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Loss control: leadership vs. disasters: plan, recruit, communicate and use positive reinforcement to ensure your crisis management plan works.

The best crisis plan in the world is useless if it sits on a shelf. Your people must be ready to put it into action on a moment's notice. That takes communication and leadership.

Leadership in crisis management starts with the CEO and continues down to the rank and file. If there's any break in the chain, the whole system will fail. Senior management speaks the language of money, so it behooves the risk or crisis manager to sell the program in their language. Talk about how the organization needs to avoid big losses to protect the bottom line. Maybe you'll need to spend $50,000 or $100,000 on developing and communicating the crisis plan. However, if planning can avert even one lawsuit, it will produce a huge return on investment.

Furthermore, botching the handling of a crisis can produce a torrent of negative publicity that can depress a public company's share price and potentially cause customers to cancel orders in droves--and insurance won't cover that.

Getting the top leadership on your side is half the battle. Once they commit to crisis planning and make it a point to tell everyone that it's a key organizational priority, you're on your way.

Understanding your risk is a key element of leadership. Start by compiling a comprehensive list of all the types of events that could occur--even those that seem extremely unlikely. Then break the list into events that are initiated by people and by natural events. Now rank each item on the list from one to 10, with 10 designating incidents that have the highest degree of probability of occurring, one the lowest.

What are the biggest threats to the health and safety of your employees and visitors? What threatens your property? What types of interruptions in operations could occur? What could result in loss of public confidence with your product or services? Is your organization in an area that can be hit by blizzards, floods, earthquakes, hurricanes, tornadoes or other natural disasters? Once you've answered these questions, you can start planning and communicating.

Create the crisis management team, or CMT, drawn from upper-level management who will take charge during the crisis.

Start by drafting a preliminary outline listing possible threats to the organization. Circulate the outline to your management. Use their comments when you flesh out the details, progressing in a logical manner from the lowest threat or emergency condition level to worst-case scenarios.

Once your plan has been finalized, make sure everyone who needs to know about it does, especially key managers. Use newsletters, brochures, meetings and your company intranet to inform your employees. If your plan is detailed, conduct a formal training session to explain its requirements and answer questions.

Test the plan under controlled conditions to ensure it is workable. Initially, involve only your key personnel. After they've learned it cold, expand participation until you involve everyone.

The plan should designate a group of managers who can detect the signs of a potential crisis. These managers should be able to drop their usual duties immediately and begin monitoring the situation. They should assemble in the emergency center and be authorized to initiate contact with the CMT and take control until the CMT arrives.

Ultimately, the point of leadership and communication is changing behavior. You can use both positive and negative reinforcement. Research shows that positive reinforcement (rewarding desired behavior) is much more powerful than negative reinforcement (punishing undesired behavior) in both changing behavior and maintaining it.

So plan for disasters, get top leadership on board, communicate extensively and use positive reinforcement. That's the recipe for success.

Session Information:

LCT203: Leadership and Communication in the Prevention and Mitigation of Disasters

Time: Monday, Apr. 30; 3:30 p.m.-5:00 p.m.

Room: MCC-242

HARRY NOLAN is the chief loss-control engineer with E.G. Bowman Co. Inc. in New York. He can be reached at
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Title Annotation:RIMS 2007
Author:Nolan, Harry
Publication:Risk & Insurance
Date:May 1, 2007
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