in a Non-Predictive World
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Business Continuity Lifecycle
Normal Business Operations
Transition Point 1
ResponseMitigationTermination
Transition Point 2
ReentryRestoration Resumption
Transition Point 3
ResumptionTransition to New Normal Operations
Transition Point 4
New NormalBusiness Operations
Activation Reactive Response Chaos
Unplanned Disruption
Planned Disruption
Termination
Emergency ResponseCrisis Management
Business RecoverySystems/Information Recovery
Recovery Management
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Transition Point 1
Transition Point 2
Transition Point 3
Transition Point 4
ActivationReactive ResponseChaos/Uncertainty
Unplanned Disruption
Planned Disruption
Termination
How Well Will Your Organization Transition?
?
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Leve
l of S
ervi
cePlan – Respond – Recover – Restore – Resume
Low
High
Time
(Image and Profile affect degree of disruption)
Recovery
(Time Critical)(Time Sensitive)(Time Dependent)
Plan
Restore
MTO
Response
Event
RTO
RPO
Stability LevelsGraceful Degradation Agile Restoration
Resume
CTL
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Plan – Respond – Recover – Restore – ResumeLe
vel o
f Ser
vice
Low
High
Time
(Image and Profile affect degree of disruption)
Recovery
(Time Critical)(Time Sensitive)(Time Dependent)
Plan
Restore
MTO
Response
Event
RTO
RPO
Stability LevelsGraceful Degradation Agile Restoration
Resume
CTL
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Plan – Respond – Recover – Restore – ResumeLe
vel o
f Ser
vice
Low
High
Time
(Image and Profile affect degree of disruption)
Recovery
(Time Critical)(Time Sensitive)(Time Dependent)
Plan
Restore
MTO
Response
Event
RTO
RPO
Stability LevelsGraceful Degradation Agile Restoration
Resume
CTL
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Graceful Degradation + Agile Restoration = Resilience
Full Functionality
Devolve to most robust less functional configuration
Minimum StableFunctionality
Maximum StableLevel of Service
(Personnel, Time, Product, Services)
Detectors/Indicators of change
Business Continuity Lifecycle
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SeamlessCommunications
Management
Operations Logistics
Administration
Planning
Finance
Infrastructure Internal/External Relations
RMR3 – Flexibility
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Building an effective crisis management team
Why Crisis Management Teams Fail:
Crisis Management Team does not know its own reaction time;
Communications;
Micro-Managing;
Decisions are left at low levels;
Allowing problems to compound.
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Your biggest challenge:
Getting the team to work together when they generally do not function every day as a team
Getting the team to comprehend their crisis management roles, responsibilities, functions and how they differ from their day-to-day roles, responsibilities and functions
Your next biggest challenge:
Building an effective crisis management team
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Crisis Management Team (CMT)
Team Competencies (TC)
Team Identity (TI)
Team Cognition (TC-1)
Team Metacognition (TM)
How good are the team members?Are they still struggling with basic procedures?
Who’s taking responsibility?Do they spot and correct problems?Do they get crunched for time?Are they “territorial”?
Does everyone know who does what?Do they help each other out?Is anyone micro-managing?Is anyone “out of it”?
Is the CMT heading for the same goals?Does everyone have the same picture?Are they consistently in a reactive mode?Do they get paralyzed by uncertainty? Gary Klein:
“Sources of Power: How People Make Decisions”
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Business Continuity – Three Levels
Strategic Level –Saving the business
Operational Level –Containing Business Unit Impacts
Tactical Level –Operational Actions
Leadership (Management)
PlanningOperationsLogisticsFinanceAdministrationInfrastructureInternal/External Relations
Key Functions
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Three Spheres of Concern
SPHERE OF INFLUENCE
Your assets and capabilities can affect the courses of action of others
SPHERE OF INTEREST
Assets and Capabilities of others can effect your courses of action
SPHERE OF RESPONSIBILITY
Your corporate mission, vision, values,
goals, objectives
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Geary W. SikichPrincipalLogical Management Systems, Corp.
www.logicalmanagement.com
+1 (219) 922-7718
“If you keep doing what you’ve always done – you’ll keep getting what you’ve always gotten.”
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